Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Petronella Smith Howard,
(OI File No. M-10-40287-9),

Petitioner,
v.
The Inspector General.
Docket No. C-13-1215
ALJ Ruling No. 2014-19

Date: January 10, 2014

ORDER OF DISMISSAL

Petitioner, Petronella Smith Howard, pled guilty in federal district court to one count of
conspiracy to possess with the intent to distribute oxycodone and oxymorphone, one
count of possession with the intent to distribute oxycodone and oxymorphone, and one
count of conspiracy to commit health care fraud. LLG. Ex. 2, at 1. Pursuant to sections
1128(a)(1) and 1128(a)(4) of the Social Security Act (Act) (42 U.S.C. §§ 1320a-7(a)(1)
and (a)(4)), the Inspector General (1.G.) excluded her from participating in Medicare,
Medicaid, and all federal health care programs for a period of fifteen years. Petitioner
appealed, challenging the length of the exclusion.

The I.G. moved to dismiss, relying upon four exhibits (I.G. Exs. 1-4), and argued that
Petitioner fails to raise an issue that may be properly addressed in a hearing. Following a
telephone conference with the parties, I issued an order in which I gave Petitioner the
opportunity to file a response to the I.G.’s motion to dismiss. Petitioner filed a response
titled “Out of Time Appeal” (P. Resp.). The I.G. requested leave to file a reply to
Petitioner’s submission, accompanied by the reply. I have accepted the I.G.’s reply for
filing without objection. For the reasons discussed below, I grant the I.G.’s Motion to
Dismiss.
Discussion

In a letter dated January 31, 2013, the I.G. notified Petitioner that she was excluded from
participation in Medicare, Medicaid, and all federal health care programs for fifteen years
pursuant to sections 1128(a)(1) and 1128(a)(4) of the Act (42 U.S.C. §§ 1320a-7(a)(1)
and (a)(4)). The LG. cited as the basis for Petitioner’s exclusion, pursuant to section
1128(a)(1) of the Act, her conviction of a criminal offense related to the delivery of an
item or service under Medicare or a state health care program. The LG. additionally cited
as the basis for Petitioner’s exclusion, pursuant to section 1128(a)(4) of the Act, her
felony convictions for criminal offenses related to the unlawful manufacture, distribution,
prescription, or dispensing of a controlled substance as defined under federal or state law.
LG. Ex. 1, at 1.

Petitioner does not dispute her convictions and that she is subject to exclusion under
sections 1128(a)(1) and (a)(4) of the Act, but she argues that the period of exclusion is
unreasonable because she suffers from chronic health care conditions. P. Req. for
Hearing (July 17, 2013). Petitioner also contends in her response that her exclusion is
unreasonable because she wishes “to own and operate a business assisting Medicaid &
Medicare patients to their doctor’s appointments” and also because she is 54 years old.
P.Resp.

Section 1128(a)(1) of the Act mandates that the Secretary of the U.S. Department of
Health and Human Services (Secretary) exclude from program participation any
individual who has been convicted under federal or state law of a criminal offense related
to the delivery of an item or service under the Medicare or a state health care program.
See also 42 C.F.R. § 1001.101(a). Section 1128(a)(4) of the Act also mandates that the
Secretary exclude from program participation any individual who has been convicted
under federal or state law of a felony criminal offense related to the unlawful
manufacture, distribution, prescription, or dispensing of a controlled substance. See also
42 C.F.R. § 1001.101(d). An exclusion under section 1128(a) must be for a minimum
period of five years. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). Regulations specify
the factors that the I.G. may consider as aggravating and a basis for lengthening an
exclusion period. 42 C.F.R. § 1001.102(b). Mitigating factors may be considered as
bases for reducing the period of exclusion only if the exclusion period is longer than five
years. 42 C.F.R. § 1001.102(c).

An excluded individual may appeal the basis for the exclusion and the length of the
exclusion. 42 C.F.R. § 1001.2007(a)(1). Petitioner has not disputed that her convictions
provided a basis to exclude her pursuant to sections 1128(a)(1) and 1128(a)(4) of the Act.
Thus, Petitioner must be excluded for at least a minimum of five years.

Here, the L.G. found that two aggravating factors exist that support increasing Petitioner’s
exclusion period to fifteen years. The I.G. alleged that Petitioner’s criminal acts were
committed over a period of one year or more, and the sentence imposed by the court
included incarceration. I.G. Ex. 1, at 2; 42 C.F.R. § 1001.102(b)(2); 42 C.F.R.
§ 1001.102(b)(5).

Petitioner has attempted to claim that her chronic health care conditions, her desire to
start a business, and her age justify a shorter period of exclusion. However, none of these
factors can be considered in determining the reasonableness of Petitioner’s exclusion
beyond the five-year minimum period because they are not mitigating factors under the
regulations. 42 C.F.R. § 1001.102(c). Therefore, I find that Petitioner has failed to raise
any issue that may be properly addressed in a hearing.’

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

/s/
Joseph Grow
Administrative Law Judge

' [note that, in her request for hearing, Petitioner states that she “need[s] to receive all
the benefits that [she] was receiving prior to [her] incarceration.” | direct Petitioner to
review the I.G.’s notice letter dated January 31, 2013. In that letter, the I.G. advised
Petitioner that “[t]his exclusion does not affect your rights or the rights of your family
members to collect benefits to which you or they may be entitled as a beneficiary under
any Federal program such as Medicare, Medicaid or Social Security.” I.G. Ex. 1, at 3
(emphasis in original).


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Riverview Psychiatric Center,
(CCN: 204007),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-84
ALJ Ruling No. 2014-18

Date: January 3, 2014

RULING DISMISSING PETITIONER’S
REQUEST FOR HEARING

I dismiss the hearing request filed by Petitioner, Riverview Psychiatric Center. Petitioner
has no right to a hearing to challenge the declination by the Centers for Medicare

& Medicaid Services (CMS) to reopen its determination to terminate Petitioner’s
participation in the Medicare program.

CMS filed 13 exhibits, designated as CMS Ex. 1 — CMS Ex. 13, in support of its motion
to dismiss. Petitioner filed two exhibits, designated as P. Ex. | and P. Ex. 2, in its
opposition to the motion. I am receiving these exhibits into the record of this case.
However, none of the material facts, as are described in the exhibits or represented by the
parties, is in dispute.
I. Undisputed Facts and Background

Petitioner is a psychiatric hospital in the State of Maine. It participated in Medicare. In
March and May 2013 the Maine Department of Health and Human Services, Division of
Licensing and Regulatory Services (Maine State agency) conducted surveys of Petitioner
in order to determine whether it was complying with Medicare conditions of
participation. CMS Ex. 2; CMS Ex. 3. At both surveys the Maine State agency found
that Petitioner was not complying substantially with conditions of participation. On June
4, 2013, CMS sent a letter to Petitioner advising Petitioner that its Medicare participation
agreement would be terminated effective September 2, 2013. CMS Ex. 3.

The letter advised Petitioner that Petitioner could avoid termination by correcting its
deficiencies in a timely manner. CMS advised Petitioner that it could submit a plan of
correction in which it specified how it would correct its deficiencies and it told Petitioner
that a revisit survey would be conducted of Petitioner’s facility to ascertain compliance,
but only if CMS found Petitioner’s plan of correction to be acceptable. CMS Ex. 3 at 2.

Petitioner submitted plans of correction on June 14 and July 18, 2013. Both of these
plans were unacceptable. CMS Ex 4; CMS Ex. 12. On August 14, 2013, CMS advised
Petitioner that it was proceeding with termination of Petitioner’s provider agreement
effective September 2, 2013. CMS Ex. 6. However, CMS gave Petitioner a final chance
to submit an acceptable plan of correction, advising Petitioner that if it did so
“immediately” a survey would be conducted to determine whether compliance had been
achieved. Jd. at 3.

On August 16, 2013, Petitioner submitted a third plan of correction, which it
subsequently supplemented. CMS Ex. 8 at 1; CMS Ex. 12 at 3. This plan of correction
was found to be acceptable and an additional survey was conducted of Petitioner on
September 17, 2013, after termination of Petitioner’s Medicare participation had gone
into effect. Upon review of the results of this survey CMS determined not to reopen or
revise its initial determination to terminate Petitioner’s Medicare participation and that
determination remained in effect. On September 27, 2013, CMS notified Petitioner of its
declination to reopen and revise. CMS Ex. 9.

Petitioner filed a hearing request on October 11, 2013 and requested an expedited hearing
and a decision. I granted that request. CMS then moved to dismiss Petitioner’s hearing
request and, in the alternative, for summary judgment. Petitioner opposed the motion to
dismiss and cross-moved for summary judgment. Neither party contends that there are
disputed issues of material fact.
II. Analysis

Petitioner’s hearing rights are governed by regulations at 42 C.F.R. Part 498. These
regulations state that any provider that is dissatisfied with an initial determination to
terminate its Medicare participation (provider agreement) may request a hearing before
an administrative law judge. 42 C.F.R. § 498.5(b). The term “initial determination” is
defined at 42 C.F.R. § 498.3(b). The subsection enumerates specific actions by CMS that
comprise initial determinations. It is clear from the regulation that only actions that are
specifically listed as initial determinations create hearing rights. Other decisions or
actions by CMS that are not initial determinations confer no right to a hearing. The
regulation specifically states that termination of a provider agreement for failure to
comply with Medicare participation requirements is an initial determination. 42 C.F.R.
§498.3(b)(8). The regulation does not define as an initial determination CMS’s
declination to reopen or revise an initial determination after the date that the
determination to terminate participation has gone into effect.

The undisputed facts of this case show that on June 4, 2013, CMS determined that
Petitioner was failing to comply substantially with Medicare participation requirements.
CMS invoked the remedy of termination of Petitioner’s provider agreement. That
determination by CMS to terminate Petitioner’s Medicare participation for
noncompliance with participation requirements was an initial determination and
Petitioner had the right to challenge that determination by requesting an administrative
hearing.

However, Petitioner did not challenge that determination. It never specifically contested
the findings of noncompliance that led to CMS’s determination that termination of
Petitioner’s provider agreement was in order. Petitioner allowed the initial determination
to go into effect without challenging it and, on September 2, 2013, CMS terminated the
provider agreement.

Petitioner waited until October 11, 2013 to file a hearing request that challenged
something entirely different than CMS’s termination of its provider status. On that date,
Petitioner challenged CMS’s declination to reopen its initial determination based on
Petitioner’s August 16, 2013 plan of correction and the September 17, 2013 survey of
Petitioner. In short, Petitioner did not file a hearing request timely in which it denied
CMS’s initial findings of noncompliance that are the basis for the termination of

Petitioner’s provider status. Rather, it challenged CMS’s refusal to rescind those findings
as a consequence of CMS’s declination to accept certain corrective actions that Petitioner
allegedly took subsequently.

While Petitioner had a right to challenge the initial findings of noncompliance — a right
that it failed to exercise — it had no right to challenge CMS’s discretionary act not to
reopen and revise those findings. Whether or not CMS accepts a plan of correction or
decides to reopen and revise its original findings of noncompliance based on acceptance
of a plan of correction and a follow-up survey is not an initial determination as is defined
at 42 C.F.R. § 498.3(b). There is no right to a hearing to challenge these actions.
Consequently, Petitioner has no hearing rights in this case. It may not now challenge the
initial findings leading to the determination to terminate participation and it has no right
to challenge CMS’s subsequent actions.

Petitioner now argues that it would challenge the merits of CMS’s initial determination if
these are relevant to the outcome of this case. But, in fact, Petitioner has offered no
challenge to those findings. It has never argued that the substantive findings of
noncompliance made by the Maine State agency surveyors at the March and May 2013
surveys were incorrect. It has offered no evidence to show that those findings were
incorrect and it has not represented that it would offer such evidence if given the
opportunity to do so. So, this case rests on unchallenged findings of condition-level
noncompliance by Petitioner. CMS’s determination to terminate Petitioner’s
participation based on those findings is unchallenged and Petitioner never timely filed a
hearing request challenging those findings.

What Petitioner really argues is that it has a right to prove that CMS should have

accepted the remedial actions that Petitioner undertook as expressed in its August 16 plan
of correction. But, CMS’s declination to accept those remedial actions cannot be a basis
for hearing rights because it is not an initial determination defined at 42 C.F.R.

§ 498.3(b).

Much of Petitioner’s argument relates to what it contends is a purely legal issue. That,
according to Petitioner, is whether it could attain compliance with Medicare participation
requirements after CMS had determined to terminate Petitioner’s participation by
undergoing a structural reorganization that allegedly subdivided its hospital facility into
two components, a “distinct part psychiatric hospital” and a “forensic unit.” Petitioner
alleges that by doing so it removed from its Medicare operations activities and staffing
that constituted noncompliance with the provision of Medicare items and services and,
thus, eliminated any basis for noncompliance with Medicare participation requirements.

But, as is clear from Petitioner’s own arguments this action — even if it occurred and was
effective as Petitioner alleges — took place after CMS determined to terminate Petitioner’s
participation based on the noncompliance that existed in March and May. CMS may
have had discretion to accept this reorganization as a way of curing deficiencies. But,
nothing in the regulations gives Petitioner a right to a hearing to challenge CMS’s refusal
to exercise that discretion.

Petitioner argues also that new hearing rights were created when CMS “accepted”
Petitioner’s plan of correction. That, according to Petitioner, was tantamount to a finding
by CMS that all deficiencies were eliminated that Petitioner was now qualified to
participate. There is nothing in the regulations that suggests that Petitioner’s analysis is
correct. “Acceptance” of a plan of correction doesn’t mean, necessarily that deficiencies
have been corrected; it means only that CMS is willing to evaluate a provider’s
performance based on what the provider has represented to CMS. There is no right to a
hearing should CMS subsequently survey the facility and find that the facility has failed
to comply with its own plan of correction. That finding is not an initial determination as
is defined by 42 C.F.R. § 498.3(b). Nor is there a right to a hearing generated by CMS’s
decision to rescind an earlier conclusion that a plan of correction is acceptable. That is an
act of discretion that confers no regulatory hearing rights.

An administrative law judge may dismiss a request for hearing where there is no right to
ahearing. 42 C.F.R. § 498.70(b). I dismiss Petitioner’s request because Petitioner has no
right to challenge CMS’s refusal to reconsider or reopen its initial determination in this
case.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

John H. Schneider, M.D.,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-1165
Decision No. CR3066

Date: January 7, 2014

DECISION

Noridian Healthcare Solutions (Noridian), an administrative contractor acting on behalf
of the Centers for Medicare & Medicaid Services (CMS), notified Petitioner, John H.
Schneider, M.D., that his Medicare enrollment and billing privileges were revoked
effective October 14, 2012, for failure to report an adverse legal action. Petitioner
appealed. For the reasons stated below, I affirm CMS’s determination to revoke
Petitioner’s enrollment and billing privileges, effective October 14, 2012.

I. Case Background and Procedural History

Petitioner is a neurosurgeon licensed to practice medicine in Wyoming, Montana, and
Utah. Petitioner was enrolled in the Medicare program as a supplier.’ Petitioner admits
that on December 1, 2011, one of his surgical patients died at home following his release
from the hospital. According to an autopsy report, the patient likely died from a “mixed
drug overdose.” On January 28, 2012, the Wyoming Board of Medicine (Wyoming
Board) temporarily suspended Petitioner’s medical license in an “emergency action”
related to Petitioner’s prescription of “fentanyl transdermal patches (Duragesic®) for

' The Medicare program considers a physician to be a “supplier.” 42 C.F.R. §§ 400.202,
498.2.
management of post-operative pain.” On February 10, 2012, Petitioner met with the
Wyoming Board to discuss the suspension. Following this meeting, Petitioner entered
into a consent agreement with the Wyoming Board where he agreed to take a “controlled
substance prescribing course” and to stop prescribing “fentanyl transdermal patches
(Duragesic®) for any patient.” Petitioner also agreed to have his practice monitored for a
six-month period. Petitioner fulfilled the requirements of the consent agreement,
following which the Wyoming Board reinstated his medical license, effective March 21,
2012. CMS Exhibits (Exs.) 2; 3, at 1, 4-5, 8; 4.

On September 14, 2012, Noridian issued an initial determination revoking Petitioner’s
Medicare enrollment and billing privileges, effective October 14, 2012, because he had
failed to notify CMS that his license was suspended effective January 28, 2012. The
initial determination also informed Petitioner that he was barred for one year from
October 14, 2012 from participating in Medicare. The initial determination stated that if
Petitioner decided to appeal the revocation he must do so within 60 days of his receipt of
the determination, which is presumed to be five days after the date of the notice (here
September 19, 2012). CMS Ex. 5. Thus, calculating from the date of the notice,
Petitioner had until November 18, 2012 to appeal.

The parties agree that Petitioner did not appeal the revocation by November 18, 2012.
Petitioner asserts, however, that his “billing company did not receive the September 14,
2012 letter from Noridian.” Petitioner asserts his office contacted Noridan in January
2013 when he received a “Medicare denial.” CMS Ex. 14, at 2; see CMS Ex. 8, at 1.

On January 15, 2013, Noridian faxed a copy of the September 14, 2012 notice to
Petitioner. Noridian noted in the fax transmittal accompanying the notice that it was too
late for Petitioner to submit an appeal of the revocation. Noridian told Petitioner to
instead submit new enrollment applications, which Noridian would then deny and from
which Petitioner could appeal the denial. If the appeal of the denial was unsuccessful,
Noridian noted Petitioner could then file an appeal for an administrative law judge (ALJ)
earing. CMS Ex. 6. On January 16, 2013, Petitioner filed Medicare enrollment
applications CMS-855I (Physicians and Non-Physician Practitioners) and 855R
(Reassignment of Medicare Benefits). CMS Ex. 7. In the CMS-855], Petitioner notified
Medicare of the suspension and reinstatement of his Wyoming license. CMS Ex. 7, at 6,
15.

By letter dated January 25, 2013, Petitioner also asked Noridian to reconsider its decision
revoking his billing privileges, arguing that he should be retroactively re-enrolled because
he did not receive the September 14, 2012 notice letter. Petitioner did not allege that he
informed Noridian of the temporary suspension within 30 days of January 28, 2012.
Instead, Petitioner asserted that letters (including a Medicare enrollment form CMS-855]1)
concerning the temporary suspension were sent to all the “payers that I am contracted
with, including Medicare, on April 12, 2012.” CMS Ex. 8. Noridian received
Petitioner’s reconsideration request on February 8, 2013. CMS Ex. 11.

On February 16, 2013, Noridian returned Petitioner’s CMS-855] and 855R forms stating
that because Petitioner’s enrollment and billing privileges had been revoked, any
enrollment applications Petitioner submitted must be returned. CMS Exs. 9, 10.

On March 7, 2012, Noridian informed Petitioner that it would make a determination with
regard to Petitioner’s February 8, 2013 reconsideration request within 90 days from the
date of the request. CMS Ex. 11. On March 22, 2013, Noridian issued a letter that
Petitioner’s request was untimely. CMS Ex. 12.

On May 31, 2013, however, Noridian issued a reconsidered determination. The May 31,
2013 reconsidered determination found Petitioner’s appeal “timely submitted.” It then
upheld the revocation, stating that Petitioner “failed to comply with the reporting
requirements specified in 42 CFR 424.516(d)(1)(ii) or (iii), which pertain to the reporting
of changes in adverse actions and practice locations, respectively, within 30 days of the
reportable event,” a violation of 42 C.F.R. § 424.535(a)(9). CMS Ex. 13. The May 31,
2013 reconsidered determination also afforded Petitioner the right to request a hearing
before an administrative law judge. CMS Ex. 13.

Petitioner requested a hearing by letter dated August 2, 2013. In accordance with my
August 16, 2013 Acknowledgment and Pre-hearing Order (Pre-hearing Order), CMS
timely filed a “Motion to Dismiss, or in the Alternative, Motion for Summary Judgment,”
(CMS Br.), accompanied by 15 exhibits (CMS Exs. 1-15). Petitioner failed to timely file
his pre-hearing exchange or a response to CMS’s motions. On November 6, 2013, I
issued an Order to Show Cause giving Petitioner until November 26, 2013, to explain
why he had not timely filed. By letter dated November 24, 2013, Petitioner responded
(P. Response).” He stated that:

I have attempted on multiple occasions to confirm that Rocky Mountain
Medical Services of Powell Wyoming, the representative contractor whom
(sic) performed my practice billing and credentialing function,
communicated with Medicare within the contract parameters after January
25, 2011 regarding my temporary Wyoming license suspension. This
contractor represented this communication occurred however they have no
documentation to provide me confirming this claim. I am unable to

> Petitioner did not file any exhibits with his response. Petitioner did submit a number of
documents as a supplement to his hearing request. With the exception of pages seven and
eight of these supplemental documents, all supplemental documents have been admitted
into the record as CMS exhibits. In making my decision, I have considered pages seven
and eight, although they are not formally entered into the record as marked exhibits.
produce documentation therefore to substantiate what this contractor had
claimed which is the basis for my objection to the findings against my
Medicare participant contract.

II. Decision on the Record
In the absence of objection, I admit CMS Exs. 1-15 into the record.

My Pre-hearing Order advised the parties that they must submit written direct testimony
for each proposed witness and that an in-person hearing would only be necessary if the
opposing party requested an opportunity to cross-examine a witness. Pre-hearing Order
49 8 - 11; see Vandalia Park, DAB No. 1940 (2004); Pacific Regency Arvin, DAB No.
1823, at 7-8 (2002). (holding that the use of written direct testimony for witnesses is
permissible so long as the opposing party has the opportunity to cross-examine those
witnesses). Neither party offered proposed witness testimony. Thus, a hearing in this
case is unnecessary. Although CMS has moved for summary judgment, I do not decide
the case on summary judgment. Instead, in the absence of witness testimony, I decide
this case on the full written record, which includes the parties’ arguments and CMS’s
exhibits.

III. Findings of Fact, Conclusions of Law, and Analysis‘
1. CMS’s Motion to Dismiss is denied.

CMS requests that I dismiss this case because Petitioner failed to preserve his right to a
earing when he failed to timely request reconsideration of Noridian’s September 14,
2012 initial determination. CMS Br. at 4, citing 42 C.F.R. §§ 424.545(a), 498.5(1)(2),
498.20(b), and 498.22(a) and (b)(3). CMS recognizes that on May 31, 2013, Noridian
issued a reconsidered determination deciding the case on the merits and notifying
Petitioner that he had a right to appeal to an administrative law judge. But, CMS argues
that the May 31, 2013 reconsideration determination incorrectly states that Petitioner’s
reconsideration request was timely filed. CMS asserts instead that it is clear from
Noridian’s March 22, 2013 letter that Petitioner’s reconsideration request was untimely
filed. CMS asserts that the May 31, 2013 reconsidered determination only issued
because the March 22, 2013 letter did not give the address for filing an appeal with the
administrative law judge. CMS Br. at 3. CMS offered no documentary or testimonial
evidence to support this claim, and I find nothing in the record to substantiate CMS’s

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

+ My numbered findings of fact and conclusions of law appear in bold and italics.
explanation for the discrepancy between the March 22, 2013 letter and May 31, 2013
reconsidered determination.

A request for reconsideration must be submitted within 60 days of receipt of the initial
determination. 42 C.F.R. § 498.22(b)(3). The CMS contractor may, however, permit an
untimely filed request for reconsideration for good cause. 42 C.F.R. § 498.22(d). In this
case it appears that Petitioner did not receive Noridian’s initial determination revoking
his Medicare enrollment and billing privileges when the notice letter was mailed in
September 2012. Instead, Petitioner only obtained a copy of the notice letter in January
2013. CMS Exs. 6, 8. Although Noridian indicated that it was rejecting Petitioner’s
reconsideration request as untimely on March 22, 2013, it is undisputed that in its May
31, 2013 reconsideration determination, Noridian considered Petitioner’s reconsideration
request to be timely and provided an analysis upholding the initial determination, as well
as notice of Petitioner’s right to appeal to an administrative law judge. CMS Exs. 12, 13.
Although Noridian did not state why it found Petitioner’s reconsideration request to be
timely in its May 31, 2013 reconsideration determination, it may have done so because it
found good cause to extend the filing deadlines due to Petitioner’s assertion that it did not
receive Noridian’s initial determination until January 2013. For the same reason,
Noridian may have reopened the case to issue the reconsidered determination. Why
Noridian decided to do so is not determinative, however. Noridian had the authority to
extend the time for filing, to reopen the case, and to issue a reconsidered determination. I
am without the authority to review such actions. See Better Health Ambulance, DAB No.
2475, at 4-5 (2012). Once a reconsidered determination is issued, a supplier may request
a hearing before an administrative law judge. 42 C.F.R. § 498.5(1); Hiva Vakil, M_D.,
DAB No. 2460, at 4-5 (2010).

2. The Wyoming Board suspended Petitioner’s medical license on January 28,
2012, and Petitioner did not report the suspension to Noridian within 30 days of
the suspension.

The Wyoming Board temporarily suspended Petitioner’s medical license on January 28,
2012. CMS Exs. 1, at 1; 2, at 2; 3, at 2-3; 4; 7, at 15. Thus, Petitioner had until February
28, 2012, to report the suspension to Noridian. Petitioner admits he has no
documentation to show that that he or his billing company did so. P. Response.
Petitioner notes instead that he tried to provide notice of his suspension through an April
10, 2012 letter (and April 12, 2012 CMS-855I form). Petitioner’s Request for Hearing;
CMS Ex. 8, at 2; see also CMS Ex. 4.

3. CMS had a legitimate basis to revoke Petitioner’s enrollment and billing
privileges in the Medicare program pursuant to 42 C.F.R. §§ 424.516(d)(1)(ii)
and 424.535(a)(9) because Petitioner failed to report an adverse legal action, the
temporary suspension of his Wyoming medical license, to Noridian within 30
days of the suspension.
Under 42 C.F.R. § 424.535(a)(9), CMS or its contractor may revoke a supplier’s
Medicare enrollment and billing privileges if the supplier fails to comply with the
“reporting requirements specified in § 424.516(d)(1)(ii) and (iii).” The reporting
requirements mandate, in relevant part, that a supplier such as Petitioner report to the
appropriate CMS contractor “[a]ny adverse legal action” within 30 days. 42 C.F.R.

§ 424.516(d)(1)(ii). Petitioner’s license suspension is an adverse legal action requiring
notice to CMS. Akram A. Ismail, M.D., DAB No. 2429, at 9-11 (2011) (holding that a
suspension still pending an appeal is an “adverse legal action” for purposes of the
revocation regulations); see also Gulf South Med. & Surgical Inst., and Kenner
Dermatology Clinic, Inc., DAB No. 2400, at 6, 8 (2011). In his November 24, 2013
response to my Order to Show Cause, Petitioner admits that he cannot obtain proof from
his billing service that it timely informed Noridian of the temporary suspension of his
Wyoming medical license within 30 days of January 28, 2012, the effective date of the
temporary suspension. Therefore, Petitioner failed to notify Noridian and CMS of the
temporary suspension within 30 days. Accordingly, pursuant to 42 C.F.R.

§§ 424.516(d)(1)(ii) and 424.535(a)(9), CMS had a legitimate basis to revoke Petitioner’s
Medicare enrollment and billing privileges.

Revocation of billing privileges based on a violation of 42 C.F.R. § 424.535(a)(9) is a
discretionary act of CMS or its contractors. 42 C.F.R. § 424.535(a) (introductory text). I
do not have the authority to review CMS’s discretionary act to revoke a provider or
supplier. Letantia Bussell, DAB No. 2196, at 13 (2008). Rather, “the right to review of
CMS’s determination by an [administrative law judge] serves to determine whether CMS
has the authority to revoke [the provider’s or supplier’s] Medicare billing privileges, not
to substitute the [administrative law judge’s] discretion about whether to revoke.” Jd.
(emphasis in original). Once CMS establishes a legal basis on which to proceed with a
revocation, then the action to revoke is a permissible exercise of discretion. See id. at 10.

4. The revocation of Petitioner’s Medicare enrollment and billing privileges
requires at least a one-year Medicare re-enrollment bar.

Petitioner requests reinstatement retroactive “to October 14, 2012 so as not to have a
lapse in the Medicare Part B program.” CMS Ex. 14, at 2. Iam unable to give Petitioner
the relief he seeks.

Whenever CMS properly revokes a Medicare supplier’s enrollment and billing privileges,
CMS must also determine how long the supplier will be barred from seeking re-
enrollment. The regulation at 42 C.F.R. § 424.535(c) provides:

After a... supplier . . . has had their billing privileges revoked, they are
barred from participating in the Medicare program from the effective date
of the revocation until the end of the re-enrollment bar. The re-enrollment
bar is a minimum of | year, but not greater than 3 years, depending on the
severity of the basis for revocation.

Here, CMS imposed the minimum one year re-enrollment bar mandated by 42 C.F.R.

§ 424.535(c). CMS Ex. 5, at 1. 1am bound by the regulations, which has the force and
effect of law, and I must sustain the one-year re-enrollment bar because it is mandated by
the regulations. See Chrysler Corp. v. Brown, 441 U.S. 281, 295-96 (1979);
1866I1CPayday.com, L.L.C., DAB No. 2289, at 14 (2009); David Burkett, M.D., DAB
CR2830, at 7 (2013).

IV. Conclusion

Based on the above, I affirm the revocation of Petitioner’s enrollment and billing
privileges in the Medicare program for a one-year period, effective October 14, 2012.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Robert Lafavor d/b/a Bob’s Market,
Respondent.

Docket No. C-14-121
FDA Docket No. FDA-2013-H-1344

Decision No. CR3065

Date: January 7, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

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

The Complaint alleges the following facts. Respondent owns an establishment that sells
tobacco products and is located at 9376 South Chuichu Road, Casa Grande, Arizona
85193. Complaint § 3. CTP conducted two inspections of the establishment. Complaint
49. During an inspection, an FDA-commissioned inspector observed the following at
Respondent’s establishment:
[A] person younger than 18 years of age was able to purchase a package of
Newport Box cigarettes on November 19, 2012, at approximately 1:00 PM
MT; and. . . the minor’s identification was not verified before the sale, as
detailed above, on November 19, 2012, at approximately 1:00 PM MT.

Complaint § 10.

On December 13, 2012, CTP issued a warning letter to Respondent specifying the
violations that the inspector observed. The letter warned Respondent that if it failed to
correct the violations, civil money penalties could be imposed on it and that it was
Respondent’s responsibility to ensure compliance with the law. Complaint § 10.

Lupe La Favor responded to the warning letter on Respondent’s behalf in a December 14,
2012 letter. Ms. La Favor stated that “Respondent held a meeting with the employee
responsible for the violation, and stated that [the] establishment would require the
employee to verify customers’ photo identification for all sales of tobacco products . . .
[and] follow all proper procedures related to the sale of tobacco products.”

Complaint § 11.

During a subsequent inspection of Respondent’s establishment, FDA-commissioned
inspectors documented that “a person younger than 18 years of age was able to purchase
a package of Marlboro cigarettes on May 2, 2013, at approximately 11:29 AM.”
Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on November 8, 2013, via United Parcel Service. CTP charged Respondent
with violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21 C.F.R.
§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth). Complaint
4 1, 10. CTP asked the CRD to impose a $250 civil money penalty based on two
alleged violations of the regulations in a 12-month period. Complaint § 13.

The Complaint provided detailed instructions related to filing an answer and requesting
an extension of time to file an answer. Complaint J 14-18, 20-22. The Complaint stated
that failure to file an answer could result in the imposition of a civil money penalty
against Respondent. Complaint § 19. Further, after CTP filed the Complaint, CRD sent
Respondent an Initial Order informing Respondent of the requirement to file an answer to
avoid a default judgment. CRD sent a form answer along with the Initial Order that
Respondent could fill out and file with CRD. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.

§ 17.9.
3

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

[T]he presiding officer shall assume the facts alleged in the complaint to be
true, and, if such facts establish liability under the relevant statute, the
presiding officer shall issue an initial decision within 30 days of the time
the answer was due, imposing:

(1) The maximum amount of penalties provided for by law for the

violations alleged; or

(2) The amount asked for in the complaint, whichever amount is smaller.

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

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

Therefore, Respondent is directed to pay a civil money penalty in the amount of $250.
This initial decision becomes final and binding upon both parties 30 days after the date of
its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Rick’s Wheels, Inc. d/b/a Clip’s,
Respondent.

Docket No. C-14-123
FDA Docket No. FDA-2013-H-1352

Decision No. CR3064

Date: January 8, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

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

The Complaint alleges the following facts. Respondent owns an establishment that sells
tobacco products and is located at 6218 Memorial Highway, Ottawa Lake, Michigan
49267. Complaint § 3. CTP conducted two inspections of the establishment. Complaint
49. During a July 19, 2012 inspection, an FDA-commissioned inspector observed that
“the establishment . . . had a [self-service] display of smokeless tobacco in a customer[-]
accessible part of the establishment . . . [and] is open to person[s] of all ages.” Complaint
q 10.

On November 8, 2012, CTP issued a warning letter to Respondent specifying the
violation that the inspector observed. The letter warned Respondent that if it failed to
correct the violation, civil money penalties could be imposed on it and that it was
Respondent’s responsibility to ensure compliance with the law. Complaint § 10.

Joyce Mierzwiak, Respondent’s owner, responded to the warning letter on Respondent’s
behalf in a November 23, 2012 letter. “Ms. Mierzwiak stated that the tobacco products
were moved and they are no longer self-service.” Complaint § 11.

During a subsequent inspection, FDA-commissioned inspectors documented the
following at Respondent’s establishment:

[A] person younger than 18 years of age was able to purchase a package of
Marlboro Menthol cigarettes on April 28, 2013, at approximately 1:22 PM;
and . . . the minor’s identification was not verified before the sale, as
detailed above, on April 28, 2013, at approximately 1:22 PM.

Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on November 8, 2013, via United Parcel Service. CTP charged Respondent
with violating 21 C.F.R. § 1140.16(c) (utilizing a self-service display to sell tobacco
products), 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor), and 21 C.F.R.
§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth). Complaint
4 1, 10. CTP asked the CRD to impose a $500 civil money penalty based on three
alleged violations of the regulations in a 24-month period. Complaint § 13.

The Complaint provided detailed instructions related to filing an answer and requesting
an extension of time to file an answer. Complaint J 14-18, 20-22. The Complaint stated
that failure to file an answer could result in the imposition of a civil money penalty
against Respondent. Complaint § 19. Further, after CTP filed the Complaint, CRD sent
Respondent an Initial Order informing Respondent of the requirement to file an answer to
avoid a default judgment. CRD sent a form answer along with the Initial Order that
Respondent could fill out and file with CRD. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.

§ 17.9.

If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that:
3

[T]he presiding officer shall assume the facts alleged in the complaint to be
true, and, if such facts establish liability under the relevant statute, the
presiding officer shall issue an initial decision within 30 days of the time
the answer was due, imposing:

(1) The maximum amount of penalties provided for by law for the

violations alleged; or

(2) The amount asked for in the complaint, whichever amount is smaller.

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

Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. Lalso find that CTP’s request to impose a $500 civil
money penalty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $500.
This initial decision becomes final and binding upon both parties 30 days after the date of
its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Christopher Scott Carter, M.D.,
(O.1. File No.: H-13-40437-9),

Petitioner,
v.
The Inspector General.
Docket No. C-13-937
Decision No. CR3063

Date: January 6, 2014

DECISION

Petitioner, Christopher Scott Carter, M.D., appeals the determination by the Inspector
General (I.G.) for the U.S. Department of Health and Human Services to exclude him
from participating in Medicare, Medicaid, and other federally-funded health care
programs until he regains his Florida medical license and reinstatement from the I.G. For
the reasons discussed below, I find the LG. is authorized to exclude Petitioner pursuant to
section 1128(b)(4) (42 U.S.C. § 1320a-7(b)) of the Social Security Act (Act) and that the
duration of his exclusion must be for a period that is as long as his license to practice
medicine in the State of Florida remains revoked.

I. Procedural Background

Ina letter dated May 31, 2013, the LG. notified Petitioner that he was excluded from
participation in Medicare, Medicaid, and other federal health care programs because the
Florida Board of Medical Examiners (State Board) revoked his medical license for
reasons bearing on his professional competence, professional performance, or financial
integrity. The letter explained that section 1128(b)(4) of the Act authorizes the exclusion.
Petitioner timely filed a request for hearing, and this case was assigned to me for hearing
and decision. On July 24, 2013, 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). See 42 C.F.R. § 1005.6(c).

Pursuant to the Order, the LG. filed a brief (I.G. Br.) on August 21, 2013, along with LG.
exhibits (I.G. Exs.) 1 through 5. I issued an Amended Order and Schedule for Filing
Briefs and Documentary Evidence (Amended Order) on September 18, 2013, that granted
Petitioner additional time to file his brief and supporting documents. Pursuant to the
Amended Order, Petitioner filed a brief dated October 15, 2013, along with Petitioner’s
exhibits (P. Exs.) 1 through 4. On November 6, 2013, the LG. filed a reply brief.
Petitioner did not object to the L.G.’s exhibits, and I admit into evidence I.G. Exs. 1-5. I
admit P. Ex. 1-4 into evidence as well. Both parties indicated in their exchanges that an
in-person hearing was unnecessary and that neither party had any witness testimony to
offer. I.G. Br. at 6-7; P. Br. at 8.

Therefore, I now decide this case based on the written record.

IL. Issue

The only issue in this case is whether the I.G. is authorized to exclude Petitioner pursuant
to section 1128(b)(4) of the Act. If I find that the LG. is so authorized, Petitioner’s
exclusion must continue at least until Petitioner regains his license to practice medicine in
Florida. Act § 1128(c)(3)(E) (42 U.S.C. § 1320a-7(c)(3)(E)); 42 C.F.R. § 1001.501(b).

Ill. Applicable Law
Section 1128(b)(4) of the Act states in relevant part:

(b) Permissive Exclusion — The Secretary may exclude the following
individuals and entities from participation in any Federal health care
program (as defined in section 1128B(f)):

* * * *
(4) License revocation or suspension.—Any individual or entity—

(A) whose license to provide health care has been revoked or
suspended by any State licensing authority, or who otherwise lost
such a license or the right to apply for or renew such a license, for
reasons bearing on the individual’s or entity’s professional
competence, professional performance, or financial integrity... .
Any period of exclusion based on section 1128(b)(4) must not be less than the period
during which the individual’s or entity’s license to provide health care is revoked,
suspended, or surrendered. Act § 1128(c)(3)(E) (42 U.S.C. § 1320a-7(c)(3)(E)).

The regulations governing exclusions at 42 C.F.R. § 1001.2007(d) limit the scope of an
appeal of an exclusion as follows:

§ 1001.2007 Appeal of exclusions.

* * * *

(d) When the exclusion is based on the existence of a criminal
conviction or a civil judgment imposing liability by Federal, State or local
court, a determination by another Government agency, or any other prior
determination where the facts were adjudicated and a final decision was
made, the basis for the underlying conviction, civil judgment or
determination is not reviewable and the individual or entity may not
collaterally attack it either on substantive or procedural grounds in this
appeal.

IV. Findings of Fact and Conclusions of Law

1. The LG. had a legal basis to exclude Petitioner from participation in
Medicare, Medicaid, and other federally-funded health care programs
because the State Board revoked his medical license for reasons bearing
on his professional competence.

The Act authorizes the Secretary of the U.S. Department of Health and Human Services
to exclude from program participation an individual whose license to provide health care
has been revoked by the state licensing authority for reasons bearing on the individual’s
professional competence, professional performance, or financial integrity. Act

§ 1128(b)(4)(A); 42 C.F.R. § 1001.501(a).

Petitioner was a licensed physician in the State of Florida and certified by the American
Board of Internal Medicine in the specialty areas of Internal Medicine and Critical Care
Medicine. LG. Ex. 2 at 1-2; P. Ex. | at 1-2. On April 19, 2010, the United States
Attorney for the Northern District of Florida, Gainesville Division, filed an Information
in United States District Court alleging that Petitioner knowingly possessed material
containing images of child pornography, in violation of 18 U.S.C. § 2252A(a)(5)(b) and
(b)(2). LG. Ex. 3 at 4-5; P. Ex. 2 at 4-5. On July 21, 2010, an Amended Judgment was
filed that accepted Petitioner’s plea and adjudicated him guilty of one count of possession
of child pornography. Petitioner was sentenced to 48 months of incarceration followed
by supervised release for life. 1.G. Ex. 3 at 7; P. Ex. 2 at 7.
On October 9, 2012, an administrative hearing was conducted by an Administrative Law
Judge for the State of Florida’s Division of Administrative Hearings (State ALJ) to
resolve the issue of whether Petitioner was convicted of, pled guilty, or pled nolo
contendere to a crime directly related to the practice or the ability to practice medicine, in
violation of section 456.072(1)(c) of the Florida Statutes and, if so, what penalty should
be imposed.’ 1.G. Ex. 3 at 1-2; P. Ex. 2 at 1-2. On November 26, 2012, the State ALJ
issued a Recommended Order listing her Findings of Fact and Conclusions of Law and
recommended that the State Board revoke Petitioner’s license for violating section
456.072(1)(c) of the Florida Statutes. I.G. Ex. 3 at 17; P. Ex. 2 at 17. On February 11,
2013, the State Board issued a Final Order which revoked Petitioner’s Florida medical
license. In that order, the State Board approved, adopted and incorporated by reference,
the Findings of Fact and Conclusions of Law set forth in the Recommended Order of the
State ALJ. I.G. Ex. 5 at 3; P. Ex. 3 at 3.

Among those findings was the State ALJ’s reliance on the opinion of the Florida
Department of Health’s expert witness, Dr. Francisco Calimano, that one of the “qualities
essential to the practice of medicine [is] sound judgment and respect for the welfare of
others.” I.G. Ex. 3 at 11; P. Ex. 2 at 11. Therefore, in the present case, the State Board
has considered that sound judgment and respect for the welfare of others are among the
necessary qualities that an individual must possess to be a licensed physician in the State
of Florida. The State ALJ recommended, and the State Board agreed, that Petitioner’s
medical license should be revoked because of his “serious judgment lapse” and his “total
disregard for one of the most vulnerable segments of our population.” I.G. Ex. 3 at 11; P.
Ex. 2 at 11. The State ALJ concluded that “[w]hether or not a particular crime is related
to a profession is not limited to its connection to the technical ability to practice the
profession.” I.G. Ex. 3 at 14; P. Ex. 2 at 14. The State ALJ went on to state that “[i]t is
the lack of respect for human life and the exploitation of others for personal gain—
whether it be for financial gain, personal pleasure, revenge, or something else entirely—
that demonstrates the impaired judgment of the licensee and reflects the antithesis of
what is required . . . to practice medicine.” I.G. Ex. 3 at 15-16; P. Ex. 2 at 15-16.

' Under Fla. Stat. § 456.072 (2009), the State Board’s authority includes:
Grounds for discipline; penalties; enforcement.--
(1) The following acts shall constitute grounds for which the disciplinary actions

specified in subsection (2) may be taken:

(c) Being convicted or found guilty of, or entering a plea of guilty or nolo
contendere to, regardless of adjudication, a crime in any jurisdiction which
relates to the practice of, or the ability to practice, a licensee’s profession.
Petitioner argues that “the rationale for applying the [Florida] statute rested heavily upon
practical barriers imposed by my conditions of supervised release, rather than upon issues
of professional competence.” P. Br. at 7. However, the State ALJ reviews Petitioner’s
“total disregard for one of the most vulnerable segments of our population” and his
“serious judgment lapse” before she discusses any of the “‘practical ramifications”
involved with Petitioner’s practice of medicine in the State of Florida. The State ALJ
states “[i]n addition to the serious judgment lapse and breach of public trust involved in
[Petitioner’s] behavior, the practical ramifications of the terms of [Petitioner’s]
supervised release make the practice of medicine problematic if not impossible.” I.G. Ex.
3 at 11; P. Ex. 2 at 11 (emphasis added). Accordingly, I find that the State Board revoked
Petitioner’s medical license for reasons bearing on his professional competence and not
just for reasons relating to conditions of Petitioner’s supervised release.

2. I may not consider Petitioner’s collateral attacks to the State
revocation action.

Petitioner argues that the State Board’s decision to revoke his medical license is not a
reflection of his competence to practice medicine. He argues that his “ ‘ability to practice
medicine’ is contingent on licensure—“‘ability’ here describes the legal right to practice,
and is not a synonym for competence to practice.” P. Br. at 4. Petitioner also challenges
some of the State ALJ’s findings and conclusions as set out in the Recommended Order
when he states “[t]hese statements of the ALJ represent a misreading of my conditions of
supervised release,” and when he claims that one of the cases the State ALJ cites is
“simply not comparable to the possession of images downloaded from the Internet.” P.
Br. at 4.

As noted prior, the State Board adopted all of the State ALJ’s findings and conclusions in
the Recommended Order, which found Petitioner’s criminal violation directly related to
is professional competence, thus, these arguments amount to a collateral attack on the
State Board’s actions. Under 42 C.F.R. § 1001.2007(d), such collateral attacks are
prohibited, and I am unable to consider them here. See, e.g., John W. Foderick, M.D.,
DAB No. 1125 (1990) (holding that the exclusion statute never intended that the party
being excluded under section 1128(b)(4) could mount a collateral attack on the state
disciplinary procedure); Marvin L. Gibbs, Jr., M.D., DAB No. 2279, at 9 (2009)
(“Petitioner’s efforts to deny the validity of or show error in the Medical Board’s Order
revoking his license are clearly collateral attacks on that Order.”).

Petitioner also attempts to distinguish the facts in his case from the facts in the cases the
1.G. cited in support of Petitioner’s discretionary exclusion. P. Br. at 5-7. Petitioner’s
arguments are unpersuasive because they do not negate, as detailed above, the results of
the State action in question here constitute a legal basis for the I.G. to exclude Petitioner
under section 1128(b)(4)(A) of the Act and under 42 C.F.R. § 1005.4(c)(5). A Federal
Administrative Law Judge does not have the authority to review the I.G.’s exercise of
discretion to exclude an individual under section 1128(b) of the Act.

V. Conclusion

For the above reasons, I conclude that the LG. properly excluded Petitioner from
participation in Medicare, Medicaid, and other federal health care programs, for a period
that lasts as long as his medical license remains revoked by the State of Florida.
Petitioner’s medical license was revoked for reasons related to his professional
competence, and he is not permitted to collaterally attack that state action here.

/s/

Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Vijay Patel
d/b/a BP Express Discount Tobacco Outlet,

Respondent.

Docket No. C-14-112
FDA Docket No. FDA-2013-H-1241

Decision No. CR3060

Date: January 3, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Vijay Patel d/b/a BP Express Discount Tobacco
Outlet, that alleges 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 initiated 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
utilized self-service displays to offer tobacco products for sale in a customer
accessible portion of the retail outlet, thereby violating the Federal Food, Drug,
and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations,
Cigarettes and Smokeless Tobacco, 21 C.F.R. Part 1140. CTP seeks a civil money
penalty of $250.

On November 6, 2013, CTP served the Complaint on Respondent by United
Parcel Service (UPS), 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 complaint to be true, and, if such facts establish
liability under [the Act],” issue an initial decision 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 BP Express Discount Tobacco Outlet, an establishment
that sells tobacco products and is located at 1274 West Highway 25/70,
Newport, Tennessee 37821. Complaint § 2.

e On August 23, 2012, an FDA-commissioned inspector observed a violation
of 21 C.F.R. § 1140.16(c) at Respondent’s establishment. Specifically,
Respondent “had self-service displays of smokeless tobacco in customer
accessible portions of the establishment, [which were] open to person[s] of
all ages.” Complaint { 9.

¢ On November 29, 2012, CTP issued a Warning Letter to Respondent
regarding the inspector’s observation from August 23, 2012. The letter
explained that the observation constituted a violation of a regulation 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
Warning Letter also stated 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

q9.

e Although UPS records indicate that an individual named “Patel” received
the Warning Letter on November 30, 2012, the FDA did not receive a
response to the Warning Letter. Complaint § 10.

e During a subsequent two-part inspection conducted on April 13, 2013, and
April 23, 2013, an FDA-commissioned inspector documented an additional
violation of 21 C.F.R. Part 1140 at Respondent’s establishment.
Specifically, the inspector “documented a violation for using a self-service
display in a non-exempt facility, in violation of 21 C.F.R. § 1140.16(c).”
The inspector documented that Respondent “ha[d] a self-service display of
smokeless tobacco in a customer accessible portion of the establishment,
[which was] open to person{s] of all ages.” 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 require retailers to sell cigarettes
exclusively in face-to-face exchanges, without the use of devices such as vending
machines, 21 C.F.R. § 1140.14(c), except where the establishment does not permit
any person younger than 18 years of age to be present or enter at any time, 21
C.F.R. § 1140.16(c)(2)(ii).

Taking the above alleged facts as true, Respondent committed two violations of
the regulations contained in 21 C.F.R. Part 1140 within an eight-month period.
First, on August 23, 2012, and subsequently during a two-part inspection
conducted on April 13, 2013, and April 23, 2013, Respondent impermissibly
utilized self-service displays to offer smokeless tobacco products for sale in a
customer-accessible portion of the retail outlet. The retail outlet was also open to
persons of all ages on those dates. Therefore, Respondent has committed
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 $250 for a second violation within an eight-month
period, 21 C.F.R. § 17.2, and CTP has requested a fine of that amount.
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
Optimum Sleep Associates, Inc.,
Petitioner
v.
Centers for Medicare & Medicaid Services.

Docket No. C-13-982

Decision No. CR3059

Date: January 3, 2014

DECISION

The Medicare enrollment and billing privileges of Petitioner, Optimum Sleep Associates,
Inc., are revoked pursuant to 42 C.F.R. §§ 424.57(d) and 424.535(a)(1) and (5)(ii),!
effective February 18, 2013, based on noncompliance with 42 C.F.R. § 424.57(c)(7)
(supplier standard 7).
I. Procedural History and Jurisdiction
Palmetto GBA, National Supplier Clearinghouse (Palmetto), the Medicare administrative
contractor for the Centers for Medicare & Medicaid Services (CMS), notified Petitioner
by letter dated March 28, 2013, that Petitioner’s Medicare enrollment was revoked

effective February 18, 2013. CMS Exhibit (CMS Ex.) 1, at 8-10.

On April 2, 2013, Petitioner requested reconsideration of the initial decision arguing that
Petitioner had relocated to a new address and the new location had approximately 2,400

" Citations are to the annual revision of the Code of Federal Regulations (C.F.R.) in
effect at the time of the pertinent agency action, unless otherwise indicated.
square feet with store front accessibility. CMS Ex. 1, at 11. On May 23, 2013, Palmetto
issued a reconsideration decision denying Petitioner’s request for reconsideration and
finding that Petitioner’s Medicare enrollment was properly revoked because Petitioner
did not comply with durable medical equipment, prosthetics, orthotics, and supplies
(DMEPOS) supplier standard 7, at 42 C.F.R. § 424.57(c)(7). CMS Ex. 1, at 1-4.

Petitioner requested a hearing before an administrative law judge (ALJ) by letter dated
June 11, 2013 (RFH), seeking review of the revocation of its Medicare enrollment and
billing privileges. The case was assigned to me for hearing and decision on July 8, 2013,
and an Acknowledgment and Prehearing Order (Prehearing Order) was issued at my
direction. No issue has been raised as to the timeliness of Petitioner’s request for hearing
and neither party alleges that I lack jurisdiction to decide this matter.

On August 7, 2013, CMS filed a prehearing brief and motion for summary judgment
(CMS Br.) with CMS Exs. | and 2. Petitioner has not objected to my consideration of
CMS Exs. | and 2 and they are admitted as evidence. On September 6, 2013, Petitioner
filed a letter in response to CMS’s motion for summary judgment (P. Br.) with no
exhibits. On September 16, 2013, CMS notified my office that CMS would not file a
reply brief.

II. Discussion
A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Administration of the Part B program is through contractors, such as
Palmetto. Act § 1842(a) (42 U.S.C. § 1395u(a)). Payment under the program for
services rendered to Medicare-eligible beneficiaries may only be made to eligible
providers of services and suppliers.” Act §§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1)
(42 U.S.C. § 1395(u)(h)(1)). Petitioner is a DMEPOS supplier.

“ A “supplier” furnishes services under Medicare. The term supplier applies to
physicians or other practitioners and facilities that are not included within the definition
of the phrase “provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider
of services,” commonly shortened to “provider,” includes hospitals, critical access
hospitals, skilled nursing facilities, comprehensive outpatient rehabilitation facilities,
home health agencies, hospice programs, and a fund as described in sections 1814(g) and

1835(e) of the Act. Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction between
(Continued next page.)
The Act requires the Secretary of Health and Human Services (the Secretary) to issue
regulations that establish a process for the enrollment of providers and suppliers,
including the right to a hearing and judicial review of certain enrollment determinations.
Act § 1866(j) (42 U.S.C. § 1395cc(j)). Pursuant to 42 C.F.R. § 424.505, a provider or
supplier must be enrolled in the Medicare program and be issued a billing number to have
billing privileges and to be eligible to receive payment for services rendered to a
Medicare eligible beneficiary. To receive direct-billing privileges, a DMEPOS supplier
must meet and maintain the Medicare application certification standards set forth in

42 C.F.R. § 424.57(c). Among other requirements, a DMEPOS supplier must maintain a
physical facility on an appropriate site. 42 C.F.R. § 424.57(c)(7). The appropriate site
for the physical facility must meet certain criteria including that the practice location is at
least 200 square feet,’ is in a location accessible to the public, Medicare beneficiaries,
CMS and its agents, and the practice location must be accessible and staffed during
posted hours of operation. 42 C.F.R. § 424.57(c)(7)(i)(A),(B),(C). Additionally, a
DMEPOS supplier must provide complete and accurate information in response to
questions on its application for Medicare billing privileges and must report to CMS any
changes in information supplied on the application within 30 days of the change.

42 C.F.R. § 424.57(c)(2). Finally, a DMEPOS supplier must permit CMS or its agent to
conduct on-site inspections to ascertain supplier compliance with the Medicare
enrollment standards. 42 C.F.R. § 424.57(c)(8). A DMEPOS supplier must at all times
be “operational,” which means it “has a qualified physical practice location, is open to the
public for the purpose of providing health care related services, is prepared to submit
valid Medicare claims, and is properly staffed, equipped, and stocked . . . to furnish these
items or services.” 42 C.F.R. § 424.502.

The Secretary has delegated the authority to revoke enrollment and billing privileges to
CMS. 42 C.F.R. § 424.535. CMS may revoke a currently enrolled supplier’s Medicare

(Continued from preceding page.)

providers and suppliers is important because they are treated differently under the Act for
some purposes.

> The requirement that the practice location be at least 200 square feet began September
27, 2010 for prospective DMEPOS suppliers, the first day after termination of an
expiring lease for an existing DMEPOS supplier with a lease that expired on or after
September 27, 2010 and before September 27, 2013, and September 27, 2013 for an
existing DMEPOS supplier with a lease that expires on or after September 27, 2013.

42 CFR. § 424.57(c)(7)((A)C)-(3).
enrollment and billing privileges if CMS determines, upon on-site review, that the
supplier is no longer operational to furnish Medicare covered items or services, or the
supplier fails to satisfy any or all of the Medicare enrollment requirements, or has failed
to furnish Medicare covered items or services as required by the statute or regulations.
42 C.F.R. § 424.535(a)(5)(ii). After a supplier’s Medicare enrollment and billing
privileges are revoked, the supplier is barred from reenrolling in the Medicare program
for one to three years. 42 C.F.R. § 424.535(c). A supplier whose enrollment and billing
privileges have been revoked may request reconsideration and review as provided by

42 C.F.R. pt. 498. A supplier submits a written request for reconsideration to CMS or its
contractor. 42 C.F.R. § 498.22(a). CMS or its contractor must give notice of its
reconsidered determination to the supplier, giving the reasons for its determination and
specifying the conditions or requirements the supplier failed to meet, and the right to an
ALJ hearing. 42 C.F.R. § 498.25. If the decision on reconsideration is unfavorable to
the supplier, the supplier has a right to request a hearing by an ALJ and further review by
the Departmental Appeals Board (Board). Act § 1866(j)(8) (42 U.S.C. § 1395ce(j)(8));
42 C.F.R. §§ 424.545, 498.3(b)(17), 498.5. A hearing on the record, also known as an
oral hearing, is required under the Act. Crestview Parke Care Ctr. v. Thompson, 373
F.3d 743, 748-751 (6th Cir. 2004). The provider or supplier bears the burden to
demonstrate that it meets enrollment requirements with documents and records.

42 CFR. § 424.545(c).

B. Issues
Whether summary judgment is appropriate; and

Whether there was a basis for the revocation of Petitioner’s billing
privileges and Medicare enrollment.

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

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

1. Summary judgment is appropriate.

A provider or supplier denied enrollment in Medicare or whose enrollment had been
revoked has a right to a hearing and judicial review pursuant to section 1866(h)(1) and (j)
of the Act and 42 C.F.R. §§ 424.454(a), 498.3(b)(1), (5), (6), (8), (15), (17), 498.5. A
hearing on the record, also known as an oral hearing, is required under the Act. Act

§§ 205(b), 1866 (h)(1) and (j); Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743,
748-51. A party may waive appearance at an oral hearing, but must do so affirmatively
in writing. 42 C.F.R. § 498.66. In this case, Petitioner has not waived the right to oral
hearing or otherwise consented to decision based only upon the documentary evidence or
pleadings. Accordingly, disposition on the written record alone is not permissible, unless
the CMS motion for summary judgment has merit.

Summary judgment is not automatic upon request but is limited to certain specific
conditions. The procedures established by 42 C.F.R. pt. 498 do not include a summary
judgment procedure. However, appellate panels of the Board have long recognized the
availability of summary judgment in cases subject to 42 C.F.R. pt. 498, and the Board’s
interpretative rule has been recognized by the federal courts. See, e.g., Crestview, 373
F.3d at 749-50. Furthermore, a summary judgment procedure was adopted as a matter of
judicial economy within my authority to regulate the course of proceedings and made
available to the parties in the litigation of this case by my Prehearing Order.

Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact for adjudication or the moving party is entitled to judgment as a matter of
law. In determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. The party requesting summary
judgment bears the burden of showing that there are no genuine issues of material fact for
trial or that it is entitled to judgment as a matter of law. Generally, the non-movant may
not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’! Med. Ctr., DAB No. 2459, at 4 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452, at 4 (2012) (and cases cited therein); Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300, at 3 (2010) (and cases cited therein); see also, Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment and an ALJ’s decision-making in
deciding a summary judgment motion differs from resolving a case after a hearing. On
summary judgment, the ALJ does not make credibility determinations, weigh the
evidence, or decide which inferences to draw from the evidence, as would be done when
finding facts after a hearing on the record. Rather, on summary judgment the ALJ
construes the evidence in a light most favorable to the non-movant and avoids deciding
which version of the facts is more likely true. Holy Cross Vill. at Notre Dame, Inc., DAB
No. 2291, at 5 (2009). The Board also has recognized that on summary judgment it is
appropriate for the ALJ to consider whether a rational trier of fact could find that the
parties’ evidence would be sufficient to meet that party’s evidentiary burden. Dumas
Nursing & Rehab., L.P., DAB No. 2347, at 5 (2010). The Secretary has not provided for
the allocation of the burden of persuasion or the quantum of evidence in 42 C.F.R. pt.
498. However, the Board has provided some persuasive analysis regarding the allocation
of the burden of persuasion in cases subject to 42 C.F.R. pt. 498. Batavia Nursing &
Convalescent Ctr., DAB No. 1904 (2004), aff'd, Batavia Nursing & Convalescent Ctr. v.
Thompson, 129 Fed. App’x 181 (6th Cir. 2005).
Petitioner asserts that at the time of the attempted inspection by Palmetto on February 18,
2013, it had relocated. But, Petitioner presented no affidavit, declaration, or other
evidence that creates a genuine dispute that it was in fact operational at another location
at the time of the inspection. Viewing the evidence actually before me in a light most
favorable to Petitioner and drawing all inferences in Petitioner’s favor, I conclude that
there are no genuine disputes as to any material facts in this case. As discussed in more
detail hereafter, the undisputed evidence shows that there is a basis for the revocation of
Petitioner’s Medicare billing privileges effective February 18, 2013. Accordingly, I
conclude that summary judgment is appropriate.

2. There was a basis to revoke Petitioner’s Medicare enrollment and
billing privileges pursuant to 42 C.F.R. §§ 424.57(d) and 424.535(a)(1)
and (5)(ii) for violation of 42 C.F.R. § 424.57(c)(7).

3. No equitable relief is available in this forum.
a. Background

The facts are not disputed and any inferences are drawn in favor of Petitioner. On
February 18, 2013, a Palmetto representative attempted to inspect Petitioner’s facility at
Petitioner’s address on file with CMS, 4460 Red Bank Road, Suite 220, Cincinnati, Ohio
45227. CMS Ex. 1, at 5-7. Upon arrival, the Palmetto inspector found the building to be
vacant and found a note taped to the door, stating that Petitioner had relocated to 7714
Montgomery Road, Suite L, Kenwood, Ohio 45236 on February 1, 2013. CMS Ex. 1, at
6-7. Although the note states that Petitioner had relocated, it does not support an
inference that Petitioner was actually operational at that new location at the time.

On March 28, 2013, Palmetto revoked Petitioner’s Medicare enrollment and billing
privileges effective February 18, 2013, the date of the attempted site inspection. In the
notice letter, Palmetto stated that the revocation was pursuant to 42 C.F.R. § 405.800,
424.57(e), 424.535(a)(1), 424.535(a)(5)(ii), and 424.535(g), based on Petitioner’s failure
to comply with DMEPOS supplier standard 42 C.F.R. § 424.57(c)(7). CMS Ex. 1, at 8-
10. Petitioner subsequently requested reconsideration and stated that Petitioner had
relocated to a new address at 7714 Montgomery Road, Suite L, Cincinnati, Ohio 45236"

The note found posted on the door at Petitioner’s old location stated that Petitioner had
relocated to Kenwood, Ohio. CMS Ex. 1, at 7. Petitioner stated in its request for
reconsideration dated April 2, 2013, that its new location is in Cincinnati, Ohio. CMS
Ex. 1, at 11. I note that Kenwood, Ohio is a suburb of Cincinnati.
and kept the same telephone and fax numbers, and the new location was approximately
2,400 square feet, with store front accessibility. CMS Ex. 1, at 11. Although Petitioner
asserted in its reconsideration request that Petitioner relocated, there is no allegation by
Petitioner that it was actually operational at the new location and no inference that it was
operational is supported.

On May 23, 2013, a hearing officer issued a reconsideration decision, upholding the
revocation of Petitioner’s Medicare enrollment and billing privileges. CMS Ex. 1, at 1-4.
The hearing officer determined that Petitioner failed to comply with supplier standard 7,
at 42 C.F.R. § 424.57(c)(7).

b. Analysis

CMS argues that there are four bases for revoking Petitioner’s billing privileges and
participation in Medicare: (1) violation of 42 C.F.R. § 424.57(c)(7) (supplier standard 7)
because Petitioner’s facility at the address on file with CMS was not operational in that it
was not accessible to the public, Medicare beneficiaries, CMS, or its agents; (2) violation
of 42 C.F.R. § 424.57(c)(8) (supplier standard 8) because CMS agents could not conduct
a site investigation of the vacant facility; (3) violation of 42 C.F.R. § 424.57(c)(2)
(supplier standard 2) because Petitioner failed to properly notify CMS within 30 days of
the change of location of its facility; and (4) pursuant to 42 C.F.R. § 424.535(a)(5), CMS
is authorized to revoke the enrollment of a supplier who is determined not to be
operational upon on-site review. CMS Br. at 5-7.

Section 424.57(c)(7) of 42 C.F.R. requires that Petitioner maintain an appropriate site that
meets specified criteria, including that it be accessible and staffed during posted hours of
operation and which CMS or its agents can inspect to ensure compliance with
participation requirements. Section 424.535(a)(5) authorizes CMS to revoke if a supplier
is determined not to be operational when CMS or its agents attempt to conduct an
inspection. In this case, the alleged violation of 42 C.F.R. § 424.57(c)(7) and CMS’s
authority to revoke at 42 C.F.R. § 424.535(a)(5), have the same factual basis and are not
separate grounds for revocation. Furthermore, Palmetto and CMS did not notify
Petitioner of revocation based on violation of either 42 C.F.R. § 424.57(c)(2) (supplier
standard 2) or § 424.57(c)(8) (supplier standard 8) (CMS Ex. 1, at 8-10) and the
reconsideration decision is not based on violation of those standards (CMS Ex. 1, at 1-4).
Therefore, the alleged violations of 42 C.F.R. §§ 424.57(c)(2) and (8) are not properly
before me due to lack of proper notice. The only basis for revocation properly before me
is the alleged violation of 42 C.F.R. § 424.57(c)(7). Even a single violation of a single
supplier standard is an adequate basis for revocation of billing privileges and enrollment.
1866I1CPayday.com, DAB No. 2289, at 13 (2009).

Petitioner does not dispute that it was not operational at the address on file with CMS on
February 18, 2013. Petitioner does not deny that its facility at 4460 Red Bank Road,

Suite 220, Cincinnati, Ohio 45227 was not staffed and the public, Medicare beneficiaries,
and CMS and its agents had no ability to access the facility on February 18, 2013. P. Br.
There is some evidence that Petitioner relocated its operation to another address effective
February 1, 2013. CMS Ex. 1, at 7 and 11. However, Petitioner has presented no
evidence from which I may infer that Petitioner was operational at another location at the
time of the February 18, 2013 inspection attempt, or that Petitioner met the requirement
of 42 C.F.R. § 424.57(c)(7) at that time.

Petitioner urges me to consider extenuating circumstances and lessen the penalty imposed
in this case. However, my authority is limited to determining whether there is a basis for
revocation. I have no authority to review the exercise of discretion by CMS to revoke
where there is a basis for revocation. I also have no authority to review the
reasonableness of the duration of the period of the re-enrollment bar imposed by CMS.
Finally, I have no authority to create or grant equitable relief. US Ultrasound, DAB No.
2302, at 8 (2010), (“[nJeither the ALJ nor the Board is authorized to provide equitable
relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory
requirements.”)

III. Conclusion

For the foregoing reasons, I conclude that Petitioner’s Medicare enrollment and billing
privileges are properly revoked effective February 18, 2013.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
EMAD INC d/b/a Tobacco Sales Saint Paul,
Respondent.

Docket No. C-14-58
FDA Docket No. FDA-2013-H-1269

Decision No. CR3058

Date: January 2, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

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

The Complaint alleges the following facts. Respondent owns an establishment that sells
tobacco products and is located at 1676 South Robert Street, Saint Paul, Minnesota
55118. Complaint § 2. CTP conducted two inspections of the establishment. Complaint
48. During an October 15, 2012 inspection, an FDA-commissioned inspector observed
the following at Respondent’s establishment:
[T]he retailer ha[d] a self-service display of tobacco products that included
cigarette rolling machines, cigarette papers, cigarette tubes, pipe tobacco
and cans, and bags and pouches of roll-your-own cigarette tobacco, that
were all located in a facility where the retailer fails to ensure that no
individuals under 18 years of age are present or permitted to enter, at any
time. Complaint § 9.

On December 13, 2012, CTP issued a warning letter to Respondent specifying the
violation that the inspector observed. The letter warned Respondent that if it failed to
correct the violation, civil money penalties could be imposed on it and that it was
Respondent’s responsibility to ensure compliance with the law. Complaint 4 9.
Although United Parcel Service (UPS) records indicate that an individual named “WAZ
WAZ” received the warning letter on December 14, 2012, the FDA did not receive a
response to the warning letter. Complaint § 10. However, in response to another letter
from CTP, Ken Waz, General Manager of Respondent’s establishment, replied on
Respondent’s behalf in an April 22, 2013 telephone call. During the call, Mr. Waz
“stated that at the time of the inspection pipe tobacco was displayed, [also] that he is
aware of all local, state, and federal law[s] regarding the sale of tobacco products[,] and
that he diligently ensures that his store complies with the law.” Complaint § 10.

During a subsequent two-part inspection conducted on April 15, 2013, and April 16,
2013, FDA-commissioned inspectors documented the following at Respondent’s
establishment:

[T]he retailer ha[d] a self-service display of tobacco products located in a
facility where the retailer fail[ed] to ensure that no individuals under 18
years of age [were] present or permitted to enter, at any time. Self-service
displays that included cigarette rolling machines, cigarette papers, cigarette
tubes, pipe tobacco and cans, and bags and pouches of roll-your-own
cigarette tobacco, were . . . easily accessible to any customer in the store. A
person younger than 18 years of age was able to enter the establishment,
access the tobacco products contained in the self-service display, and was
not asked for ID until a purchase attempt was made. Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on October 31, 2013, via UPS. CTP charged Respondent with violating 21
C.F.R. § 1140.16(c) (utilizing a self-service display to sell tobacco products in a non-
exempt facility). Complaint § 1, 9. CTP asked the CRD to impose a $250 civil money
penalty based on two alleged violations of the regulations in a 12-month period.
Complaint § 12.

3

The Complaint provided detailed instructions related to filing an answer and requesting
an extension of time to file an answer. Complaint J 13-17, 19-21. The Complaint stated
that failure to file an answer could result in the imposition of a civil money penalty
against Respondent. Complaint § 18. Further, after CTP filed the Complaint, CRD sent
Respondent an Initial Order informing Respondent of the requirement to file an answer to
avoid a default judgment. CRD sent a form answer along with the Initial Order that
Respondent could fill out and file with CRD. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.

§ 17.9.

Ifa respondent does not file an answer within 30 days of a properly served complaint or
by the date stated in any extension that the presiding officer may grant, the regulations
provide that:

the presiding officer shall assume the facts alleged in the complaint to be
true, and, if such facts establish liability under the relevant statute, the
presiding officer shall issue an initial decision within 30 days of the time
the answer was due, imposing:

(1) The maximum amount of penalties provided for by law for the

violations alleged; or

(2) The amount asked for in the complaint, whichever amount is smaller.

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

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

Therefore, Respondent is directed to pay a civil money penalty in the amount of $250.
This initial decision becomes final and binding upon both parties 30 days after the date of
its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.
/s/

Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Alfanar Fuel Inc. d/b/a BP,
Respondent.

Docket No. C-14-79
FDA Docket No. FDA-2013-H-1300

Decision No. CR3057

Date: January 2, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

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

The Complaint alleges the following facts. Respondent owns an establishment that sells
tobacco products and is located at 2551 North Emerson Avenue, Indianapolis, Indiana
46218. Complaint § 3. CTP conducted three inspections of the establishment.
Complaint § 9. During an inspection, an FDA-commissioned inspector observed the
following at Respondent’s establishment:
[A] person younger than 18 years of age was able to purchase a package of
Grizzly Long Cut Wintergreen smokeless tobacco on November 8, 2012, at
approximately 8:37 PM; and . . . the minor’s identification was not verified
before the sale, as detailed above, on November 8, 2012, at approximately
8:37 PM.

Complaint § 10.

On December 6, 2012, CTP issued a warning letter to Respondent specifying the
violations that the inspector observed. The letter warned Respondent that if it failed to
correct the violations, civil money penalties could be imposed on it and that it was
Respondent’s responsibility to ensure compliance with the law. Complaint § 10.

Souleymane Ibrahim, Respondent’s General Manager, responded to the warning letter on
Respondent’s behalf in an undated letter that CTP received on January 9, 2013. “Mr.
Ibrahim stated that Respondent trained all employees to ID anyone who looks younger
than 30 years old and to check [a] proper form of identification.” Complaint § 11.

During a subsequent inspection, FDA-commissioned inspectors documented the
following at Respondent’s establishment:

[A] person younger than 18 years of age was able to purchase a package of
Marlboro cigarettes on April 21, 2013, at approximately 7:27 PM; and...
the minor’s identification was not verified before the sale, as detailed
above, on April 21, 2013, at approximately 7:27 PM.

Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on November 5, 2013, via United Parcel Service. CTP charged Respondent
with violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21 C.F.R.
§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth). Complaint
4 1, 10. CTP asked the CRD to impose a $500 civil money penalty based on three
alleged violations of the regulations in a 24-month period. Complaint § 13.

The Complaint provided detailed instructions related to filing an answer and requesting
an extension of time to file an answer. Complaint J 14-18, 20-22. The Complaint stated
that failure to file an answer could result in the imposition of a civil money penalty
against Respondent. Complaint § 19. Further, after CTP filed the Complaint, CRD sent
Respondent an Initial Order informing Respondent of the requirement to file an answer to
3

avoid a default judgment. CRD sent a form answer along with the Initial Order that
Respondent could fill out and file with CRD. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.
§ 17.9.

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

[T]he presiding officer shall assume the facts alleged in the complaint to be
true, and, if such facts establish liability under the relevant statute, the
presiding officer shall issue an initial decision within 30 days of the time
the answer was due, imposing:

(1) The maximum amount of penalties provided for by law for the

violations alleged; or

(2) The amount asked for in the complaint, whichever amount is smaller.

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

Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. Lalso find that CTP’s request to impose a $500 civil
money penalty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $500.
This initial decision becomes final and binding upon both parties 30 days after the date of
its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Joseph Grow
Administrative Law Judge