Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Aleksandar Kondic, M.D.!
(NPI: 1265532766),
and

Aleksandar Kondic, Inc.
(NPI: 1235381906),

Petitioners,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-2933
Decision No. CR4487

Date: December 8, 2015

DECISION

The Centers for Medicare & Medicaid Services (CMS), through administrative contractor
National Government Services (NGS), revoked the Medicare enrollment and billing

' The Civil Remedies Division originally captioned this case with Aleksandar Kondic,
Inc., as the sole petitioner. Documents related to this case following the initial
determinations to revoke both Dr. Kondic and his medical practice are ambiguous as to
whether they apply to Dr. Kondic, his practice, or both. However, the basis for the
revocation of Dr. Kondic and his practice were identical, and my analysis below applies
equally to both Dr. Kondic and his practice. Further, the hearing request indicates the
“Claimant Name” is “Alexandar K[o]ndic INC, and MD”. Therefore, I correct the
caption in this case to ensure that both Dr. Kondic and his practice receive the review
they sought.
privileges of Aleksandar Kondic, M.D., and Aleksandar Kondic, Inc. (Petitioners) based
on Medicare claims for services that Petitioners purportedly provided to deceased
beneficiaries. Petitioners requested a hearing to dispute the revocations. Because there is
no dispute that Petitioners erroneously filed 26 claims for services to deceased
beneficiaries, I grant CMS’s motion for summary judgment and affirm the revocations of
Petitioners’ Medicare enrollments and billing privileges.

I. Case Background and Procedural History

Dr. Kondic is a physician. Petitioners Exhibit (P. Ex.) A ¥ 1; CMS Ex. 31 at 15. On
February 12, 2009, CMS separately enrolled Petitioners into the Medicare program with
an effective date of September 1, 2008. CMS Ex. 5. As a physician, Dr. Kondic is a
“supplier” in the Medicare program. 42 U.S.C. § 1395x(d).

In separate initial determinations dated March 4, 2015, NGS notified Petitioners that it
was revoking their Medicare billing privileges effective April 3, 2015, for the following
reason:

42 CFR §424.535(a)(8) — Abuse of Billing Privileges

Data analysis revealed that Alexandar Kondic submitted
claims for services rendered to beneficiaries who were
deceased on the purported date of service. Please see the
attached claims data (Attachment A).”

CMS Ex. 30 (emphasis in original). NGS attached identical lists to each of the initial
leterminations. The lists showed 26 claims involving 24 beneficiaries with dates of
service purportedly rendered later than the dates of death of the beneficiaries. CMS Ex.
30 at 3, 6. The claims in question ranged from June 2, 2012, through November 14,
2014. CMS Ex. 30 at 3, 6. NGS also barred Petitioners from re-enrollment in the
Medicare program for three years. CMS Ex. 30 at 2,5. Although the initial
leterminations advised Petitioners of their right to seek reconsideration of the
revocations, they did not state that Petitioners could file corrective action plans (CAP).
CMS Ex. 30.

Through counsel, Petitioners submitted a single document to request reconsideration of
the revocations and to propose a CAP. CMS Ex. 31. In the reconsideration request
portion of Petitioners’ submission, Petitioners stated that they submitted erroneous claims
to Medicare due to inexperience, poor documentation, and ineffective billing processes.

> This quotation is from the initial determination to revoke Dr. Kondic. CMS Ex. 30 at
1. The initial determination concerning Dr. Kondic’s practice stated the same reason for
revocation, except that “Alexandar Kondic, Inc.” appears in the quoted text instead of
“Alexandar Kondic.” CMS Ex. 30 at 4.
However, Petitioners asserted that they addressed the causes of the erroneous billing in
the CAP. CMS Ex. 31 at 5.

On May 29, 2015, NGS issued a reconsidered determination upholding the revocations.
CMS Ex. 32. Specifically, NGS stated as its decision: “Alexandar Kondic Inc has not
provided evidence to show full compliance with the standards for which you were
revoked.” CMS Ex. 32 at 1 (emphasis in original).

Petitioners timely requested a hearing before an administrative law judge (ALJ) to
challenge the reconsidered determination. On June 23, 2015, I issued an
Acknowledgment and Pre-hearing Order (Pre-hearing Order), which established general
procedures for record development and permitted the parties to file for summary
judgment if appropriate. See Pre-hearing Order § 4. CMS timely filed a motion for
summary judgment with a supporting brief (CMS Br.) along with 32 proposed exhibits
(CMS Exs. 1-32). In response, Petitioners filed a brief opposing summary judgment (P.
Br.) along with one exhibit (P. Ex. A), which is Dr. Kondic’s written direct testimony.

IL. Issues
This case presents three issues:
1. Whether CMS is entitled to summary judgment;

2. Whether CMS had a legitimate basis to revoke Petitioners’ Medicare
enrollments and billing privileges pursuant to 42 C.F.R. § 424.535(a)(8); and

3. Whether CMS was obligated to review Petitioners’ CAP.
HI. Jurisdiction

I have jurisdiction to decide the issues in this case. 42 C.F.R. §§ 498.3(b)(17),
498.5(1)(2); see also 42 U.S.C. § 1395ec(j)(8).

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

The Social Security Act (Act) authorizes the Secretary of Health and Human Services
(Secretary) to establish by regulation procedures for enrolling providers and suppliers in
the Medicare program. 42 U.S.C. § 1395cc(j)(1)(A). The Secretary has promulgated
enrollment regulations in 42 C.F.R. part 424, subpart P. See 42 C.F.R. § 424.500-.570.
The regulations provide CMS with the authority to revoke the billing privileges of an
enrolled provider or supplier if CMS determines that certain circumstances exist. Id.

§ 424.535(a). Relevant to this case, CMS may revoke a provider’s or supplier’s billing
privileges if:
The provider or supplier submits a claim or claims for
services that could not have been furnished to a specific
individual on the date of service. These instances include but
are not limited to situations where the beneficiary is deceased,
the directing physician or beneficiary is not in the State or
country when services were furnished, or when the equipment
necessary for testing is not present where the testing is said to
have occurred.

Id. § 424.535(a)(8) (2014). When CMS revokes a provider’s or supplier’s billing
privileges, any provider agreement in effect at the time of revocation is terminated. Id.
§ 424.535(b). In addition, after revocation CMS must impose a bar on re-enrollment for
a minimum of one year, but no more than three years. Id. § 424.535(c).

A provider or supplier may request reconsideration of the initial determination to revoke
his or her billing privileges. 42 C.F.R. §§ 498.5()(1), 498.22(a). If dissatisfied with the
reconsidered determination, the supplier may request a hearing before an ALJ. Jd.

§ 498.5(/)(2). When appropriate, ALJs may decide a case arising under 42 C.F.R. part
498 by summary judgment. See Civil Remedies Division Procedures § 19(a); Livingston
Care Ctr. v. U.S. Dep’t of Health & Human Servs., 388 F.3d 168, 172 (6th Cir. 2004)
(citing Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743 (6th Cir. 2004)). Summary
judgment is appropriate and an in-person hearing is not required if the record shows that
there is no genuine dispute of any material fact and the moving party is entitled to
judgment as a matter of law. Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3
(2010) (citations omitted). To determine whether there are genuine issues of material fact
for an in-person hearing, the ALJ must view the evidence in the light most favorable to
the non-moving party, drawing all reasonable inferences in that party’s favor. Id.
(citation omitted).

I. Summary judgment is appropriate.

As summarized above, a CMS contractor investigated Petitioners and concluded that they
filed 26 claims for Medicare reimbursement for services provided to 24 beneficiaries who
were deceased at the time that the services were purportedly provided. See CMS Ex. 30.
CMS has provided documentation concerning the claims and the dates of death of the
beneficiaries. CMS Exs. 8-29.

> CMS substantially amended 42 C.F.R. § 424.535(a)(8) effective February 3, 2015. See
79 Fed. Reg. 72,500 (Dec. 5, 2014). However, in this case I will apply 42 C.F.R.

§ 424.535(a)(8) (2014) because the text reflected in that regulation was in effect on the
dates that Petitioners filed the claims on which Petitioners’ revocations are based. See
CMS Ex. 30 at 3, 6.
Petitioners have never denied the allegations made in the initial determinations. In their
reconsideration request/CAP, Petitioners admitted that they filed erroneous claims.

As discussed above, neither Dr. Kondic nor his practice was
abusing their Medicare billing privileges. Dr. Kondic’s
practice submitted erroneous claims to Medicare due to
inexperience, poor documentation, and ineffective billing
processes. We believe we have addressed the causes of the
erroneous billing in the CAP and proposed new procedures
that will eliminate the erroneous billing.

CMS Ex. 31 at 5.

Petitioners stated the following in the CAP portion of their submission related to the
causes for the billing errors:

Dr. Kondic and his billing staff have reviewed the claims
identified by CMS in Attachment A to the Notice of
Revocation, Enclosure ‘1.’ These claims were submitted to
Medicare erroneously due to defective processes for Dr.
Kondic transmitting billing information to his billing staff.

Inadequate documentation and billing processes at Dr.
Kondic’s practice caused the erroneous billing to be
submitted to Medicare. As stated above, Dr. Kondic provides
geriatric psychiatric care to patients in several nursing homes.
When Dr. Kondic visits a facility to see patients, the facility
provides him with a list of all the patients that are on his
service, or need to be added to his service. The list provided
by the facility also includes the patients that were on Dr.
Kondic’s service, but who have died since his last visit to the
facility.

When Dr. Kondic completes his examinations in the facility,
he faxes the patient list with his notations to his billing staff.
His billing staff then prepares and submits claims to Medicare
and other payers electronically. We have examined this
situation carefully with Dr. Kondic and his staff and
identified multiple deficiencies in the documentation and
billing practices.

Dr. Kondic’s handwriting and notations are not always clear
to the billing staff, which resulted in some of the erroneous
claims submitted to Medicare. In some instances, the
facsimile transmission to the billing staff was of poor quality,
which also resulted in erroneous claims to Medicare.

CMS Ex. 31 at 3-4.

Following an unfavorable reconsidered determination, Petitioners stated in their hearing
request that they worked at seven nursing homes and focused on patient care rather than
billing. Petitioners asserted that “Medicare has never paid for services I erroneously
billed” and that Petitioners deserved probation or a fine instead of revocation. Petitioners
admitted to making billing errors in their brief in this proceeding as well. P. Br. at 2.
Rather than dispute the incorrect billing that forms the basis of the revocation, Petitioners
argued that CMS’s revocations were procedurally defective because CMS did not
consider Petitioners’ CAP and that it is against good public policy to revoke Petitioners’
Medicare enrollments and billing privileges for merely filing erroneous claims. P. Br. at
4-7.

Because Petitioners concede that the claims identified in the initial determinations are
ones that were not provided to the beneficiaries in question because those beneficiaries
were deceased on the dates of the claimed services, these claims may form the basis for
summary judgment.

For purposes of summary judgment, I draw all inferences in favor of Petitioners. I accept
as true that prior to March 2015, Petitioners relied on a billing coordinator to provide
billing services for their Medicare patients, and that Dr. Kondic would compile a list of
patients seen each day and submit that list to the billing coordinator. P. Ex. A 4/4. Lalso
accept as true that this practice resulted in billing errors related to beneficiary names and
dates that services were provided. P. Ex. A 44. I further accept as true that Petitioners
never attempted to intentionally submit a claim to Medicare that Petitioners knew was
incorrect or inaccurate, and that all of the claims identified in the initial determination
“represent unintentional billing submissions without any intent to deceive or defraud
Medicare.” P. Ex. A95. Finally, I accept as true that Petitioners have identified the
weaknesses in their internal processes that led to the erroneous Medicare claims at issue
in this case and implemented, as part of their CAP, those changes to prevent the
submission of erroneous claims in the future. P. Ex. A § 6.
2. NGS was authorized to revoke Petitioners’ Medicare enrollment and
billing privileges pursuant to 42 C.F.R. § 424.535(a)(8).

Once NGS determined that Petitioners submitted a claim or claims that could not have
been furnished to a specific individual on the dates of service, it was authorized to revoke
Petitioners’ Medicare enrollments and billing privileges. 42 C.F.R. § 424.535(a)(8).
Here, there are 26 undisputed instances where Petitioners submitted claims for a service
that could not have been furnished and, in fact, were not furnished to a specific individual
on the date of service. CMS Exs. 8-31; see also P. Ex. A Jf 4-6.

Petitioners explain in response that their inexperience, poor documentation, and
ineffective billing processes are to blame for the erroneous claims that they filed. CMS
Ex. 31 at 5; P. Ex. A494. Petitioners assert that they never knowingly submitted
erroneous or inaccurate claims and that they never had any intent to defraud Medicare.
P. Ex. A 5. Petitioners argue that “it makes no sense” to restrict Dr. Kondic from
providing much needed services to nursing home residents for three years “because of
innocent billing mistakes.” P. Br. at 6. Petitioners do not believe that a first offense
involving claims that CMS never paid should result in punitive measures, especially
when Petitioners have provided a CAP that will prevent errors from recurring in the
future. P. Br at 7.

However, as Petitioners recognize (P. Br. at 6), even an unintentional error with regard to
claims may serve as a basis for revocation because 42 C.F.R. § 424.535(a)(8) does not
require fraudulent or dishonest intent to revoke. See Louis J. Gaefke, D.P.M., DAB No.
2554, at 7 (2013); cf Proteam Healthcare Inc., DAB No. 2658, at 11 (2015).

As stated in Gaefke:

Given the absence from the regulation of any requirement to
show fraudulent intent, or exceptions for inadvertent error,
the preamble cannot be read in a manner that would
effectively bar CMS from taking action against providers or
suppliers who submit multiple improper claims, even where
the claims were the result of negligence or reckless
indifference by the provider or supplier. We also agree with
the ALJ that the preamble statements Petitioner cites do not
bar CMS from revoking the enrollment of a supplier or
provider whose incorrect billing falls within the plain
language of the regulation.

The 26 improper claims that are undisputed in this case are more than sufficient to show a
section 424.535(a)(8) violation. Section 424.535(a)(8) only requires “a claim or claims”

for services that could not have been rendered. Therefore, one claim for services that
could not have been rendered is enough for revocation.

Although Petitioners do not directly blame the billing service they hired to file claims
with Medicare (P. Ex. A § 4), Petitioners cannot avoid revocation due to the errors or
actions of others. As stated in Gaefke:

As discussed, Medicare suppliers and providers certify that
they are responsible for the accuracy of their claims for
reimbursement, and the regulation contains no exception for
improper claims prepared and submitted by billing agents,
which is consistent with the preamble stating that providers
and suppliers are responsible for claims submitted on their
behalf. As in Reife, Petitioner “cites no legal authority
relieving suppliers of responsibility for the claims for
Medicare reimbursement submitted on their behalf and at
their direction.” Jd. Petitioner’s position, if adopted, would
effectively shield a supplier from any consequences for the
submission of an unlimited number of improper claims on his
behalf, so long as he could point to an agreement with a
billing agent, who is not a party to the supplier’s Medicare
agreement, to submit the claims. Petitioner’s efforts to assign
blame for the improper billing to his billing agent or his
assistant do not relieve him of his responsibility for the
improper claims or bar CMS from revoking his billing
privileges.

DAB No. 2554, at 6.

Although Petitioners make public policy arguments against the interpretation of the
regulations articulated above, I cannot consider those arguments since my review is
limited to deciding whether CMS had a legitimate basis to revoke Petitioners’ billing
privileges. Letantia Bussell, DAB No. 2196, at 13 (2008).

Based on the foregoing, I conclude that CMS had a legitimate basis to revoke Petitioners’
Medicare enrollments and billing privileges pursuant to 42 C.F.R. § 424.535(a)(8).

3. Petitioners did not have a right to file a CAP, but even if they did,
NGS constructively rejected it in the reconsidered determination.

Petitioners argue that NGS did not consider their CAP and remedial efforts to correct
their billing errors. Petitioners assert that, under the regulations prevailing at the time
Petitioners filed the improper claims that form the basis for revocation, Petitioners had
the right to file a CAP and receive a decision from CMS on that CAP. P. Br. at 4-5; see
42 CFR. § 424.535(a)(1) (2014).

CMS’s position is that Petitioners had no right to file a CAP under newly promulgated
regulations that took effect on February 3, 2015, and that, in any event, “NGS’s May 29,
2015 unfavorable decision on reconsideration constructively rejected [Petitioners’] CAP .
...” CMS Br. at 4n.3, 12 n.7.

l agree with CMS that Petitioners do not have the right to file a CAP for a revocation
based on 42 C.F.R. § 424.535(a)(8). Although the regulations in effect before February
3, 2015, would have provided Petitioners a right to file a CAP (42 C.F.R. § 424.535(a)(1)
(2014)), the Secretary modified the regulations to make it clear that providers or suppliers
subject to revocation could only submit a CAP when CMS based revocation on non-
compliance of enrollment requirements under 42 C.F.R. § 424.535(a)(1). 42 C.F.R.

§§ 405.809(a), 424.535(a)(1) (2015); 79 Fed. Reg. 72,500 (Dec. 5, 2014).

NGS did not issue its initial determinations revoking Petitioners’ billing privileges until
March 4, 2015, which is after the modifications to the regulations took effect. CMS Ex.
30. As indicated in footnote 3 above, it is appropriate to apply the version of 42 C.F.R.
§ 424.535(a)(8) that was in effect from 2012 through 2014 because that was the
substantive regulation under which Petitioners were operating as Medicare suppliers
when Petitioners filed the claims at issue in this case. However, the provision governing
CAPs is procedural; therefore, the modified version of the regulation applies to all cases
where the initial determination was issued on or after February 3, 2015.

If Petitioners had a right to a CAP, I agree with CMS that NGS constructively rejected
Petitioners’ CAP in the reconsidered determination. In the reconsidered determination,
NGS stated in the “Decision” section that: ““Alexandar Kondic Inc has not provided
evidence to show full compliance with the standards for which you were revoked.” CMS
Ex. 32 at 1 (emphasis in original). The standard that NGS applied, i.e., full compliance
with standards, is the standard that it would apply when reviewing a CAP. See 42 C.F.R.
§ 405.809 (2014); 42 C.F.R. § 809(b)(1) (2015). Therefore, I conclude that even if NGS’
reconsidered determination did not expressly deny the CAP, NGS’s determination
included a finding that would have resulted in the rejection of the CAP. Rejection of a
CAP is not an initial determination and, therefore, not subject to further review. See

42 CFR. § 405.809 (2014); DMS Imaging, Inc., DAB No. 2313, at 5 (2010).

10

V. Conclusion

For the reasons explained above, I grant summary judgment in favor of CMS.
Consequently, I affirm CMS’s determination to revoke Petitioners’ Medicare enrollment
and billing privileges.

/s/
Scott Anderson
Administrative Law Judge


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

Divy Dixit
(O.I. File No. H-14-42581-9),

Petitioner,
v.

The Inspector General,
Department of Health and Human Services.

Docket No. C-15-2879
Decision No. CR4488
Date: December 8, 2015
DECISION

Petitioner, Divy Dixit, is excluded from participation in Medicare, Medicaid, and all
federal health care programs pursuant to section 1128(a)(1) of the Social Security Act
(Act) (42 U.S.C. § 1320a-7(a)(1)), effective April 20, 2015. Petitioner’s exclusion for the
minimum period of five years is mandatory pursuant to section 1128(c)(3)(B) of the Act
(42 U.S.C. § 1320a-7(c)(3)(B)), and an additional period of exclusion of 8 years for a
total minimum period of exclusion of 13 years is not unreasonable based upon the 3
aggravating factors established in this case and the absence of any mitigating factors.’

I. Background

The Inspector General (I.G.) notified Petitioner by letter, dated March 31, 2015, that he
was excluded from participation in Medicare, Medicaid, and all federal health care
programs for 13 years pursuant to section 1128(a)(1) of the Act. The basis cited for
Petitioner’s exclusion was his conviction in the Supreme Court of the State of New York,

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
Bronx County, of a criminal offense related to the delivery of an item or service under
Medicare or a state health care program.

Petitioner timely requested a hearing pursuant to 42 C.F.R. § 1005.2 on May 18, 2015.
The case was assigned to me on June 18, 2015. A prehearing telephone conference was
convened on July 20, 2015. The substance of the conference is memorialized in my
Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence
dated July 20, 2015 (Prehearing Order). During the prehearing conference, Petitioner did
not waive an oral hearing. The I.G. requested to file a motion for summary judgment and
I set a briefing schedule.

The LG. filed a motion for summary judgment and supporting brief (I.G. Br.) on August
19, 2015, with LG. Exs. 1 through 5.° Petitioner filed a response to the I.G. motion (P.
Response) on October 5, 2015, and three documents not marked as exhibits. The LG.
waived filing a reply brief on October 27, 2015.

Petitioner did not object to my consideration of I.G. Exs. 1 through 5 and they are
admitted as evidence. Petitioner filed with his request for hearing two letters attesting to
his character. Neither letter may be admitted as evidence because they are unsworn and
unsigned. 42 C.F.R. § 1005.16 (testimony of witnesses must be under oath or
affirmation). The letters are also not admissible as evidence because they are not relevant
to any issue that I may decide in this case. 42 C.F.R. § 1005.17(c). The letters are not
relevant because good character is not a mitigating factor that I may consider in
determining whether or not the period of exclusion is unreasonable. 42 C.F.R.

§ 1001.102(c). Petitioner failed to mark the documents he filed with his response to the
1.G.’s motion for summary judgment as required by Civil Remedies Division Procedure
§ 14. Rather than reject the documents, I treat them as being marked as follows:

Petitioner’s Exhibit (P. Ex.) 1 — Letter dated July 16, 2015 from Uber
Technologies, Inc. to Petitioner.

P. Ex. 2 — Undated press release titled - CVS Pharmacy Inc. Agrees to Pay $17.5
Million to Resolve False Prescription Billing Case.

P. Ex. 3— June 29 press release titled —Walgreens Settles Medicaid False Billing
Case in New York.

> The LG. did not file a copy of the March 31, 2015 notice of exclusion as an I.G. exhibit
as required by my Prehearing Order § 7. Petitioner has raised no issue related to the
sufficiency of the March 31, 2015 notice and Petitioner provided a copy of the notice
with his request for hearing.
P. Exs. 1 through 3 are minimally relevant to the issue of whether the 13-year exclusion
is unreasonable. The I.G. has not objected to my consideration of P. Exs. | through 3 and
they are admitted as evidence.

IL. Discussion
A. Applicable Law

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

The Secretary must exclude from participation in any federal health care program any
individual convicted under federal or state law of a felony or misdemeanor criminal
offense related to the delivery of an item or service under Medicare or a state health care
program. Act § 1128(a)(1). The Secretary has promulgated regulations implementing
these provisions of the Act. 42 C.F.R. § 1001.101(a).°

Pursuant to section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), an individual is convicted
of a criminal offense when: (1) a judgment of conviction has been entered against him or
her in a federal, state, or local court whether an appeal is pending or the record of the
conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no
contest is accepted by a court; or (4) the individual has entered into any arrangement or
program where judgment of conviction is withheld.

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

§ 1001.102(a). The Secretary has published regulations that establish aggravating factors
the I.G. may consider to extend the period of exclusion beyond the minimum five-year
period, as well as mitigating factors that may be considered only if the I.G. proposes to
impose an exclusion greater than five years. 42 C.F.R. § 1001.102(b), (c).

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

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

> References are to the 2014 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise indicated.
B. Issues
The Secretary has by regulation limited my scope of review to two issues:

Whether the I.G. has a basis for excluding Petitioner from participation in
Medicare, Medicaid, and all federal health care programs; and

Whether the length of the proposed period of exclusion is unreasonable.
42 C.F.R. § 1001.2007(a)(1).
C. Findings of Fact, Conclusions of Law, and Analysis

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

1. Petitioner’s request for hearing was timely and I have jurisdiction.
2. Summary judgment is appropriate in this case.
Petitioner’s request for hearing was timely and I have jurisdiction.

Petitioner has not waived an oral hearing and the I.G. has moved for summary judgment.
Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to a hearing before an ALJ and both the
sanctioned party and the LG. have a right to participate in the hearing. 42 C.F.R.

§§ 1005.2 -.3. Either or both parties may choose to waive appearance at an oral hearing
and to submit only documentary evidence and written argument for my consideration. 42
CFR. § 1005.6(b)(5).

An ALJ may also resolve a case, in whole or in part, by summary judgment. 42 C.F.R.

§ 1005.4(b)(12). Summary judgment is appropriate and no hearing is required where
either: there are no genuine disputes of material fact and the only questions that must be
decided involve application of law to the undisputed facts; or the moving party prevails
as a matter of law even if all disputed facts are resolved in favor of the party against
whom the motion is made. A party opposing summary judgment must allege facts which,
if true, would refute the facts relied upon by the moving party. See, e.g., Fed. R. Civ. P.
56(c); Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr.,
DAB No. 1628, at 3 (1997) (holding in-person hearing is required where the non-movant
shows there are material facts in dispute that require testimony); Thelma Walley, DAB
No. 1367 (1992).
Summary judgment is appropriate in this case. There are no genuine issues of material
fact in dispute. I may resolve the case by applying the law to the undisputed facts.

3. Petitioner’s exclusion is required by section 1128(a)(1) of the Act.

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

(a) MANDATORY EXCLUSION.—The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):

(1) Conviction of program-related crimes. — Any individual
or entity that has been convicted of a criminal offense related
to the delivery of an item or service under title XVIII
[Medicare] or under any State health care program.

Act § 1128(a)(1); 42 C.F.R. § 1001.101(a).

Petitioner does not dispute that on December 13, 2012, he was convicted pursuant to his
guilty plea in the Supreme Court of the State of New York, Bronx County, of one felony
count of grand larceny in the second degree in violation of N.Y. Penal Law § 155.40.
Petitioner was sentenced on May 14, 2013, and his sentence included probation and
restitution. LLG. Ex. | at 3, ¥7; 1G. Ex. 2 at 3-7; 1.G. Ex. 3 at 6-7; 1.G. Ex. 4. The
acceptance of Petitioner’s guilty plea and the entry of the judgment of conviction by the
Supreme Court of the State of New York, Bronx County, amounted to a “conviction”
within the meaning of sections 1128(i)(1) and (3) of the Act.

Section 1128(a) of the Act requires that Petitioner be excluded if he was convicted of an
offense related to the delivery of an item or service under Medicare or a state health care
program. Petitioner does not deny that his criminal offense was related to the delivery of
a health care item or service under the New York State Medical Assistance program
(Medicaid). The Superior Court Information to which Petitioner pleaded guilty describes
the details of the charge to which Petitioner pleaded guilty:

Defendant SYPRAM CORP. d/b/a AKSHAR PHARMACY
and Defendant DIVY DIXIT, an owner, supervising
pharmacist and high managerial agency of SYPRAM Corp.
d/b/a AKSHAR Pharmacy, an enrolled provider in the New
York State Medical Assistance Program, commonly known as
Medicaid, caused to be submitted claims for payment to
Medicaid that falsely represented that SYPRAM CORP. d/b/a

AKSHAR PHARMACY dispensed the prescription
medications itemized on said claims to Medicaid recipients
from April 14, 2005 to July 24, 2008. Said claims were false
in that the medications were not dispensed to the Medicaid
recipients as claimed. In reliance on those claims, the State of
New York, through its fiscal agency, paid Defendants
$1,041,491.77 to which Defendants were not entitled.

1.G. Ex. 4 at 2. Petitioner admitted as part of his plea agreement that beginning about
April 14, 2005 and continuing through about July 24, 2008, he stole $1,041,491.77 from
the New York State Medicaid program. Petitioner agreed to pay to the State of New
York $1,103,981.28 as restitution, which included the $1,041,491.77 he stole and
interest. 1.G. Ex. 1 at 1 91, 3-499. The New York State Medicaid program meets the
definition of a state health care program. 42 C.F.R. § 1001.2. Therefore, there is no
genuine dispute that Petitioner’s conviction related to the delivery of a health care item or
service under a state health care program.

The two elements that trigger mandatory exclusion under section 1128(a)(1) of the Act
are satisfied. Accordingly, I conclude that there is a basis for Petitioner’s exclusion, and
his exclusion is mandated by section 1128(a)(1) of the Act.

4. Pursuant to section 1128(c)(3)(B) of the Act, the minimum period of
exclusion under section 1128(a) of the Act is five years.

5. Three aggravating factors justify extending the minimum period of
exclusion to 13 years.

I have concluded that a basis exists to exclude Petitioner pursuant to section 1128(a)(1) of
the Act. Therefore, the I.G. must exclude Petitioner for a minimum period of five years.
Act § 1128(c)(3)(B). The I.G. has no discretion to impose a lesser period, and I may not
reduce the period of exclusion below five years. The remaining issue is whether it is
unreasonable for the I.G. to extend Petitioner’s period of exclusion by an additional eight
years. My determination of whether the exclusionary period in this case is unreasonable
turns on whether: (1) the I.G. has proven that there are aggravating factors within the
meaning of 42 C.F.R. § 1001.102(b); (2) Petitioner has proven that there are mitigating
factors within the meaning of 42 C.F.R. § 1001.102(c) that the LG. failed to consider or
that the I.G. considered an aggravating factor that does not exist; and (3) the period of
exclusion is within a reasonable range.

Petitioner does not dispute that he is subject to the mandatory minimum five-year period
of exclusion pursuant to section 1128(c)(3)(B) of the Act. However, Petitioner asks that I
reduce the 13-year exclusion imposed by the I.G. RFH; P. Response.
The three aggravating factors in this case are undisputed. The I.G. notified Petitioner in
the March 31, 2015 notice of exclusion that there are three aggravating factors which
justify an exclusion of more than five years: (1) Petitioner’s criminal acts caused a
financial loss to a government program of $5,000 or more as evidenced by the order to
pay restitution in the amount of $1,041,400; (2) the acts that resulted in Petitioner’s
conviction occurred over a period of one year or more, as evidenced by Petitioner’s plea
that his criminal conduct occurred from about April 2005 to about July 2008; and (3)
Petitioner was subject to adverse action by the State of New York as he was excluded
from the New York Medicaid program.

Petitioner admitted as part of his plea agreement to stealing $1,041,491.77 from New
York Medicaid and he agreed to make restitution of that amount plus interest. I.G. Exs.
1, 2,3 at 10-11. There can be no question that, based on the amount of restitution, the
actual loss to Medicaid as a result of Petitioner’s criminal acts exceeded $5,000. The
Departmental Appeals Board (Board) has long considered restitution to be a reasonable
measure of program losses. Jason Hollady, M.D., DAB No. 1855 (2002). Further, the
Board has characterized restitution in an amount substantially greater than the $5,000
threshold to be an “exceptional[ly] aggravating factor” that is entitled to significant
weight. Jeremy Robinson, DAB No. 1905 (2004); Donald A. Burstein, Ph.D., DAB No.
1865 (2003). Petitioner does not deny that the aggravating factor established by 42
C.F.R. § 1001.102(b)(1) is clearly present in this case.

Petitioner admitted in his plea agreement that his criminal conduct occurred from about
April 14, 2005 through about July 24, 2008. 1.G. Ex. 191,54 17. Therefore,
Petitioner’s criminal acts occurred over a period of one year or more, and the second
aggravating factor cited by the I.G. is established in this case. 42 C.F.R.

§ 1001.102(b)(2).

There is also no dispute that the third aggravating factor cited by the I.G. is present in this
case. On January 28, 2014 the New York State Office of the Medicaid Inspector General
notified Petitioner that he was excluded from participation in the New York State
Medicaid program. I.G. Ex. 5. Petitioner does not deny that he was excluded from
participation in the New York State Medicaid program based on his conviction.
Therefore, the third aggravating factor is established. 42 C.F.R. § 1001.102(b)(9).

Accordingly, I conclude that the three aggravating factors considered by the LG. are
undisputed and are established by the evidence. The I.G. was authorized by the Secretary
to rely upon these factors as grounds for extending the duration of Petitioner’s exclusion
by eight years.
6. There is no genuine dispute of material fact as to the existence of
any mitigating factor.

7. Exclusion for 13 years is not unreasonable.

If any of the aggravating factors authorized by 42 C.F.R. § 1001.102(b) justify an
exclusion of longer than five years, then mitigating factors may be considered as a basis
for reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).
The only authorized mitigating factors that I may consider are listed in 42 C.F.R.

§ 1001.102(c).

(1) The individual or entity was convicted of 3 or fewer
misdemeanor offenses, and the entire amount of financial loss
(both actual loss and intended loss) to Medicare or any other
Federal, State or local governmental health care program due
to the acts that resulted in the conviction, and similar acts, is
less than $1,500;

(2) The record in the criminal proceedings, including
sentencing documents, demonstrates that the court determined
that the individual had a mental, emotional or physical
condition before or during the commission of the offense that
reduced the individual’s culpability; or

(3) The individual's or entity’s cooperation with Federal or
State officials resulted in —

(i) Others being convicted or excluded from Medicare,
Medicaid and all other Federal health care programs,

(ii) Additional cases being investigated or reports being
issued by the appropriate law enforcement agency
identifying program vulnerabilities or weaknesses, or

(iii) The imposition against anyone of a civil money
penalty or assessment under part 1003 of this chapter.

Petitioner has the burden to prove that there is a mitigating factor for me to consider that
was not considered by the I.G. 42 C.F.R. § 1005.15(b)(1). Petitioner does not allege that
any of these authorized mitigating factors are present in his case.

Petitioner requests that I reduce his 13-year exclusion because for over two years he has
not been practicing as a pharmacist; he has paid his restitution in full; he has completed
the 300 hours of community service ordered by the court as part of his sentence; and he is
in full compliance with his probation. Petitioner also argues that he now has limited job
opportunities and has not been able to enroll in an educational program in the medical
field. He states that if his exclusion is reduced it will be easier for him to secure a job in
the medical field and allow him to provide for his mother and son. RFH; P. Response.
None of Petitioner’s arguments relate to mitigating factors that I may consider under the
regulations.

Petitioner also argues referring to P. Exs. 2 and 3 that CVS and Walgreens were not
treated as harshly by the .G. P. Response. Whether or not CVS and Walgreens were
treated differently than Petitioner, is the not the issue before me. Whether or not
Petitioner’s exclusion is unreasonable is the issue I must resolve and that issue is resolved
based on the aggravating and mitigating factors in this case not equitable considerations.

Petitioner has failed to raise any genuine dispute of material fact related to the existence
of any mitigating factor I am authorized to consider under the regulations. The Board has
made clear that the role of the ALJ in cases such as this is to conduct a de novo review of
the facts related to the basis for the exclusion and the existence of aggravating and
mitigating factors identified at 42 C.F.R. § 1001.102 and to determine whether the period
of exclusion imposed by the LG. falls within a reasonable range. Juan De Leon, Jr.,
DAB No. 2533 at 4-5 (2013); Craig Richard Wilder, M.D., DAB No. 2416 at 8 (2011);
Joann Fletcher Cash, DAB No. 1725 at 10 n.9 (2000). The applicable regulation
specifies that the ALJ must determine whether the length of exclusion imposed is
“unreasonable.” 42 C.F.R. § 1001.2007(a)(1)(ii). The Board has explained that, in
determining whether a period of exclusion is “unreasonable,” the ALJ is to consider
whether such period falls “within a reasonable range.” Cash, DAB No. 1725 at 10, n.9.
The Board cautions that whether the ALJ thinks the period of exclusion too long or too
short is not the issue. The ALJ may not substitute his or her judgment for that of the LG.
and may only change the period of exclusion in limited circumstances.

I conclude that there is a basis for the IG. to exclude Petitioner and there is no dispute as
to the existence of the three aggravating factors that the LG. relied on to impose al3-year
exclusion. There is also no genuine dispute as to the existence of any authorized
mitigating factors that would support a reduction of the period of Petitioner’s exclusion.
Accordingly, there is no basis for me to reassess the period of exclusion. I conclude that
a period of exclusion of 13 years is in a reasonable range and not unreasonable
considering the three aggravating factors present.

Petitioner requests that the two and a half years that he has already been excluded from
program participation be retroactively applied to reduce the length of his exclusion. P.
Response. Petitioner’s program-related conviction occurred on December 13, 2012, but I
do not have the authority to grant the relief Petitioner seeks. The Board has consistently
held that the statute and regulations give an ALJ no authority to adjust the beginning date
10

of exclusion. Thomas Edward Musial, DAB No. 1991, at 4-5 (2005); Douglas Schram,
R.Ph., DAB No. 1372, at 11 (1992); David D. DeFries, DAB No. 1317, at 6 (1992).

Exclusion is effective 20 days from the date of the I.G.’s written notice of exclusion to
the affected individual or entity. 42 C.F.R. § 1001.2002(b). The LG. notice to Petitioner
is dated March 31, 2015, therefore, the effective date of Petitioner’s exclusion is April 20,
2015.

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs for a minimum period of 13 years
pursuant to section 1128(a)(1) of the Act, effective April 20, 2015.

/s/
Keith W. Sickendick
Administrative Law Judge


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

(FDA No. FDA-2015-H-1841)
Complainant
v.

Kuma H. Mamie
d/b/a 7-Eleven Store 22921A',

Respondent.
Docket No. C-15-2595
Decision No. CR4485

Date: December 8, 2015

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a civil money penalty
against Respondent, Kuma H. Mamie d/b/a 7-Eleven Store 22921A, located at
8101 Fenton Street, Silver Spring, Maryland 20910, for six violations of the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, 21 C.F.R. pt. 1140, within a forty-eight month period.
Specifically, CTP alleges that 7-Eleven Store 22921A violated the Act by
impermissibly selling cigarettes to minors, and failing to verify, by means of photo
identification containing a date of birth, that the purchasers were 18 years of age
or older.

' On October 8, 2015, CTP motioned for leave to amend the complaint to change
the name of Respondent from Kuma H. Mamie d/b/a 7-Eleven 22921 to Kuma H.
Mamie d/b/a 7-Eleven Store 22921A. On October 13, 2015, an order granting
CTP’s motion for leave to amend the complaint was granted.
Procedural History

CTP began this matter by serving an administrative complaint seeking an $11,000
civil money penalty on Respondent 7-Eleven Store 22921A, at 8101 Fenton Street,
Silver Spring, Maryland 20910, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management.
Respondent timely answered CTP’s complaint. On July 7, 2015, I issued an
Acknowledgement and Prehearing Order (APHO) that set deadlines for the parties
to file their pre-hearing exchanges. CTP filed its pre-hearing exchange on October
28, 2015. Subsequently, Respondent 7-Eleven Store 22921A timely filed its
pre-hearing exchange, admitting all allegations in the Complaint but contesting the
amount of the civil money penalty.

Decision on the Record

Pursuant to 21 CFR § 17.37(b), all direct testimony of witnesses shall be admitted
in the form of a written declaration. In its pre-hearing exchange, CTP submitted
two witness declarations. Respondent 7-Eleven Store 22921A submitted one
witness declaration. Because Respondent 7-Eleven Store 22921A has admitted all
the allegations in the Complaint, CTP’s witness declarations are not relevant to the
issue of the amount of the civil money penalty. Therefore, I will decide this case
on the basis of the written record.

Analysis
I. Violations

In its Complaint, CTP alleges that Respondent 7-Eleven Store 22921 A committed
six violations of the Act and its implementing regulations within a forty-eight
month period. On November 18, 2015, 7-Eleven Store 22921A filed an informal
brief, admitting all the allegations in the Complaint, but contesting the amount of
the civil money penalty. Informal Brief of Respondent §§ 4,5,6.

CTP makes the following uncontested allegations:

¢ CTP previously issued a warning letter to Respondent 7-Eleven Store
22921A on October 11, 2012, citing a violation of 21 C.F.R. pt. 1140 on
August 2, 2012, at Respondent’s business establishment, 8101 Fenton
Street, Silver Spring, Maryland 20910;

e¢ On July 9, 2013, CTP initiated the first civil money penalty action, CRD
Docket Number C-13-973, FDA Docket Number FDA-2013-H-0809,
against Respondent 7-Eleven Store 22921 A for three violations of
21 C.F R. pt. 1140 within a 24-month period. CTP alleged those violations
to have occurred on August 2, 2012, and December 13, 2012;

The previous action concluded when an Initial Decision and Default

Judgment was entered by an Administrative Law Judge on September 26,
2013, “which found Respondent liable under the Act for the violations as

alleged .

...” The Initial Decision and Defau

binding on the parties on October 26, 2013;

CRD Docket Number C-14-1400, FDA Doc’

0904, against Respondent 7-Eleven Store 22!

it Judgment became final and

On July 16, 2014, CTP initiated the second civil money penalty action,

et Number FDA-2014-H-
921A for four violations of

21 C.F R. pt. 1140 within a 24-month period. CTP alleged those violations
to have occurred on August 2, 2012, Deceml
19, 2013;

Respond
Respond
August

lent’s authorized representative, sett
lent’s behalf. Mr. Mamie signed an

ber 13, 2012, and November

The previous civil money penalty action concluded when Kuma Mamie,

ed the action with CTP on
Acknowledgment Form, dated

8, 2014 in which he “admitt[ed] that the violations . . . occurred,

waiv[ed] his ability to contest the vio:
he understood that the violations may
number of violations for purposes of
Respondent

3

During a subsequent two-part inspecti
establishment, at approximately 4:26
Respondent’s business establishment,
Maryland 20910, FDA-commissioned
staff selling a package of Newport Bo:

ations in the future, and stat[ed] that
be counted in determining the total
uture enforcement actions against

on of Respondent’s business

p.m. on October 2, 2014, at

8101 Fenton Street, Silver Spring,
inspectors documented Respondent’s
x Cigarettes to a person younger than

18 years of age. The inspectors also

locumented that staff failed to verify,

by means of photographic identification containing a date of birth, that the
purchaser was 18 years of age or older.

CTP asserts that these allegations, as supported by documentary evidence, are
sufficient to establish a basis for liability against Respondent.

Respondent 7-Eleven Store 22921A has not disputed these allegations. Therefore,
I find that these facts establish Respondent Kuma H. Mamie d/b/a 7-Eleven Store
22921A’s liability under the Act. The Act prohibits misbranding of a tobacco
product. 21 U.S.C. § 331(k). A tobacco product is misbranded if sold or
distributed in violation of regulations issued under section 906(d) of the Act.
21 USC. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C.

§ 387a-1; see 21 U.S.C. § 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19,
2010). Under 21 C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person
younger than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must
verify, by means of photographic identification containing a purchaser’s date of
birth, that no cigarette purchasers are younger than 18 years of age.

A. II. Civil Money Penalty

Pursuant to 21 U.S.C. § 333(f)(9), Respondent 7-Eleven Store 22921A is liable for
a civil money penalty not to exceed the amounts listed in FDA’s civil money
penalty regulations at 21 C.F.R. § 17.2. In its Complaint, CTP sought to impose
the maximum penalty amount, $11,000, against Respondent for six violations of
the Act and its implementing regulations within a forty-eight month period.
Complaint §§ 1, 15. In its Informal Brief, CTP continues to assert that an $11,000
civil money penalty is appropriate. Informal Brief of Complainant at 9.

Respondent 7-Eleven Store 22921A contends that “the civil money penalty
suggested by CTP, if imposed, will have a significant negative impact on
Respondent’s ability to continue to do business.” Informal Brief of Respondent at
4,5. Respondent goes on to state that “Respondent’s net profit for 2012, 2013,
and 2014 was only i, 2c
respectively...Respondent’s projected net earnings for 2015 will be less than
2014. An $11,000 civil penalty would be a death blow to the business.” Informal
Brief of Respondent at 5. Additionally, Respondent states that “on the prior
infractions[,] which Respondent admitted, Respondent was given the name of the
employee who committed the alleged infraction.” Id. Essentially, Respondent is
asserting that he has not been allowed take disciplinary action against the
employee or implement additional steps to ensure compliance because he has not
been given the employee’s name.

When determining the amount of a civil money penalty, I am required to take into
account “the nature, circumstances, extent and gravity of the violations and, with
respect to the violator, ability to pay, effect on ability to continue to do business,
any history of prior such violations, the degree of culpability, and such other
matters as justice may require.” 21 U.S.C. § 303(f)(5)(B).

i. Nature, Circumstances, Extent and Gravity of the Violations

Respondent 7-Eleven Store 22921A has consistently failed to comply with the Act
and its implementing regulations. Respondent previously admitted to and was
found liable for three violations for selling cigarettes to persons younger than 18
years of age, 21 C.F.R. § 1140.14(a), and one violation for failing to verify, by
means of photo identification containing a purchaser’s date of birth, that no
cigarette purchasers are younger than 18 years of age, 21 C.F.R. § 1140.14(b)(1).
The repeated inability of Respondent to comply with federal tobacco regulations is
serious in nature, and the civil money penalty amount should be set accordingly.

ii. Respondent’s Ability to Pay

CTP is seeking an $11,000 civil money penalty against Respondent 7-Eleven Store
22921A. In its production of documents, Respondent 7-Eleven Store 22921A
provided CTP with tax returns for 2012, 2013 and 2014. CTP states that
Respondent reported gross profits of [I.E and aa
respectively. Additionally, CTP states that Respondent had adjusted gross

incomes of iE. HE, and SM respectively from 2012 — 2014.

Respondent states that net profits for 2012, 2013, and 2014 were only x.
ES 20  vespectively. In addition, Respondent asserts that
projected net earnings for 2015 will be less than 2014. Finally, Respondent asserts
that an $11,000 civil penalty would be a death blow to the business.

Considering Respondent’s explanation of these figures, imposition of an $11,000
penalty would take away nearly half of Respondent’s net profits, a severe
punishment.

iii. Effect on Ability to do Business

There is nothing in the evidentiary record that shows the effect a civil money
penalty will have on Respondent 7-Eleven Store 22921A’s ability to do business.
CTP asserts that “[a]n $11,000 civil monetary penalty will not affect Respondent’s
ability to do business. Respondent may continue to sell tobacco products and
other products at the establishment.” Informal Brief of Complainant at 12. While
the record does not include specific evidence to show the effects of an $11,000
civil money penalty, it appears that a civil money penalty of this amount will have
a substantial effect on Respondent’s ability to do business.

iv. History of Prior Violations

The current action is the third civil money penalty action brought against
Respondent 7-Eleven Store 22921A for violations of the Act and its implementing
regulations. In the first civil money penalty action, CRD Docket Number
C-13-973, FDA Docket Number FDA-2013-H-0809, Respondent violated the
prohibition against selling cigarettes to persons younger than 18 years of age,
21 C.F.R. § 1140.14(a), on August 2, 2012, and December 13, 2012. On
December 13, 2012, Respondent also violated the requirement that retailers verify,
by means of photo identification containing a purchaser’s date of birth, that no
cigarette purchasers are younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1).
An Initial Decision and Default Judgment was entered against Respondent on
September 26, 2013. The Initial Decision and Default Judgment became final and
binding on the parties on October 26, 2013.

In the second civil money penalty action, CRD Docket Number C-14-1400, FDA
Docket Number FDA-2014-H-0904, Respondent violated the prohibition against
selling cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a),
on November 19, 2013. Respondent settled the civil money penalty action with
CTP for an undisclosed penalty amount.

The current action brings Respondent’s total violation count to four sales to a
minor, in violation of 21 C.F.R. § 1140.14(a), and two failures? to verify the
identification of persons who were not over the age of 26, in violation of 21 C.F.R.
§ 1140.14(b)(1). Informal Brief of Complainant at 12. I agree with CTP that
“Tt]hese repeat violations show an unwillingness or inability to sell tobacco
products in accordance with federal tobacco regulations.” Id. While Respondent
has already paid civil money penalties for its previous violations, its continued
inability to comply with the federal tobacco regulations calls for a more severe
penalty.

v. Degree of Culpability

Respondent 7-Eleven Store 22921A admitted to all violations in its informal brief.
Based on Respondent 7-Eleven Store 22921A’s own admissions, I hold it fully
culpable for all six violations of the Act and its implementing regulations.

vi. Additional Mitigating Factors

Respondent 7-Eleven Store 22921A stated that “I was not able to identify what
employee committed the infraction. This made it difficult for me to identify how
the corrective actions I took after the previous violations failed or to take
appropriate corrective action with the employee who committed the infraction.”
Declaration of Kuma H. Mamie § 6.

> CTP asserts in its Informal Brief that Respondent violated 21 C.F.R.

§ 1140.14(b)(1) three times. The record does not support a finding that
Respondent violated 21 C.F.R. § 1140.14(b)(1) three times. The record supports
two violations of 21 C.F.R. § 1140.14(b)(1) on December 13, 2012 and October 2,
2014.
vii. Penalty

Tacknowledge the financial strain a large penalty amount will have on
Respondent’s small business. Based on the financial strain an $11,000 penalty
would have on Respondent and the foregoing discussion, I find a reduced penalty
amount of $5,500 to be appropriate under 21 U.S.C. §§ 303(f)(5)(B) and 333(f)(9).

Conclusion

Pursuant to 21 C.F.R. § 17.45, Lenter judgment in the amount of $5,500 against
Respondent, Kuma H. Mamie d/b/a 7-Eleven Store 22921A, for six violations of
the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, 21 C.F.R. pt. 1140, within a forty-eight month period.

/s/

Catherine Ravinski
Administrative Law Judge


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

Cedonne Ngwilefem Alemnji
(O.I File No. 3-10-40264-9),

Petitioner,
v.

The Inspector General,
Department of Health & Human Services.

Docket No. C-15-2878
Decision No. CR4484
Date: December 7, 2015
DECISION

Petitioner, Cedonne Ngwilefem Alemnji, is excluded from participation in Medicare,
Medicaid, and all federal health care programs pursuant to section 1128(a)(1) of the
Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)), effective April 20, 2015.
Petitioner’s exclusion for the minimum period of five years is mandatory pursuant to
section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).!

I. Background

The Inspector General (I.G.) notified Petitioner by letter dated March 31, 2015, that she
was being excluded from participation in Medicare, Medicaid, and all federal health care
programs for the minimum statutory period of five years pursuant to section 1128(a)(1)
of the Act. The basis cited for Petitioner’s exclusion was her conviction in the Superior
Court of the District of Columbia, of a criminal offense related to the delivery of an item

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
or service under Medicare or a state health care program. I.G. Exhibit (I.G. Ex.) 1.
Petitioner timely requested a hearing by letter dated May 5, 2015. The case was assigned
to me on June 18, 2015, for hearing and decision.

On July 20, 2015, I convened a prehearing conference by telephone, the substance of
which is memorialized in my Order to Show Cause, Prehearing Conference Order, and
Schedule for Filing Briefs and Documentary Evidence dated July 23, 2015 (Prehearing
Order). Petitioner failed to appear for the prehearing conference but subsequently
established good cause for why this case should not be dismissed for abandonment or as a
sanction.

The LG. filed a motion for summary judgment and supporting brief (1.G. Br.) on
September 2, 2015, with I.G. Exs. 1 through 3. Petitioner filed a brief in opposition to
the I.G. motion (P. Response) on September 16, 2015. Petitioner also filed two sets of
documents as exhibits on September 16, 2015. Petitioner’s exhibits were filed in the
Departmental Appeals Board Electronic Filing System (DAB E-File) as documents #10
and #11a. Petitioner’s exhibits were not properly marked and paginated as required by
the Prehearing Order and the Civil Remedies Division Procedures (CRDP). However,
the exhibits were not rejected because there was little potential for confusion due to the
absence of proper marking. DAB E-File document #10 is treated as marked as
Petitioner’s Exhibit (P. Ex.) 1, pages 1 through 19 and document #11 is treated as marked
as P. Ex. 2, pages | through 7. The LG. filed a reply brief (IG. Reply) on November 2,
2015. No objections have been made to my consideration of the offered exhibits and I.G.
Exs. | through 3 and P. Exs. 1 and 2 are admitted.

IL. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner with rights to an
Administrative Law Judge (ALJ) hearing and judicial review of the final action of the
Secretary of Health and Human Services (Secretary). The right to hearing before an ALJ
is set forth in 42 C.F.R. §§ 1001.2007(a) and 1005.2, and the rights of both the
sanctioned party and the LG. to participate in a hearing are specified by 42 C.F.R.

§ 1005.3. Either or both parties may choose to waive appearance at an oral hearing and
to submit only documentary evidence and written argument for my consideration. 42
CFR. § 1005.6(b)(5).

The Secretary must exclude from participation in federal health care programs any

individual convicted of a criminal offense under federal or state law that is related to the

> Citations are to the 2014 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise indicated.
delivery of an item or service under Medicare or a state health care program. Act
§ 1128(a)(1). The Secretary has promulgated regulations implementing these provisions
of the Act. 42 C.F.R. § 1001.101(a).

Pursuant to section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), an individual is convicted
of a criminal offense when: (1) a judgment of conviction has been entered against him or
er in a federal, state, or local court whether an appeal is pending or the record of the
conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no
contest is accepted by a court; or (4) the individual has entered into any arrangement or
program where judgment of conviction is withheld. The statute does not distinguish
between misdemeanor and felony convictions.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act shall be for a minimum period of five years. The exclusion is
effective 20 days from the date of the notice of exclusion. 42 C.F.R. § 1001.2002(b).
Pursuant to 42 C.F.R. § 1001.102(b), the period of exclusion may be extended based on
the presence of specified aggravating factors. Only if aggravating factors justify an
exclusion of longer than five years are mitigating factors considered as a basis for
reducing the period of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

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

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

B. Issue
The Secretary has by regulation limited my scope of review to two issues:

Whether the I.G. has a basis for excluding Petitioner from participation in
Medicare, Medicaid, and all federal health care programs; and

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

42 C.F.R. § 1001.2007(a)(1). If the 1.G. imposes the minimum period of exclusion
authorized for a mandatory exclusion under section 1128(a)(1) of the Act, then there is no
issue of whether the period of exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1).
The I.G. proposes to exclude Petitioner for five years, the minimum authorized period.
Therefore, whether the length of the proposed exclusion is unreasonable is not an issue.
C. Findings of Fact, Conclusions of Law, and Analysis

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

1. Petitioner’s request for hearing was timely and I have jurisdiction.
2. Summary judgment is appropriate in this case.

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

Petitioner has not waived an oral hearing and the I.G. has moved for summary judgment.
An ALJ may resolve a case, in whole or in part, by summary judgment. 42 C.F.R.
§ 1005.4(b)(12).

Summary judgment is appropriate in an exclusion case when there are no disputed issues
of material fact and when the undisputed facts, clear and not subject to conflicting
interpretation, demonstrate that one party is entitled to judgment as a matter of law.
Tanya A. Chuoke, R.N., DAB No. 1721 (2000); David A. Barrett, DAB No. 1461 (1994);
Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992);
Catherine L. Dodd, R.N., DAB No. 1345 (1992); John W. Foderick, M.D., DAB No.
1125 (1990). When the undisputed material facts of a case support summary judgment,
there is no need for a full evidentiary hearing, and neither party has the right to one.
Surabhan Ratanasen, M.D., DAB No. 1138 (1990); Foderick, DAB No. 1125. In
opposing a properly-supported motion for summary judgment, the nonmoving party must
show that there are material facts that remain in dispute, and that those facts either affect
the proponent’s prima facie case or might establish a defense. Garden City Med. Clinic,
DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No. 1628 (1997). It is
insufficient for the nonmovant to rely upon mere allegations or denials to defeat the
motion and proceed to hearing. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247
(1986).

There are no genuine issues of material fact in dispute in this case. Petitioner does not
dispute that she was convicted of a criminal offense within the meaning of section
1128(i) of the Act. Petitioner does not dispute that her criminal offense was related to the
delivery of a health care item or service under Medicare or a state health care program.
Her sole arguments are that she was unaware of the consequences of pleading guilty to
the criminal offense and that there are factors that support her request for “some
modicum of leniency” and a reduction in the five-year exclusion period to one year.

P. Br. at 4-6. Petitioner’s arguments require application of law to the undisputed facts
and, as discussed hereafter, are resolved against her. I conclude that summary judgment
is appropriate as there are no genuine disputes as to any material facts and the L.G.
prevails as a matter of law on the issue of whether there is a basis for exclusion based on
the undisputed facts. Accordingly, summary judgment is appropriate.

3. There is a basis for Petitioner’s exclusion pursuant to section
1128(a)(1) of the Act.

Exclusion from participation in Medicare, Medicaid, and all federal health care programs
is required by section 1128(a)(1) of the Act when: (1) the individual has been convicted
of a criminal offense; and 2) the criminal offense is related to the delivery of an item or
service under Medicare or a state health care program. Act § 1128(a)(1); 42 C.F.R.

§ 1001.101(a).

a. Petitioner was convicted of a criminal offense within the
meaning of section 1128(a)(1) of the Act.

It is undisputed that on October 29, 2014, Petitioner was convicted pursuant to her guilty
plea in the Superior Court of the District of Columbia of one felony count of second
degree fraud. I.G. Ex. 2; P. Ex. 1 at 1; P. Response at 1-4. Petitioner pleaded guilty
pursuant to the terms of a plea agreement she signed on June 6, 2014. I.G. Ex. 3.
Petitioner’s sentence included probation and restitution. I.G. Ex. 2 at 2. The acceptance
of Petitioner’s guilty plea and the entry of the judgment of conviction by the Superior
Court of the District of Columbia amount to a “conviction” within the meaning of section
1128(i)(1) and (3) of the Act.

b. Petitioner’s criminal offense is related to the delivery of an
item or service under Medicare or a state health care program
within the meaning of section 1128(a)(1) of the Act.

The statute requires that Petitioner be excluded if she was convicted of an offense relating
to the delivery of an item or service under Medicare or a state health care program. Act

§ 1128(a)(1). Petitioner does not deny that her criminal offense was related to the
delivery of a health care item or service under a state health care program, specifically the
District of Columbia (D.C.) Medicaid program. On February 19, 2014, Petitioner was
charged as follows:

Commencing on or about January of 2013, and continuing
thereafter to on or about December of 2013, within the
District of Columbia, Cedonne Ngwilefem Alemnji
[Petitioner] engaged in a scheme and systematic course of
conduct, with intent to defraud and to obtain property of the
D.C. Medicaid Program by means of false or fraudulent
pretense, representation, and promise and thereby obtained
property of a value of $1000 or more or caused the loss of
property of a value of $1000 or more belonging to the D.C.
Medicaid Program, consisting of money.

P. Ex. 1 at 14; P. Ex. 2 at 2.

In her plea agreement, which she signed on June 6, 2014, Petitioner agreed the
government could prove beyond a reasonable doubt that Petitioner, a licensed practical
nurse, paid cash kickbacks to a D.C. Medicaid beneficiary and also to another individual
who was posing as a D.C. Medicaid beneficiary in exchange for each of the individuals
signing timesheets falsely indicating that Petitioner had provided them with personal care
services when, in fact, the services had not been provided. Petitioner agreed that she
provided the timesheets to two of her home health aide providers, who then submitted the
false timesheets to the D.C. Medicaid program for payment. She agreed that D.C.
Medicaid paid $26,740.80 for services that were not provided by Petitioner. Petitioner
agreed that the loss to the D.C. Medicaid program was $26,740.80, and that she would
pay the full amount of restitution jointly and severely with her two co-defendants. I.G.
Ex. 3 at 1-5; P. Ex. 1 at 16-19. The D.C. Medicaid program meets the definition of a
state health care program. 42 C.F.R. § 1001.2. Therefore, there is no genuine dispute
that Petitioner’s conviction related to the delivery of a health care item or service under a
state health care program.

The two elements that trigger mandatory exclusion under section 1128(a)(1) of the Act
are satisfied. Accordingly, I conclude that there is a basis for Petitioner’s exclusion, and
her exclusion is mandated by section 1128(a)(1) of the Act.

4. Five years is the minimum authorized period of exclusion pursuant
to section 1128(a) of the Act.

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

Petitioner requests a reduction in the length of her exclusion. P. Response at 2, 5-6.
However, the I.G. has imposed the minimum five-year period of exclusion authorized
under the Act. Act § 1128(c)(3)(B). When the LG. imposes the minimum period of
exclusion authorized for a mandatory exclusion under section 1128(a)(1) of the Act, then
there is no issue of whether the period of exclusion is unreasonable for me to decide.

42 C.F.R. § 1001.2007(a)(2).

Petitioner advises me that she filed a motion with the Superior Court for the District of
Columbia on July 29, 2014, seeking to vacate her judgment of conviction and permit her
to withdraw her plea of guilty and to enter a plea of not guilty. P. Br. at 1 n.1, 4; P. Ex. 1.
Pursuant to the regulations, if Petitioner’s conviction is reversed or vacated on appeal,
she may seek reinstatement pursuant to 42 C.F.R. § 1001.3005.

Exclusion is effective 20 days from the date of the I.G.’s written notice of exclusion to
the affected individual or entity. 42 C.F.R. § 1001.2002(b).

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs for the minimum statutory period of five
years pursuant to section 1128(a)(1) of the Act, effective April 20, 2015.

/s/
Keith W. Sickendick
Administrative Law Judge


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

(FDA No. FDA-2015-H-1922)
Complainant
v.

7 Eleven Inc.
d/b/a 7-Eleven Store 34153A,

Respondent.
Docket No. C-15-2657
Decision No. CR4482

Date: December 4, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated a $250 civil money penalty (CMP)
action against Respondent for unlawfully selling cigarettes to minors, on two separate
occasions, and failing to verify, by means of photo identification containing a date of
birth, that the purchasers were 18 years of age or older, on one occasion, in violation of
the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, 21 C.F.R. pt. 1140. During the hearing process, Respondent
has failed to comply with a judicial direction regarding CTP’s discovery request. I
therefore strike Respondent’s answer and issue this decision of default judgment.

I. Procedural History

Respondent timely answered CTP’s complaint opposing the CMP and requested a
hearing. On July 15, 2015, I issued an Acknowledgment and Pre-Hearing Order that explained
to the parties what they must do to present evidence and arguments in this case. I explained that
the parties may request copies of documents relevant to this case and that the requesting party
must serve the request for documents no later than August 12, 2015. I further explained that a
party receiving such a request must provide the requested documents no later than 30 days after
the request has been made. As party of the discovery process, both CTP and Respondent served
Requests for Production of Documents on each other. CTP served a request for documents on
August 11,2015. Respondent mailed its First Request for Production of Documents by United
States mail on August 31, 2015.

On August 27, 2015, CTP forwarded, via email, the Respondent’s Informal Brief to the
Departmental Appeals Board. Respondent had mailed its Informal Brief to CTP.

On September 15, 2015, CTP filed a motion to quash respondent’s request for production
of documents because the request was mailed on August 31, 2015, more than two weeks
after the APHO stated that the request must be served. Pursuant to my direction, a
September 17, 2015 letter allowed Respondent until October 1, 2015 to file a response to
CTP’s motion to quash. The September 17, 2015 letter also suspended the exchange
deadlines set forth in the APHO pending the resolution of the motion to quash.
Respondent did not file a response to CTP’s motion to quash respondent’s request for
production of documents.

CTP served Respondent with its request for documents on August 11, 2015. On
September 18, 2015, CTP filed a motion to compel discovery indicating that CTP had not
received a response to its request for production of documents. See 21 C.F.R. § 17.23(a).
Then, pursuant to my direction, a September 21, 2015 letter allowed Respondent until
October 6, 2015 to a file a response to CTP’s motion to compel discovery. Respondent
did not file a response to CTP’s motion. On October 9, 2015, CTP filed a motion to
impose sanctions that asked me to strike the Respondent’s answer and issue a default
judgment in this case.

On October 14, 2015, I issued an Order that explained that CTP’s motion to quash was
actually a motion for a protective order, and granted CTP a protective order finding that
CTP did not need to comply with Respondent’s request for production of documents as
that request was not timely served and Respondent failed to file a response to CTP’s
motion. In that Order, I also granted CTP’s motion to compel discovery. I ordered
Respondent to comply with CTP’s request for production of documents by November 3,
2015. I did not rule on CTP’s motion to impose sanctions to allow Respondent an
opportunity to comply with CTP’s request for production of documents. Finally, that
Order set the parties’ pre-hearing exchange deadlines.

On November 9, 2015, CTP filed an updated status report advising me that “Respondent
ha[d] not produced any documents responsive to CTP’s Request for Production of
Documents.” CTP requested that I grant its motion to impose sanctions. In a November
10, 2015 Order, I stayed the parties’ pre-hearing exchange deadlines pending a ruling on
CTP’s motion to impose sanctions. In that Order I also allowed Respondent until
November 27, 2015 to file a response to CTP’s motion to impose sanctions. Respondent
did not file a response to CTP’s motion to impose sanctions.

Il. Striking Respondent’s Answer

Respondent failed to file a response to CTP’s motion to quash respondent’s request for
production of documents, to file a response to CTP’s motion to compel discovery, to
comply with the October 14, 2015 Order compelling discovery responses to be provided
by November 3, 2015, and also failed to file a response to CTP’s motion to impose
sanctions. Respondent did not comply with any of CTP’s discovery requests.
Respondent has not made any contact with this Court since July 1, 2015, the date
Respondent timely filed its answer. Respondent’s failure to effectively prosecute and
lefend actions taken over the course of the proceedings have interfered with the orderly
and speedy processing of this case, further warranting imposition of sanctions. See

21 C.F.R. § 17.35(a) (1)(2) and (3).

Due to Respondent’s noncompliance with the October 14, 2015 Order compelling
jiscovery, I am striking Respondent’s Answer, issuing this default decision, and
assuming the facts alleged in CTP’s complaint to be true. See 21 C.F.R. § 17.35(c) (3),
7.11(a). The harshness of the sanctions I impose upon either party must relate to the
nature and severity of the misconduct or failure to comply, and I find the failure to
comply here sufficiently egregious to warrant striking the answer and issuing a decision
without further proceedings. See 21 C.F.R. § 17.35(b). Respondent failed to comply
with the October 14, 2015 Order, nor did it provide any adequate justification for not
loing so.

III. Default Decision

Striking Respondent’s answer leaves the Complaint unanswered. Therefore, I am
required to issue an initial decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must determine whether the allegations in
the Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true and
conclude that default judgment is merited based on the allegations of the Complaint and
the sanctions imposed on Respondent for failure to comply with my orders. 21 C.F.R.
§ 17.11. Specifically:

e At approximately 5:11 p.m. on September 16, 2014, at Respondent’s business
establishment, 11700 South Cleveland Avenue, Fort Myers, Florida 33907, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Camel Crush Menthol cigarettes to a person younger than 18 years of age. The
inspector also observed that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older;

e Ina warning letter dated October 9, 2014, CTP informed Respondent of the
inspector’s September 16, 2014 observations, and that such actions violate federal
law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that
Respondent’s failure to correct its violations could result in a civil money penalty
or other regulatory action;

e At approximately 9:16 p.m. on January 27, 2015, at Respondent’s business
establishment, 11700 South Cleveland Avenue, Fort Myers, Florida 33907, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
Marlboro Gold Pack cigarettes to a person younger than 18 years of age.

These facts establish Respondent 7-Eleven Store 34153A’s liability under the Act. The
Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product
is misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. §

387a-1; see 21 U.S.C. § 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under
21 CFR. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18
years of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of
photographic identification containing a purchaser’s date of birth, that no cigarette
purchasers are younger than 18 years of age.

A $250 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $250 against Respondent 7
Eleven Inc. d/b/a 7-Eleven Store 34153A. Pursuant to 21 C.F.R. § 17.11(b), this order
becomes final and binding upon both parties after 30 days of the date of its issuance.

/s/
Margaret G. Brakebusch
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2015-H-1935)

Complainant
v.

Brothers Groceries, LLC
d/b/a Brothers Grocery,

Respondent.
Docket No. C-15-2758
Decision No. CR4481

Date: December 4, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Brothers Groceries, LLC d/b/a Brothers Grocery, located at
4685 Park Heights Avenue, Baltimore, Maryland 21215, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Brothers Grocery impermissibly sold cigarettes
to minors and failed to verify, by means of photo identification containing a date of birth,
that the purchasers were 18 years of age or older, thereby violating the Federal Food,
Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations,
21 C.F.R. pt. 1140. CTP seeks to impose a $2,000 civil money penalty against
Respondent Brothers Grocery. During the hearing process, Respondent has failed to
comply with a judicial direction regarding CTP’s discovery request. I therefore strike
Respondent’s answer and issue this decision of default judgment.
I. Procedural History

CTP began this matter by serving an administrative complaint seeking a $2,000 civil
money penalty on Respondent Brothers Grocery, at 4685 Park Heights Avenue,
Baltimore, Maryland 21215. Respondent filed an answer to CTP’s complaint on July 14,
2015. Lissued an Acknowledgement and Prehearing Order (APHO) on July 21, 2015,
that set deadlines for parties’ submissions, including the August 19, 2015 deadline to
request that the opposing party provide copies of documents relevant to this case.
Additionally, the APHO stated that a party receiving such a request must provide the
requested documents no later than 30 days after the request. CTP served Respondent
with its request for documents on August 19, 2015.

On September 25, 2015, CTP filed a Motion to Compel Discovery indicating that
Respondent did not respond to its request within the time limit. See 21 C.F.R. § 17.23(a).
On the same date, CTP also filed a motion requesting that all pre-hearing exchange
deadlines be extended. In a letter issued by my direction, Respondent was given until
October 15, 2015, to object to CTP’s motion. Respondent did not file an objection to
CTP’s motion.

On October 22, 2015, I issued an order granting CTP’s Motion to Compel Discovery and
extending the pre-hearing exchange deadlines. The Order allowed Respondent until
November 6, 2015 to comply with CTP’s discovery request. In granting CTP’s Motion
to Compel Discovery I also explained that failure to comply with CTP’s discovery
request may result in Sanctions, including the issuance of an Initial Decision and Default
Judgment, finding Respondent liable for the violations listed in the complaint and
imposing a civil money penalty. CTP subsequently filed a Motion to Impose Sanctions
on November 12, 2015, indicating that Respondent did not comply with the Order
Granting CTP’s Motion to Compel. I do note that Respondent mailed a $250 check to
the Departmental Appeal Board on October 30, 2015. On November 12, 2015,
Respondent’s check was returned with detailed instructions on how to provide payment
to CTP. On December 1, 2015, CTP filed an Updated Status Report indicating that the
parties had not reached a settlement.

Il. Pending Motions

On November 12, 2015, CTP filed a Motion to Impose Sanctions. In its November 12,
2015 Motion for Sanctions, CTP stated that “Respondent has neither produced any of the
requested documents, nor contacted Complainant or Counsel for Complainant regarding
this matter.”

Due to noncompliance with my Order granting CTP’s Motion to Compel, I am striking
Respondent’s Answer, issuing this default decision, and assuming the facts alleged in
CTP’s complaint to be true. See 21 C.F.R. § 17.35(c) (3), 17.11(a). The harshness of the
sanctions I impose upon either party must relate to the nature and severity of the
misconduct or failure to comply, and I find the failure to comply here sufficiently
egregious to warrant striking the answer and issuing a decision without further
proceedings. See 21 C.F.R. § 17.35(b).

III. Default Decision

Striking Respondent’s Answer leaves the Complaint unanswered. Therefore, I am
required to issue an initial decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must determine whether the allegations in
the Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true and
conclude the default judgment is merited based on the allegations of the Complaint and
the sanctions imposed on Respondent for failure to comply with the orders. 21 C.F.R.
§ 17.11. Specifically:

¢ CTP previously issued a warning letter to Respondent Brothers Grocery on
February 20, 2014, citing violations of 21 C.F.R. pt. 1140 on December 5, 2013, at
Respondent’s business establishment, 4685 Park Heights Avenue, Baltimore,
Maryland 21215;

¢ On October 7, 2014, CTP initiated a previous civil money penalty action, CRD
Docket Number C-15-6, FDA Docket Number FDA-2014-H-1494! , against
Respondent for two violations of 21 C.F.R. pt. 1140 within a twelve month period.
CTP alleged those violations to have occurred on December 5, 20137, and March
26, 2014;

e The previous action concluded when an Initial Decision and Default Judgment
was entered by an Administrative Law Judge on December 3, 2014, that “found
Respondent liable under the Act for the violations as alleged ....” The Initial
Decision and Default Judgment became final and binding on the parties on

In the previous action, Respondent was Ali Ahmed d/b/a Brothers Grocery.

"Tn the complaint, CTP describes the action or actions that took place at Respondent
Brothers Grocery’s business establishment on December 5, 2013, as both “a violation”
and as “violations.” Complaint J 10. In a previous administrative complaint issued on
October 1, 2014, CTP described two discrete violations at Respondent Brothers
Grocery’s business establishment on December 5, 2013: a violation of 21 C.F.R.

§ 1140.14(a) and a violation of 21 C.F.R. § 1140.14(b)(1). Therefore, I will infer that
CTP’s description in the present complaint of “a violation” occurring on December 5,
2013, was a typographical error.

January 2, 2015;

e At approximately 4:00 p.m. on February 4, 2015, at Respondent’s business
establishment, 4685 Park Heights Avenue, Baltimore, Maryland 21215, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age. The inspector
also observed that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older.

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

§ 387a-1; see 21 U.S.C. § 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010).
Under 21 C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person younger than
18 years of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of
photographic identification containing a purchaser’s date of birth, that no cigarette
purchasers are younger than 18 years of age.

A $2,000 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $2,000 against Respondent
Brothers Groceries, LLC d/b/a Brothers Grocery. Pursuant to 21 C.F.R. § 17.11(b), this
order becomes final and binding upon both parties after 30 days of the date of its
issuance.

/s/
Catherine Ravinski
Administrative Law Judge