Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Kamal Tiwari,
(OI File No.: 5-05-40877-9),

Petitioner,
v.
The Inspector General.
Docket No. C-13-815
Decision No. CR3106

Date: February 7, 2014

DECISION

Petitioner, Kamal Tiwari, appeals the determination of the Inspector General (I.G.)
for the U.S. Department of Health and Human Services to exclude Petitioner from
participating in Medicare, Medicaid, and all federal health care programs pursuant
to sections 1128(a)(1) and 1128(a)(4) of the Social Security Act (Act) (42 U.S.C.
§§ 1320a-7(a)(1), 1320a-7(a)(4)) for a period of 20 years. For the reasons
explained below, I find that there is a basis for the I.G. to exclude Petitioner and
that an exclusion period of 20 years is reasonable based on three aggravating
factors and no mitigating factors.

I. Background and Procedural History

Petitioner, a physician who practiced in several pain management offices in
Indiana, pleaded guilty to two felonies, one count of Health Care Fraud Resulting
in Serious Bodily Injury, in violation of 18 U.S.C. § 1347, and one count of Illegal
Drug Distribution, in violation of 21 U.S.C. § 841(a)(1). I.G. Exs. 1, 2. Ina letter
dated March 29, 2013, the I.G. notified Petitioner that he was being excluded from
participating in Medicare, Medicaid, and all federal health care programs effective
April 18, 2013, pursuant to sections 1128(a)(1) and (a)(4) of the Act (42 U.S.C. §§
1320a-7(a)(1) and (a)(4)). The basis cited for Petitioner’s exclusion under section
1128(a)(1) was his conviction in the United States District Court, Southern District
of Indiana, of a criminal offense related to the delivery of an item or service under
Medicare or a state health care program. The basis cited for Petitioner’s exclusion
under section 1128(a)(4) was his felony conviction, in the same court, of a
criminal offense related to the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance as defined under federal or state law. The
1G. excluded Petitioner for 20 years, 15 years above the statutory minimum
exclusion period for mandatory exclusions, based on three aggravating factors: (1)
the acts resulting in his conviction caused, or were intended to cause, a financial
loss to a government program of $5,000 or more; (2) the acts resulting in his
conviction were committed over a period of one year or more; and (3) the court’s
sentence of Petitioner included incarceration.

By letter dated May 14, 2013, Petitioner, appearing pro se, requested a hearing
before an administrative law judge (ALJ). This case was assigned to me for a
possible hearing and written decision. I convened a prehearing conference by
telephone on June 26, 2013, the substance of which I summarized in my Order and
Schedule for Filing Briefs and Documentary Evidence issued on June 28, 2013.
On July 31, 2013, the LG. filed a brief (I.G. Br.) and five proposed exhibits (I.G.
Exs. 1-5). After receiving an extension of time to file, on October 21, 2013,
Petitioner filed his written arguments, consisting of three separate submissions:
“Answer to the Inspector General’s Brief” (P. Answer); a response to the
questions contained in the short-form informal brief (P. Response to Informal
Brief Questions); and a letter (P. Letter). Petitioner also submitted thirteen
proposed exhibits (P. Exs. 1-6, 8-11, 13-15) with his submissions. Because there
appeared to be discrepancies between Petitioner’s exhibit list and the exhibits
submitted, as well as pages missing from Petitioner’s exhibits, I issued an Order to
Supplement Petitioner’s Exhibits and To Extend Deadline For The Inspector
General’s Reply Brief on November 13, 2013.' Ina letter dated November 19,
2013, Petitioner stated that he “apologize[d] for missing and/or mis-numbered
pages. Please consider the submission complete.” The LG. filed a reply brief
(.G. Reply) with an amended I.G. Ex. 3 on December 11, 2013.

Petitioner did not object to the I.G.’s exhibits, and I admit into evidence I.G. Exs.
1-5. The LG. objected to all of Petitioner’s proposed exhibits except P. Ex. 15.
With respect to P. Exs. 1, 2-3, 5, 8, 10-11, and 13-14, the LG. argued that they are

' Among other things, my Order noted that Petitioner had not submitted a P. Ex. 7
and a P. Ex. 12 although he had listed these on his exhibit list, and Petitioner had
submitted a document marked as P. Ex. 15, which he had not listed on his exhibit
list.
irrelevant because they are offered in support of an impermissible collateral attack
on Petitioner’s underlying convictions. I.G. Reply at 5. The .G. objected further
to P. Exs. 1 and 5 on the grounds that they were incomplete and missing pages.
LG. Reply at 5. P. Exs. 1 and 2 comprise the medical records of patient “D.K.” P.
Ex. 3 is an excerpt from a response by CMS contractor National Government
Services (NGS) regarding a draft local coverage determination (LCD) (the name
or the number of the LCD is not apparent). P. Ex. 5 is an excerpt of a LCD (the
LCD name or number is not apparent). P. Ex. 8 is the prescription record for
patient “D.O.” P. Ex. 10 is a letter from W. Stephen Minore, M.D. to John Muller,
Esq. dated September 3, 2012. P. Ex. 11 is the medical record of patient “D.O.”
P. Ex. 13 is a log containing graphs titled “Patients vs Number of Procedures” and
“Patient Percentage vs. Number of Procedures.” P. Ex. 14 is an excerpt from a
response by NGS regarding a draft LCD (the name or the number of the LCD is
not apparent).

It appears that Petitioner has offered P. Exs. 1, 2-3, 5, 8, 10-11, and 13-14 in
support of an attack on his underlying convictions. Such collateral attacks are
impermissible under the regulations. 42 C.F.R. § 1001.2007(d). However, I
overrule the I.G.’s objections and admit P. Exs. 1, 2-3, 5, 8, 10-11, and 13-14 as
relevant to the underlying basis of the L.G.’s exclusion.

Additionally, the I.G. objected to P. Ex. 4 on the grounds that it comprised a
portion (five pages) from the I.G.’s brief, which is already a part of the record.
The I.G. also objected to P. Ex. 6 on the grounds that it appears to be incomplete,
given that it is one page of an arrest affidavit and the exhibit notation on it states
that it is “page 35 of 35.” Lastly, the I.G. objected to P. Ex 9, which is a page
from the indictment, on the grounds that the complete indictment is already a part
of the record as I.G. Ex. 4. I note that in his response dated November 19, 2013,
Petitioner indicated that he “apologize[d] for missing and/or mis-numbered pages”
and confirmed that his exhibits were complete. Considering Petitioner is aware of
the irregularities in his exhibits, I will admit P. Exs. 4, 6, and 9 to the record as
originally filed.

I directed the parties to indicate in their briefs whether an in-person hearing would
be necessary and, if so, to describe the testimony the party wishes to present, the
names of the witnesses it would call, and a summary of each witness’ proposed
testimony. Both parties indicated that they did not believe an in-person hearing
was necessary to decide this case. P. Response to Informal Brief Questions at 5;
1G. Br. at 8. I therefore decide this case based upon its written record.
II. Discussion
A. Applicable Law

Section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1), requires tl

e Secretary of

the U.S. Department of Health and Human Services (Secretary) to exclude from

participation in all federal health care programs “[a]ny individual or

entity that has

been convicted of a criminal offense related to the delivery of an item or service

under [Medicare] or under any State health care program.” Act § 1
U.S.C. § 1320a-7(a)(1)); see also 42 C.F.R. § 1001.101(a). Section

28(a)(1) (42
1128(a)(1) of

the Act does not distinguish between felonies and misdemeanors as predicates for

exclusion.

Section 1128(a)(4) of the Act, 42 U.S.C. § 1320a-7(a)(4), requires tl

e Secretary to

exclude from participation in all federal health care programs “[a]ny individual or

entity that has been convicted for an offense which occurred after . .
1996], under Federal or State law, of a criminal offense consisting 0:

. [August 21,
fa felony

relating to the unlawful manufacture, distribution, prescription, or dispensing of a

controlled substance.” Act § 1128(a)(4) (42 U.S.C. § 1320a-7(a)(4)
C.F.R. § 1001.101(d).

); see also 42

An exclusion made pursuant to section 1128(a)(1) or section 1128(a)(4) is
mandatory. The I.G. must impose such a mandatory exclusion for a minimum
period of five years. Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)); see 42
C.F.R. § 1001.102(a). The I.G. may increase an exclusion period based on the

presence of certain aggravating factors that the Secretary has establi

shed by

regulation. 42 C.F.R. § 1001.102(b). Here, the I.G. relied on three aggravating
factors to enhance the period of Petitioner’s exclusion beyond the minimum

mandatory period:

(1) The acts resulting in the conviction, or similar acts, that caused,
or were intended to cause, a financial loss to a Government program
or to one or more entities of $5,000 or more. (The entire amount of
financial loss to such programs or entities, including any amounts
resulting from similar acts not adjudicated, will be considered
regardless of whether full or partial restitution has been made);

(2) The acts that resulted in the conviction, or similar acts, were
committed over a period of one year or more;

ek
(5) The sentence imposed by the court included incarceration[.]
42 C.F.R. § 1001.102(b)(1), (2), (5); see I.G.’s March 29, 2013 Notice Letter.”

Where, as here, the I.G. determines that one or more aggravating factors may
support increasing an exclusion period beyond the five-year minimum, the I.G.
may then only consider certain specified mitigating factors “as a basis for reducing
the period of exclusion to no less than 5 years.” 42 C.F.R. § 1001.102(c).

Rights to an ALJ hearing and judicial review of the final action of the Secretary
are provided by section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)). The standard
of proof is a preponderance of the evidence, and there may be no collateral attack
of the conviction that is the basis for 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(c). An ALJ reviews the length of an exclusion
de novo to determine whether it falls within a reasonable range considering any
aggravating and mitigating factors. Sushil Aniruddh Sheth, M.D., DAB No. 2491,
at 5 (2012) (citing Joseph M. Rukse, Jr., R.Ph., DAB No. 1851, at 10-11 (2002)).

B. Issues

Under 42 C.F.R. § 1001.2007(a)(1), the scope of my review is limited to two
issues:

Whether there is a basis for the I.G. to exclude Petitioner from participation
in Medicare, Medicaid, and all other federal health care programs; and

Whether the length of the exclusion is unreasonable.
C. Findings of Fact and Conclusions of Law

1. There is a basis for the I.G. to exclude Petitioner pursuant to section
1128(a)(1) of the Act.

The essential elements necessary to support an exclusion based on section
1128(a)(1) of the Act are: (1) the individual to be excluded must have been
convicted of a criminal offense, whether felony or misdemeanor; and (2) the

? Petitioner claims that the I.G. also alleged an aggravating factor “related to the
State Licensing Board action.” P. Response to Informal Brief Questions at 4.
However, Petitioner is mistaken considering that none of the aggravating factors
the L.G. relied upon related to the Indiana Medical Licensing Board’s actions
against him.
criminal offense is related to the delivery of an item or service under Medicare or
any state health care program.

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

An individual is “convicted” of a criminal offense when: (1) a judgment of
conviction has been entered by a federal, state, or local court whether or not an
appeal is pending or the record has been expunged; (2) there has been a finding of
guilt in a federal, state, or local court; (3) a plea of guilty or no contest has been
accepted in a federal, state, or local court; or (4) an accused individual enters a
first offender program, deferred adjudication program, or other arrangement where
a judgment of conviction has been withheld. Act § 1128(i) (42 U.S.C. § 1320a-
7(i)); see also 42 C.F.R. § 1001.2.

On June 16, 2010, a federal grand jury sitting for the United States District Court
for the Southern District of Indiana indicted Petitioner on 13 counts charging him
with Health Care Fraud (Count One), in violation of 18 U.S.C. § 1347, Health
Care Fraud Resulting in Serious Bodily Injury (Count Two), in violation of 18
U.S.C. § 1347, and Illegal Drug Distribution (Counts Three — Thirteen), in
violation of 21 U.S.C. § 841(a)(1). LG. Ex. 4. The Grand Jury alleged, among
other things, that from about 2002 through about December 2008, Petitioner
engaged in a scheme where he “claimed and received reimbursement from health
care benefit programs for medical procedures, such as facet blocks, radiofrequency
ablations, and epidurals and other injection procedures, when these procedures
were not medically necessary.” I.G. Ex. 4, at 8. The Grand Jury alleged that
Petitioner “required and attempted to require patients to undergo medically
unnecessary injection procedures . . . as a condition of receiving controlled
substance prescriptions that he issued, which injection procedures were beyond the
bounds of medical practice.” I.G. Ex. 4, at 8. The Grand Jury alleged further that
Petitioner “prescribed controlled substances, including Schedule II and III
controlled substances, at such dosage frequencies, ... and in such amounts . . . as
were likely to cause and that did cause those patients to submit to unwanted and
unnecessary injection procedures and other services, and to cause those patients to
become dependent on the medically unnecessary procedures of [Petitioner].” I.G.
Ex. 4, at 9.

Petitioner acknowledges that he entered into a plea agreement with federal
prosecutors pursuant to Fed. R. Crim. P. 11(c)(1)(C). P. Response to Questions at
1. On March 9, 2012, Petitioner agreed to plead guilty to the charge of Felony
Health Care Fraud Resulting in Serious Bodily Injury (Count Two), in violation of
18 U.S.C. § 1347, and the charge of felony Illegal Drug Distribution (Count
Three) in violation of 21 U.S.C. § 841(a)(1). LG. Exs. 1, 2. On September 18,
2012, the United States District Court of the Southern District of Indiana accepted
Petitioner’s guilty plea and entered judgment of conviction against him. I.G. Ex.
2, at 1. The court sentenced Petitioner to: 42 months of incarceration; three years
of supervised release; forfeiture of certain assets (real property, bank accounts, and
life insurance); payment of a $200 assessment; and payment of $1,121,872.24 in
restitution to the Centers for Medicare & Medicaid Services (CMS) and the
Indiana Medicaid Program, and $178,014.30 in restitution to Anthem Blue Cross
Blue Shield (total amount of restitution was $1,299,886.54). I.G. Ex. 2, at 5. The
court’s acceptance of Petitioner’s guilty plea, its finding of his guilt, and its entry
of judgment of conviction on September 18, 2012, satisfy the definitions of
“conviction” set out at sections 1128(i)(1), 1128(i)(2), and 1128(i)(3) of the Act.

b. Petitioner’s conviction was for a criminal offense related to the
delivery of an item or service under Medicare and Medicaid.

A conviction is related to the delivery of a health care item or service under
Medicare or a state health care program if there is a “common-sense connection or
nexus between the offense and the delivery of an item or service under the
program.” Scott D. Augustine, DAB No. 2043, at 5-6 (2006) (citations omitted).
Here, one of the offenses for which Petitioner was convicted related to health care
fraud resulting in serious bodily injury. I.G. Exs. 1, 2.

An examination of Count 2 of the indictment, to which Petitioner pleaded guilty,
as well as the “Stipulated Factual Basis for Plea of Guilty” (Stipulation), which
Petitioner signed as part of his guilty plea, shows that Petitioner, beginning in or
about 2002 through December 2008, engaged in a scheme to “defraud a health
care benefit program” and obtain money from a health care benefit program “by
false and fraudulent pretenses . . . resulting in serious bodily injury” to patients.
1.G. Exs. 3; 4, at 8-9, 16. Petitioner admitted in the Stipulation that “[f]rom
January 2007 through December 2007, [he] “performed injection procedures, such
as facet blocks, epidurals and radiofrequency ablations, on a portion of his patients
that were not medically necessary.” I.G. Ex. 3, at 2. He admitted that the
“number of procedures he performed . . . exceeded the standard of care in
interventional pain medicine practice” and amounted to a scheme to defraud
Medicare, Medicaid, and Anthem Blue Cross Blue Shield. I.G. Ex. 3, at 2. The
Stipulation states that the procedures carried risks of serious infections and side
effects from too many steroids, and Petitioner therefore put patients at risk of
suffering serious bodily injury. I.G. Ex. 3, at 2. The Stipulation also states that
the total amount Petitioner received in 2007 from Medicare, Medicaid, and
Anthem from billing for medically unnecessary procedures was approximately
$1.3 million. I.G. Ex. 3, at 3.

Petitioner’s conviction for health care fraud resulting in serious bodily injury thus
directly involved a scheme to defraud Medicare and Medicaid through the
dangerous and unnecessary procedures he provided to his patients under the guise
of pain management. There is a direct “nexus” between Petitioner’s criminal acts
and the delivery of items or services under the Medicare and Medicaid programs.
Moreover, the submission of false claims to the Medicare and Medicaid programs
has been held to be program-related misconduct. See, e.g., Jack W. Greene, DAB
No. 1078 (1989), aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835 (E.D. Tenn.
1990). Here, the District Court ordered Petitioner to pay restitution of
$1,299,886.54, and this figure was allocated as follows: $967,510.63 to CMS;
$154,361.61 to the Indiana Medicaid Program; and $178,014.30 to Anthem Blue
Cross Blue Shield. 1.G. Ex. 2, at 5. Considering the court specifically ordered
Petitioner to pay restitution to CMS and the Indiana Medicaid Program confirms
that a nexus existed between his fraudulent conduct and the delivery of items or
services under Medicare and Medicaid.

2. There is a basis for the IG. to exclude Petitioner pursuant to section
1128(a)(4) of the Act because he pleaded guilty to a felony relating to
unlawfully providing controlled substances to his patients.

The L.G. is required to exclude from participation in Medicare, Medicaid, and all
federal health care programs any individual or entity: (1) convicted of a felony
criminal offense under federal or state law; (2) where the offense occurred after
August 21, 1996; and (3) the criminal offense related to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled substance. Act

§ 1128(a)(4) (42 U.S.C. § 1320a-7(a)(4)); see also 42 C.F.R. § 1001.101(d).

As discussed above, in addition to his conviction for Health Care Fraud Resulting
in Serious Bodily Injury, Petitioner was also convicted, pursuant to his guilty plea,
of a felony charge of Illegal Drug Distribution (Count Three), in violation of 21
ULS.C. § 841(a)(1). 1.G. Exs. 1, 2. Based on the language of Count Three of the
Indictment and the facts set forth in the Stipulation, another part of Petitioner’s
fraudulent scheme involved Petitioner improperly providing opioid prescriptions
to his patients that were “not for a legitimate medical purpose and [were] beyond
the bounds of medical practice.” I.G. Ex. 4, at 17; see I.G. Ex. 3, at 3. The
Stipulation notes that “[t]hese opioids, along with excess steroids from the
procedures caused certain patients . . . serious bodily injury.” I.G. Ex. 3, at 3.
Count Three relates to one of Petitioner’s patients, “D.O,” who not only received
injection procedures from Petitioner but also improperly received prescriptions for
Methadone in 2008. I.G. Ex. 3, at 3.

The Schedules of Controlled Substances in the Code of Federal Regulations list
Methadone as a controlled substance. 21 C.F.R. § 1308.12. Thus, there can be no
dispute that the felony drug offense of which Petitioner was convicted was clearly
related to the unlawful prescription of a controlled substance. Accordingly, I
conclude that there is also a basis to exclude Petitioner pursuant to section
1128(a)(4) of the Act.

3. Tam unable to consider collateral attacks on Petitioner’s underlying
conviction.

Despite pleading guilty to the felony offenses of Health Care Fraud Resulting in
Serious Bodily Injury and Illegal Drug Distribution, Petitioner contends that his
“clinical conduct [was] not consistent with felonious acts” and was within the
standard of care. P. Response to Informal Brief Questions at 1; P. Answer at 3-26.
Petitioner explains that he accepted the plea agreement “solely for the purpose of
limiting my exposure to an unpredictable jury trial with potentially more severe
punitive consequences.” P. Answer at 1. Petitioner argues that the Stipulation he
signed as part of his plea agreement “is incongruous with my clinical conduct” and
that there are “inconsistencies in the dates.” P. Answer at 1, 7; see P. Response to
Informal Brief Questions at 3-4. Further, Petitioner challenges the factual bases
underlying his convictions as outlined in the indictment. P. Answer at 3-21. With
respect to his conviction for illegal drug distribution, Petitioner argues that it was
clinically appropriate for him to provide the prescription to D.O., which was the
basis of his conviction. Petitioner claims that the federal prosecutors had a faulty
“foundation” with respect to this charge. P. Answer at 25.

Petitioner’s arguments, however, amount to collateral attacks on his conviction.
Petitioner has not disputed that he was in fact convicted. The regulation explicitly
precludes any such collateral attack:

When the exclusion is based on the existence of a criminal
conviction . .. where the facts were adjudicated and a final decision
was made, the basis for the underlying conviction . . . is not
reviewable and the individual or entity may not collaterally attack it
either on substantive or procedural grounds in this appeal.

42 C.F.R. § 1001.2007(d). The Departmental Appeals Board (Board) has
repeatedly affirmed this categorical preclusion. See, e.g., Lyle Kai, R.Ph., DAB
No. 1979, at 8 (2005) (“Excluding individuals based on criminal convictions
‘provides protection for federally funded programs and their beneficiaries and
recipients, without expending program resources to duplicate existing criminal

processes.”” (internal citation omitted)). Thus, I do not consider Petitioner’s
arguments attacking his underlying conviction.
10

4. Petitioner must be excluded for a minimum of five years.

Five years is the minimum authorized period for a mandatory exclusion pursuant
to Section 1128(a). Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)). Because
I have concluded that a basis exists to exclude Petitioner pursuant to sections
1128(a)(1) and 1128(a)(4) of the Act (42 U.S.C. § 1320a-7(a)(1) and (a)(4)),
Petitioner must be excluded for a minimum period of five years. Act

§ 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)).

5. The I.G. proved that three aggravating factors exist in this case that
justify lengthening the period of exclusion beyond the five-year statutory
minimum.

The regulations establish aggravating factors that the I.G. may consider to
lengthen the period of exclusion beyond the five-year minimum for a mandatory
exclusion. 42 C.F.R. § 1001.102(b). Only if an aggravating factor justifies an
exclusion longer than five years may mitigating factors be considered as a basis
for reducing the period of exclusion to no less than five years. 42 C.F.R.

§ 1001.102(c). In this case, the I.G. established the presence of three aggravating
factors by a preponderance of the evidence. I address these three aggravating
factors below.

a. The acts resulting in Petitioner’s conviction caused a loss to
government programs and Anthem Blue Cross Blue Shield of
$5,000 or more.

The I.G. may increase the length of an exclusion if the acts resulting in the
underlying conviction caused, or were intended to cause, a loss to a government
program or to one or more entities of $5,000 or more. 42 C.F.R. § 1001.102(b)(1).
The court documents show that the District Court ordered Petitioner to pay
$1,299,886.54 in restitution resulting from his criminal conduct, and this figure
was allocated as follows: $967,510.63 to CMS, $154,361.61 to the Indiana
Medicaid Program, and $178,014.30 to Anthem Blue Cross Blue Shield. I.G. Ex.
2, at 5. It is well established that restitution is a recognized measure of program
loss. See, e.g., Craig Richard Wilder, DAB No. 2416, at 9 (2011). Petitioner’s
crimes caused Medicare, the Indiana Medicaid Program and Anthem Blue Cross
Blue Shield financial losses of almost 260 times the $5,000 threshold required to
trigger this particular aggravating factor.

Petitioner does not deny that he was ordered to pay restitution in the amount of
$1,299,886.54. Petitioner argues, however, that Medicare and Medicaid withheld
payments from him in 2009 and 2010 totaling approximately $1.5 million, and
because he is attempting to apply these withheld monies to pay his restitution, he
11

does not actually “owe any restitution.” P. Answer at 27; P. Response to Informal
Brief at 4. Petitioner’s argument is without merit. There is no dispute that the
District Court ordered Petitioner to pay approximately $1.3 million in restitution,
and this amount reflects the financial losses to CMS, the Indiana Medicaid
program, and Anthem Blue Cross Blue Shield. It is irrelevant how or from what
source Petitioner chooses to pay the restitution amount.

b. The acts resulting in Petitioner’s conviction occurred over a
period of one year or more.

The I.G. may increase the length of an exclusion if the acts resulting in the
underlying conviction occurred over a period of one year or more. 42 C.F.R.

§ 1001.102(b)(2). Petitioner pleaded guilty to Count Two of the indictment,
Health Care Fraud Resulting in Serious Bodily Injury, and this count stated that
Petitioner engaged in his scheme to defraud from “in or about 2002 and continuing
through December 2008.” LG. Ex. 4, at 16. Petitioner also pleaded guilty to
Count Three of the indictment, Illegal Drug Distribution, and this count
specifically related to a prescription that Petitioner had written in December 2008.
LG. Ex. 4, at 17.

Petitioner contends that the duration of his criminal conduct was less than a year.
Petitioner points to the Stipulation and argues that it describes the time span of his
criminal scheme as having occurred from January 2007 to December 2007, which
is less than a year. P. Answer at 27; P. Response to Informal Brief Questions at 2-
3; L.G. Ex. 3, at 2. As noted above, Count Two of the indictment, to which
Petitioner pleaded guilty, specifically gave the time frame of “in or about 2002 and
continuing through December 2008” in outlining Petitioner’s criminal conduct.
1G. Ex. 4, at 16. Moreover, Petitioner also pleaded guilty to Count Three of the
indictment. The Stipulation establishes that his scheme took place, at a minimum,
from January 2007 through December 2008, which is almost twice as long as one
year. LLG. Ex. 3. Therefore, I conclude that the I.G. has established the presence
of this aggravating factor for both convictions.

c. The court’s sentence of Petitioner included incarceration.

The I.G. may increase the length of an exclusion if the court’s sentence includes a
period of incarceration. 42 C.F.R. § 1001.102(b)(5). Here, the District Court
sentenced Petitioner to 42 months in prison based on his convictions for Health
Care Fraud Resulting in Serious Bodily Injury and Illegal Drug Distribution.
Petitioner is currently incarcerated under the District Court’s sentence. Thus, the
1G. has established the presence of this aggravating factor.
12

d. No mitigating factors justify reducing the period of exclusion.

Because I found that aggravating factors are present in this case that justify an
exclusion of longer than five years, I next consider whether any mitigating factors
authorized in the regulations are present to reduce the exclusion period to no less
than five years. 42 C.F.R. § 1001.102(c). Petitioner concedes that there are no
mitigating factors in this case. P. Answer to Informal Brief Questions at 5.
Accordingly, I find that no mitigating factors exist which would justify reducing
the period of exclusion.

6. Based on the three aggravating factors in this case, and the absence of
any mitigating factors, an exclusion period of 20 years is within a
reasonable range.

To determine whether an exclusion period is within a reasonable range, an ALJ
must weigh any aggravating and mitigating factors in the case, and evaluate the
quality of the circumstances surrounding the factors. Vinod Chandrashekhar
Patwardhan, M.D., DAB No. 2454, at 6 (2012) (citing Jeremy Robinson, DAB
No. 1905, at 11 (2004)). There is no “rigid formula” for the LG. or an ALJ to
determine an exact exclusion period when weighing and evaluating aggravating
and mitigating factors. Patwardhan, DAB No. 2454, at 6. Rather, the ALJ must
review the factors de novo to determine whether the exclusion imposed is within a
“reasonable range” of exclusion periods. Ruske, DAB No. 1851, at 11, (citing
Gary Alan Katz, R.Ph., DAB No. 1842, at 8 n.4 (2002)). A “reasonable range” is
“a range of exclusion periods that is more limited than the full range authorized by
the statute and that is tied to the circumstances of the individual cases.” Robinson,
DAB No. 1705, at 5 (quoting Ruske, DAB No. 1851, at 11). Here, the severity of
the three aggravating factors and the absence of any mitigating factors support an
increase in the length of Petitioner’s exclusion period beyond the five-year
minimum. A 20-year exclusion period is within a reasonable range based upon the
aggravating factors.

Petitioner’s crimes resulted in significant financial losses to Medicare, the Indiana
Medicaid program, and Anthem Blue Cross Blue Shield. As I discussed above,
the District Court ordered Petitioner to pay restitution in the total amount of
$1,299,886.54, and of this amount, he was ordered to pay $967,510.63 to CMS,
$154,361.61 to the Indiana Medicaid program, and $178,014.30 to Anthem Blue
Cross Blue Shield. 1.G. Ex. 2, at 5. The Board has characterized program loss
amounts substantially greater than the $5,000 statutory threshold “as an
‘exceptional aggravating factor’ entitled to significant weight.” Sheth, DAB No.
2491, at 7 (2012), citing Robinson, at 12, and Donald A. Burstein, Ph.D., DAB
No. 1865, at 12 (2003). The financial losses in this case to government health care
programs and a private insurance company, almost 260 times the $5,000 threshold
13

needed to support an increase to the exclusion period, must thus be afforded such
substantial weight as to support a significant increase to the reasonable range of
exclusion periods that the I.G. may impose. The reasonable range of exclusion
periods must reflect the substantial government loss as well as the need to protect
government programs from untrustworthy individuals. See Burstein, DAB No.
1865, at 12 (2003). The 20-year exclusion period imposed here is within a
reasonable range because it is long enough to reflect the scope of government loss
and ensure that government programs are protected for a significant period from
an individual proven to be untrustworthy when participating in such programs.
See Michael D. Miran, et al., DAB No. 2469, at 5-6 (2012) (upholding 13-year
exclusion based on $257,946 loss to government program and one additional
aggravating factor); Emem Dominic Ukpong, DAB No. 2220, at 4 (2012)
(upholding 10-year exclusion based on $125,800 loss to government program and
one additional aggravating factor); Brenda Mills, M.D., DAB No. 2061, at 5-6
(2007) (upholding 10-year exclusion based on $84,112 loss to government
program and one additional aggravating factor); Robinson, DAB No. 1905, at 12
(upholding a 15-year exclusion based on a $205,000 loss to government program
and two additional aggravating factors).

The record shows that Petitioner’s criminal conduct took place at least from
around 2002 through December 2008. As the Board has stated, the purpose of the
aggravating factor addressing the length of criminal conduct “is to distinguish
between petitioners whose lapse in integrity is short-lived from those who
evidence a lack of such integrity over a longer period of time.” Burstein, DAB
No. 1865, at 8. Previously, the Board has accorded enough weight to sustain a 15-
year exclusion to the fact that underlying criminal conduct was committed for
“slightly more” than one year. Burstein, at 12. Here, as in Burstein, the length of
Petitioner’s criminal conduct shows prolonged lack of integrity that was more than
just “short-lived” and supports an increase from the five-year minimum exclusion
period to twenty years.

The other proven aggravating factor relates to Petitioner’s prison sentence of 42
months for his crimes. Petitioner’s sentence represents substantial jail time which
indicates the severity of the scheme in which Petitioner was involved. The Board
once determined that a nine-month period of incarceration was “relatively
substantial,” and supported an eight-year exclusion period. Jason Hollady, M.D.,
DAB No. 1855, at 12 (2002). Here, the length of Petitioner’s incarceration was
almost five times that imposed in Hollady. Accordingly, this aggravating factor
bears substantial weight and supports an increase well beyond the five-year
minimum exclusion period to twenty years.

Petitioner has conceded that none of the authorized mitigating factors under 42
C.F.R. § 1001.102(c) are present in his case. Nevertheless, he argues that his
14

period of exclusion is unreasonable and urges me to consider the following: an
exclusion would essentially result in a lifetime bar from the practice of medicine
due to his age (61 years), there are “dire Physician’s shortages,” his significant
investment in his education and board certifications, he no longer intends to
practice pain management but will practice in a different specialty so that the
circumstances for possible criminal or fraudulent activity will not occur again, his
participation in a rehabilitation program as a volunteer, his release from prison in
the next few months, his desire to contribute to society, and the fact that he had
participated in a community health access program and provided care to patients
for free. Request for Hearing; P. Answer at 27-29; P. Letter at 1-2.

I reiterate that the regulations specifically outline what factors may be considered
mitigating and none of Petitioner’s arguments relates to any of those mitigating
factors. See 42 C.F.R. § 1001.102(c). Moreover, “the practical effect of a finite
exclusion period on the individual’s ability to participate in the Medicare program
in the future is irrelevant to determining a reasonable exclusion period.” Sheth,
DAB No. 2491, at 18 (explaining that the Board “has repeatedly declined to
consider an individual’s age or financial or employment prospects in determining
whether an exclusion period is reasonable,” citing Jeremy Robinson, DAB No.
1905, at 7 (2004)).

Til. Conclusion

For the foregoing reasons, the LG. has a basis to exclude Petitioner from
participating in Medicare, Medicaid, and all federal health care programs. After
considering all three aggravating factors and the absence of any mitigating factors,
an exclusion of 20 years is within a reasonable range. Therefore, I sustain the
1.G.’s exclusion of Petitioner for 20 years, effective April 18, 2013.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Jai Shree Ram, Corp.
d/b/a Plaza Liquors,

Respondent.

Docket No. C-14-305
FDA Docket No. FDA-2013-H-1520

Decision No. CR3105
Date: February 7, 2014
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Jai Shree Ram, Corp. d/b/a Plaza Liquors,
alleging facts and legal authority sufficient to justify the imposition of a civil
money penalty of $500. Respondent did not timely answer the Complaint, nor did
Respondent request an extension of time within which to file an answer.
Therefore, I enter a default judgment against Respondent and order that
Respondent pay a civil money penalty in the amount of $500.

CTP began this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent’s staff unlawfully
sold cigarettes to minors and failed to verify that the cigarette purchasers were of
sufficient age, thereby violating the Federal Food, Drug, and Cosmetic Act (Act)
and its implementing regulations, found at 21 C.F.R. Part 1140. CTP seeks a civil
money penalty of $500.
On December 12, 2013, CTP served the Complaint on Respondent by United
Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days Respondent should
pay the 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 by default 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. Therefore, pursuant to 21 C.F.R. § 17.11(a), lam
required to issue an initial decision by default if the Complaint is sufficient to
justify a penalty. Accordingly, I must determine whether the allegations in the
Complaint establish violations of the Act.

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

e Respondent owns Plaza Liquors, an establishment that sells tobacco
products and is located at 591 D Memorial Drive, Chicopee, Massachusetts
01020. Complaint § 3.

e On February 18, 2013, an FDA-commissioned inspector observed that “a
person younger than 18 years of age was able to purchase a package of
Marlboro Gold Pack cigarettes ... at approximately 11:37 AM ET[.]” The
inspector also noted that “the minor’s identification was not verified before
the sale... .” Complaint ¥ 10.

e@ On March 7, 2013, CTP issued a Warning Letter to Plaza Liquors
explaining that the inspector’s February 18, 2013 observations constituted
violations of regulations found at 21 C.F.R. § 1140.14(a) and (b)(1). In
addition to describing the violations, the letter advised Respondent that the
FDA may initiate a civil money penalty action or take other regulatory
action against Respondent if it failed to correct the violations. The letter
also stated that it was Respondent’s responsibility to comply with the law.
Complaint § 10.
e On June 5, 2013, Mr. Yogesh Patel, Respondent’s owner, responded by
telephone to the Warning Letter on Respondent’s behalf. “Mr. Patel stated
that the establishment would be more vigilant about not selling tobacco
products to minors and verifying the identification of all tobacco purchasers
who appear to be under 27 years old.” Complaint § 11.

e¢ On June 6, 2013, FDA-commissioned inspectors documented additional
violations of 21 C.F.R. Part 1140 during another inspection of
Respondent’s establishment. The inspectors noted that “‘a person younger
than 18 years of age was able to purchase a package of Newport Box
cigarettes . . . at approximately 4:18 PM[.]” The inspectors also noted that
“the minor’s identification was not verified before the sale . . . on June 6,
2013....” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). 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), a retailer must verify, by means
of photo identification containing the bearer’s date of birth, that no cigarette
purchasers are younger than 18 years of age.

Here, Respondent violated 21 C.F.R. § 1140.14(a) on February 18, 2013, and June
6, 2013, when its staff sold cigarettes to minors. Respondent also violated 21
C.F.R. § 1140.14(b)(1) on those same dates when its staff did not verify, by
checking the cigarette purchasers’ photographic identification, that the cigarette
purchasers were 18 years of age or older. Therefore, Respondent’s actions and
omissions on two separate occasions at the same retail outlet constitute violations
of law that warrant a civil money penalty. Accordingly, I find that a civil money
penalty of $500 is permissible under 21 C.F.R. § 17.2.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

David M. Massey
d/b/a The Chicken Stop,

Respondent.

Docket No. C-14-296
FDA Docket No. FDA-2013-H-1499

Decision No. CR3104

Date: February 6, 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 113 U.S. Highway 63 West, Marked Tree, Arkansas
72365. Complaint § 3. CTP conducted four inspections of the establishment. Complaint
49. During one of the inspections, an FDA-commissioned inspector observed that:
[A] person younger than 18 years of age was able to purchase a package of
Newport Box cigarettes on November 28, 2011, at approximately 3:45 PM CT;
and... the minor’s identification was not verified before the sale, as detailed
above, on November 28, 2011, at approximately 3:45 PM CT.”

Complaint § 10.

On January 19, 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.

Though United Parcel Service records indicate that an individual named “Massey”
received the warning letter on January 20, 2012, CTP did not receive a response to the
warning letter from Respondent. 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 Special Blend 100s cigarettes on May 9, 2013, at approximately
8:52 PM; and .. . the minor’s identification was not verified before the sale,
as detailed above, on May 9, 2013, at approximately 8:52 PM.

Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on December 10, 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
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
3

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/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Olufunke R. Anifowose,
(OI File No. H-12-43048-9)

Petitioner,
v.

The Inspector General.

Docket No. C-14-142

Decision No. CR3103
Date: February 4, 2014

DECISION
I sustain the determination of the Inspector General (1.G.) to exclude Petitioner,

Olufunke R. Anifowose, from participating in Medicare and all other federally
funded health care programs for a minimum period of five years.

I. Background

On August 30, 2013, the LG. sent notice to Petitioner, advising her that she was
being excluded from Medicare and all federally funded health care programs for a
minimum period of five years. The I.G. advised Petitioner that her exclusion was
mandated by section 1128(a)(2) of the Social Security Act (Act) because
Petitioner had been convicted of a criminal offense relating to patient neglect or
abuse in connection with the delivery of a health care item or service. The length
of the exclusion, five years, was for the minimum period prescribed by law for
exclusions imposed pursuant to section 1128(a)(2).

Petitioner requested a hearing and the case was assigned to me for a hearing and a
decision. I directed the parties to file briefs and proposed exhibits. The LG. filed
a brief and seven proposed exhibits that are identified as LG. Ex. 1 —1.G. Ex. 7. I
receive these exhibits into the record. Petitioner filed a brief without supporting
exhibits. The I.G. did not file a reply brief.' Neither party offered proposed
testimony nor did either party request that I convene an in-person hearing.

II. Issues, Findings of Fact and Conclusions of law
A. Issue

The issue in this case is whether the I.G. was authorized to exclude Petitioner for a
minimum of five years.

B. Findings of Fact and Conclusions of Law

I find that Petitioner’s exclusion is mandated by section 1128(a)(2) of the Act and
that the exclusion period of five years is the minimum period that is required by
law.

Petitioner admits that she was convicted of a criminal offense and that her
conviction is of an offense that falls within the reach of section 1128(a)(2) of the
Act. As I discuss above, section 1128(a)(2) mandates the exclusion of any
individual who is convicted of a criminal offense relating to neglect or abuse
committed in connection with the delivery of a health care item or service. It is
undisputed that Petitioner was convicted under Maryland law of abuse by causing
physical injury to a vulnerable adult who at the time of the crime was under
Petitioner’s care. I.G. Ex. 3 at 3. More specifically, Petitioner worked as a
caregiver at an adult care home. She entered a plea resulting in her conviction of
the crime of abusing a resident of that home on February 6, 2011. I.G. Exs. 2, 5,
6.

There is no doubt that Petitioner’s conviction satisfies all of the elements of a
section 1128(a)(2) offense and that the law mandates her exclusion. She was
convicted of a criminal offense. The crime — on its face — was related to
Petitioner’s abuse of an elderly and ill individual. That individual was under
Petitioner’s care at the time of the incident and so Petitioner committed her crime
in connection with the delivery of a health care item or service.

' The I.G. also filed a motion to dismiss Petitioner’s hearing request, arguing that
Petitioner did not present an argument or raise an issue that I had authority to hear
and decide. I deny that motion because I conclude that, although Petitioner’s
arguments may not be justiciable, they are certainly arguments that she had the
right to raise and that I have the duty to address even if only to conclude that I lack
authority to hear and decide them.
Petitioner argues that she is not actually guilty of the offense of which she was
convicted. She avers without elaboration that she did not commit the “alleged
crime.” Petitioner’s Informal Brief at IV. That assertion is, as a matter of law,
irrelevant. The requirement that Petitioner be excluded derives directly from her
conviction and not from the underlying issue of her guilt or innocence. That issue
was resolved when Petitioner entered a plea to the charges filed against her and
Petitioner may not litigate it before me.

Petitioner argues also that the length of her exclusion is unreasonable. I may not
make findings as to reasonableness because Petitioner’s exclusion is for the
minimum period that is mandated by the Act for exclusions imposed pursuant to
section 1128(a)(2). Act, section 1128(c)(3)(B).

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Major Petroleum Company d/b/a Quik Break Belton,
Respondent.

Docket No. C-14-270
FDA Docket No. FDA-2013-H-1469

Decision No. CR3102

Date: February 3, 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 101 Cherry Hill Drive, Belton, Missouri 64012.
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
Pall Mall Orange cigarettes on December 30, 2013, at approximately 1:31
PM CT.

Complaint § 10.

On February 28, 2013, 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.

Harwin S. Sandhu, Respondent’s Vice President, responded to the warning letter on
Respondent’s behalf in a March 5, 2013 letter that was attached to an e-mail. “Mr.
Sandhu stated that the employee no longer works for the establishment. The
establishment always had a program in place for checking IDs and employees are trained
on the law[] when hired.” Mr. Sandhu further stated that “it was working to improve its
internal process and make all current employees understand the consequences of tobacco
sales violations.” 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 Longhorn Long Cut Wintergreen smokeless tobacco on May 30, 2013, at
approximately 11:35 AM.” Complaint {| 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on December 4, 2013, via United Parcel Service. CTP charged Respondent
with violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor). 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
Omah Singh, M.D.,
(PTAN: E0518701),

Mark Hatton, M.D.,
(PTAN: A3413602),

Nadia Waheed, M.D.,
(PTAN: A3764707),

Petitioners,
v.
Centers for Medicare & Medicaid Services.
Docket Nos. C-14-545
C-14-546
C-14-547
ALJ Ruling Nos. 2014-20
2014-21
2014-22
Date: February 4, 2014
RULINGS DISMISSING REQUESTS FOR HEARING
I dismiss the hearing requests of Petitioners Omah Singh, M.D., (C-14-545), Mark
Hatton, M.D. (C-14-546), and Nadia Waheed, M.D. (C-14-547) because they were not
timely filed and Petitioners have not shown good cause for their failure to file their
hearing requests timely.
I have not formally consolidated these cases. However, all three Petitioners work for the

same employer, North Suburban Eye Associates, P.C., (North Suburban) and all three
cases address the same issue, that being the effective date of the Petitioners’ reassignment

of Medicare benefits to their employer. Furthermore, the three cases involve identical
material facts concerning the history of the Petitioners’ hearing requests. For these
reasons I find it efficient to issue consolidated rulings that apply to all three Petitioners.

The parties filed essentially identical exhibits in all three cases. I receive the exhibits
identified in each case into that case’s record.

The material facts of these cases are that each Petitioner applied to a Medicare contractor,
NHIC, to have his or her Medicare reimbursement reassigned to his or her employer,
North Suburban. The applications were denied and on July 26, 2012 NHIC affirmed its
denials with a reconsideration determination in each case. NHIC sent out a letter to each
Petitioner which contained the following language:

FURTHER APPEAL RIGHTS: ADMINISTRATIVE LAW JUDGE
(ALJ): If you are satisfied with this decision you do not need to take any
further action. If you believe that this determination is not correct, you may
request a final ALJ review. You must act quickly and you must meet the
requirements for requesting a final ALJ review. You must file your appeal
within 60 calendar days after the receipt of this decision by writing to the
following address:

Department of Health and Human Services
Departmental Appeals Board
Civil Remedies Division, Mail Stop 6132
330 Independence Avenue, S.W.
Cohen Building, Room G-644
Washington, D.C. 20201
Attn: CMS Enrollment Appeal

Alternatively, you can file your appeal electronically at the Departmental
Appeals Board electronic filing system website (DAB E-File) at

https://dab.efile.hhs.gov.

C-14-545, CMS Ex. 1; C-14-546, CMS Ex. 1; C-14-547, CMS Ex. 1.

There is no dispute that Petitioners did not file their hearing requests until July 24, 2013,
almost a full year after receiving NHIC’s reconsideration determinations with the quoted
language. And, on that date, they filed their requests with the Office of Medicare
Hearings and Appeals (OMHA) rather than with the Departmental Appeals Board
(DAB). Each Petitioner’s hearing request is thus filed many months after the 60-day
deadline for timely filing a request for hearing notwithstanding the fact that each
Petitioner had been told explicitly that it must file his or her request with the DAB Civil
Remedies Division no later than 60 days after receiving NHIC’s reconsideration
determination.

Hearings in these cases are governed by regulations at 42 C.F.R. Part 498. An
administrative law judge may dismiss a hearing request that is untimely filed and where
the judge has not extended the deadline for filing the hearing request. 42 C.F.R.

§ 498.70(c). The deadline for filing a hearing request will not be extended beyond the
60-day period allowed for filing absent a showing of good cause for a failure to file
timely. 42 C.F.R. § 498.40(c)(1), (2).

The regulatory term “good cause” is not defined. However, it has been held universally
that “good cause” means an event or act beyond a party’s ability to control that prevents
im or her from filing a hearing request timely. Hospicio San Martin, DAB No. 1554
(1996). Ordinary negligence or even an honest misunderstanding of one’s duties is not
good cause.

Petitioners assert that good cause exists in their cases because they were affirmatively
misled by an employee of CMS into believing that they did not have to file hearing
requests while they pursued an alternate appeal process to the process for appeals
established by regulation. They contend that the employee told them that they could
pursue something called a “set aside appeal process” of the determination as to their
effective date of benefits reassignment and that, if they were dissatisfied with the results
of the process they could then file appeals of their adverse redeterminations. C-14-545,
P. Ex. B; C-14-546, P. Ex. B; C-14-547, P. Ex. B. Effectively, Petitioners contend that
they were told that the period during which they could file an appeal of the
reconsideration determination would be extended indefinitely while they pursued a
favorable outcome in the “set aside appeal process.”'

Petitioners contend that the process was protracted but that they immediately filed their
appeals, albeit with the wrong agency (OMHA), once they were advised that the outcome
was unfavorable. They contend that they would have filed their hearing requests timely
in these cases but for being told that they could pursue their rights in the “set aside
appeal” process without jeopardizing their hearing rights.

For purposes of this ruling I conclude that a CMS employee did make a misleading
statement to Petitioners about the impact of participating in the “set aside appeal process”
and effectively told them that their right to a hearing at the Civil Remedies Division
would be preserved while the alternative process ran its course. However, I find that this

' [have no idea what the “set aside appeal process” is inasmuch as neither party has
provided me with an explanation of what it consists of. However, for purposes of this
ruling I find that such a process exists and that Petitioner pursued a favorable outcome
via the process and did not prevail.
misleading information should not have misled Petitioners to sleep on their rights.
Consequently, I do not find good cause for extending their deadlines to file hearing
requests.

I begin with the fact that Petitioners were told explicitly by the contractor that they must
file hearing requests within 60 days of receiving adverse redeterminations if they wanted
to preserve their rights to hearings. The language in the contractor’s letter was
unequivocal and offered no exceptions. Indeed, there was nothing in that statement to
Petitioners that would lead any reasonable person to believe that his or her right to a
earing would be preserved beyond 60 days if he or she pursued some alternative appeal
process.

Furthermore, Petitioners are not unsophisticated individuals. They are medical
professionals who must deal with the intricacies of health insurance and the Medicare
program every day of their lives. They are expected to understand the requirements of
the program and, equally, they are expected to understand their rights and to exercise
them consistent with regulatory requirements. Petitioners should not have been misled
by the verbal assurances of a CMS employee given that they were on explicit written
notice of their rights and obligations. In light of the fact that they had been given
misleading and contradictory information they should have inquired further in order to
verify their rights. They could have determined immediately exactly what their
obligations were simply by contacting the Civil Remedies Division at the address given
to them by the contractor.

Indeed, nothing that the CMS employee told Petitioners should have led them to believe
that they could ignore the deadline for filing their hearing requests. The information that
Petitioners received was certainly misleading but no reasonable person possessing
Petitioners’ level of sophistication would have concluded that it trumped the explicit
notice sent by the contractor or, more importantly, the specific requirements of
regulations that Petitioners, as Medicare participants, are charged with knowing.

/s/
Steven T. Kessel
Administrative Law Judge


The Center

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
J & H of Washington, Inc. d/b/a Young’s Quick Stop #1,

Respondent.

Docket No. C-14-273

FDA Docket No. FDA-2013-H-1476
Decision No. CR3094

Date: January 29, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

‘or 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 penal

ties 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 100 G Street, Aberdeen, Washington 98520.

Complaint §

On June 20,

3. CTP conducted four inspections of the establishment. Complaint § 9.

2012, CTP initiated a previous civil money penalty action, CRD docket

number C-12-877, against Respondent in which it alleged three violations of regulations
found at 21 C.F.R. Part 1140. See Complaint § 10; CTP v. J & H of Washington, Inc.,
2

d/b/a Young’s Quick Stop #1, DAB CR2593, at 2-4 (2012).' In that action, the
Administrative Law Judge found that Respondent committed one violation of the
regulations on June 6, 2011, and two violations of the regulations on February 23, 2012.
Young’s Quick Stop #1, DAB CR2593, at 7-8. The Administrative Law Judge entered
default judgment against Respondent and ordered it to pay a $500 civil money penalty.
Young’s Quick Stop #1, DAB CR2593, at 9.

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
Newport Box cigarettes on April 24, 2013, at approximately 5:55 PM; and

. .. the minor’s identification was not verified before the sale, as detailed
above, on April 24, 2013, at approximately 5:55 PM.

Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on December 4, 2013, via United Parcel Service. CTP charged Respondent
with violations of 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. CTP asked the CRD to impose a $5,000 civil money penalty based on five alleged
violations of the regulations in a 36-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:

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

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 $5,000 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 $5,000.
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,
(FDA No. FDA-2013-H-1532)

Complainant
v.

Scottie Ivers d/b/a Tab’s,
Respondent.
Docket No. C-14-313
Decision No. CR3093

Date: February 4, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an
administrative complaint on Respondent, Scottie Ivers d/b/a Tab’s, at 2101 South
Main Street, Hope, Arkansas 71801, and by filing a copy of the complaint with the
Food and Drug Administration's (FDA) Division of Dockets Management. The
complaint alleges that Tab’s impermissibly sold cigarettes to minors and failed to
verify, by means of photo identification containing a date of birth, that tobacco
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. Part 1140. CTP seeks to impose a $500 civil money
penalty against Respondent Tab’s.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on December 17, 2013, CTP
served the complaint on Respondent Tab’s by United Parcel Service. In the
complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time
in which to file an answer. CTP warned Respondent that, if it failed to take one of
these actions within 30 days, the Administrative Law Judge could, pursuant to 21
C.F.R. § 17.11, issue an initial decision ordering it to pay the full amount of the
proposed penalty.

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

e At Respondent’s business establishment, at 2101 South Main Street, Hope,
Arkansas 71801, on May 24, 2012, at approximately 11:46 AM CT, an
FDA-commissioned inspector observed Respondent’s staff sell a package
of Grand Prix Kings Filter Red cigarettes to a person younger than 18 years
of age. The FDA-commissioned inspector also observed that staff failed to
verify, by means of photo identification containing the bearer’s date of
birth, that the cigarette purchaser was 18 years of age or older;

e Ina warning letter issued on July 19, 2012, CTP informed Respondent of
the inspector’s May 24, 2012 observations, and that such actions violate
federal law, 21 C.F.R. § 1140.14(a) and (b)(1) . The letter further warned
that if Respondent failed to correct its violations, the FDA could impose a
civil money penalty or take other regulatory action;

e At Respondent’s business establishment, 2101 South Main Street, Hope,
Arkansas 71801, on June 19, 2013, at approximately 12:19 PM, FDA-
commissioned inspectors documented Respondent’s staff selling a package
of Marlboro 100’s to a person younger than 18 years of age. The inspectors
also noted that Respondent’s staff failed to verify, by means of photo
identification containing the bearer’s date of birth, that the tobacco
purchaser was 18 years of age or older.

These facts establish Respondent’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 issued the regulations at 21 C.F.R. Part 1140 under
section 906(d) of the Act. 21 U.S.C. 387(a); see 21 U.S.C. § 387£(d)(1); 75 Fed.
Reg. 13,229 (Mar. 10, 2010). Under 21 C.F.R. § 1140.14(a), no retailer may sell
cigarettes or smokeless tobacco to any person younger than 18 years of age.
Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photo
identification containing the bearer’s date of birth, that no cigarette or smokeless
tobacco purchaser is younger than 18 years of age.
A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against
Respondent Scottie Ivers d/b/a Tab’s. 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/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Five Smooters, Inc.
d/b/a La Plata Short Stop,

Respondent.

Docket No. C-14-261
FDA Docket No. FDA-2013-H-1454

Decision No. CR3092

Date: January 28, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Five Smooters, Inc. d/b/a La Plata Short Stop (Respondent),
which alleges facts and legal authority sufficient to justify imposing a $500 civil
money penalty.

CTP initiated this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Civil Remedies Division (CRD) and the Food and Drug
Administration’s (FDA) Division of Dockets Management. The Complaint
alleges that Respondent’s staff unlawfully sold regulated tobacco products to a
person younger than 18 years of age, thereby violating the Federal Food, Drug,
and Cosmetic Act (Act), codified at 21 U.S.C. §§ 301 — 399d, and its
implementing regulations found at 21 C.F.R. Part 1140. CTP seeks a civil money
penalty of $500.
On December 3, 2013, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days, Respondent must
take one of the following three actions: pay the penalty, file an answer, or request
an extension of time within which to file an answer. CTP warned Respondent that
if it failed to take one of these actions within 30 days, an Administrative Law
Judge could issue an initial decision ordering Respondent to pay the full amount of
the proposed penalty. 21 C.F.R. § 17.11.

Pursuant to 21 C.F.R. § 17.11(a), lam 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 that:

e Respondent owns La Plata Short Stop, an establishment that sells tobacco
products and is located at 12732 Old Highway 63, La Plata, Missouri
63549. Complaint 3.

e On February 4, 2013, CTP initiated a civil money penalty action against
Respondent for two violations of 21 C.F.R. Part 1140 within a twelve-
month period. See CRD Docket Number C-13-362, Complaint § 13.
Specifically, on March 2, 2012, an FDA-commissioned inspector observed
that Respondent “[had] a basket containing packages of cigarettes located
on the sales counter where the packages were directly accessible to
consumers.” Jd. at § 10.

e During a subsequent “two-part inspection” conducted on November 5, 2012
and November 6, 2012, FDA-commissioned inspectors documented a
violation of 21 C.F.R. § 1140.14(a) when “a person younger than 18 years
of age was able to purchase a package of Copenhagen Long Cut smokeless
tobacco on November 5, 2012, at approximately 12:50 PM.” Jd. at 4 1;
Complaint § 10.

e “Linda Smoot, [who] identified herself as being authorized to settle claims
on behalf of Five Smooters, Inc. d/b/a La Plata Short Stop” settled CRD
Docket Number C-13-362 and the case closed on March 11, 2013.
Complaint § 11.

e On May 20, 2013, FDA-commissioned inspectors documented a violation
of 21 C.F.R. § 1140.14(a) at the establishment. Specifically, the inspectors
observed that “a person younger than 18 years of age was able to purchase
a package of Pall Mall Red cigarettes . . . at approximately 10:21 AM.”
Complaint § 1.

I find that these facts, which I must assume are true, establish that Respondent is
liable under the Act. See 21 C.F.R. § 17.11(a). 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,
codified at 21 U.S.C. § 387f(d). See 21 U.S.C. § 387(a)(7)(B); 21 C.F.R.

§ 1140.1(b). The regulations prohibit the sale of cigarettes or smokeless tobacco
to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a).

In the present case, Respondent committed three violations of 21 C.F.R. Part 1140
within a fourteen-month period. First, on March 2, 2012, Respondent used a self-
service display in a non-exempt facility. 21 C.F.R. § 1140.16(c). On November
5, 2012, and subsequently on May 20, 2013, Respondent unlawfully sold a
regulated tobacco product to a minor. 21 C.F.R. § 1140.14(a). Therefore,
Respondent’s actions and omissions constitute violations of law that merit a civil
money penalty. Accordingly, I find that a civil money penalty in the amount of
$500 is permissible and order it imposed. 21 C.F.R. § 17.2.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Schatze’s Sports Bar & Grill, Inc.,
Respondent.

Docket No. C-14-280
FDA Docket No. FDA-2013-H-1482

Decision No. CR3091

Date: January 27, 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 2301 East Main Street, Belleville, Illinois 62221.
Complaint § 3. CTP conducted three inspections of the establishment. Complaint § 9.
During an inspection, an FDA-commissioned inspector observed that “on June 22, 2012,
. .. [Respondent] u[tilized] a vending machine [to sell regulated tobacco products]... .”
In addition, “the bartender on duty told the inspector that minors are allowed to enter [the
establishment] prior to 9:00 PM.” Complaint § 10.

On September 27, 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.

Bobby Minard, Respondent’s Manager, responded to the warning letter on Respondent’s
behalf in an October 12, 2012 telephone call. “Mr. Minard stated that the vending
machine was moved upstairs[ ]to a portion of the facility where minors are neither
present nor permitted to enter at any time.” 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 Gold Pack 100’s cigarettes from a vending machine in
Respondent’s establishment on July 12, 2013, at approximately 2:10 PM;

. . . [and] the minor’s identification was not verified before the sale, as
detailed above, on July 12, 2013, at approximately 2:10 PM.

Complaint {

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on December 5, 2013, via United Parcel Service. CTP charged Respondent
with violating 21 C.F.R. § 1140.14(c) (utilizing a vending machine to sell tobacco
products in a non-exempt facility), 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 §§j 1, 10. CTP asked the CRD to impose a $2,000 civil money penalty
based on four 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.

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. I also find that CTP’s request to impose a $2,000 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 $2.000.
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
Donna J. Mann,
(OI File No. 7-00-4081 1-9),
Petitioner,
v.

The Inspector General.
Docket No. C-13-1177
Decision No. CR3089

Date: January 17, 2014

DECISION

Petitioner, Donna J. Mann, was a licensed practical nurse (LPN), with licenses in Utah
and Montana, until the Utah Division of Occupational and Professional Licensing
revoked her Utah license. Pursuant to section 1128(b)(4) of the Social Security Act
(Act), the Inspector General (I.G.) has excluded her from participation in Medicare,
Medicaid, and all federal health care programs until she regains her Utah license.
Petitioner now appeals the exclusion.

For the reasons set forth below, I find that the Utah licensing authority revoked
Petitioner’s nursing license for reasons bearing on her professional competence and
performance, so the I.G. has appropriately excluded her from program participation.

Background
In a letter dated January 31, 2001, the I.G. advised Petitioner Mann that she was excluded

from participation in Medicare, Medicaid, and all federal health care programs because
her license to provide health care in the State of Utah was revoked, suspended, or
otherwise lost or was surrendered while a formal disciplinary proceeding, bearing on her
professional competence, professional performance, or financial integrity, was pending
before the state licensing authority. The letter explained that section 1128(b)(4)
authorizes the exclusion. I.G. Ex. 1. Petitioner Mann requested review.'

The I.G. submitted his brief (I.G. Br.) and seven exhibits (I.G. Exs. 1-7). Petitioner filed
a brief (P. Br.) with no exhibits. In the absence of any objection, I admit into evidence
1G. Exs. 1-7.

I directed the parties to indicate in their briefs whether an in-person hearing would be
necessary, and, if so, to “describe the testimony” it wishes to present, the names of the
witnesses it would call, and a summary of each witness’ proposed testimony.” Neither
party indicates that an in-person hearing is necessary, and, in any event, neither party has
listed any witnesses.

Discussion

Because Utah’s licensing authority revoked Petitioner
Mann’s nursing license for reasons bearing on her
professional competence or performance, the I.G. may
appropriately exclude her from participation in Medicare,
Medicaid, and other federal health care programs.°

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

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

In Montana, the state licensing authority placed her on probation due to her substance
abuse and a domestic abuse conviction. Thereafter, she applied for a nursing license in
Utah. Utah granted her a license but, because of her history, placed conditions on that
license: that she submit to random drug screening; that she participate in a professional
support group and 12-step program; that she submit quarterly therapy reports; and that

1 Initially, the notice letter was returned to the I.G. as undeliverable, and the I.G.
concedes that Petitioner did not receive it, so even though she did not file her hearing
request until August 7, 2013, the parties agree that her appeal was filed timely.

° These instructions are included in the “short form brief,” which I directed the parties to
complete and submit. Order and Schedule for Filing Briefs and Documentary Evidence
(September 16, 2013).

* I make this one finding of fact/conclusion of law.
she meet with the licensing authority on a quarterly basis. Petitioner Mann did not
comply with these requirements. I.G. Ex. 4 at 3-4.

As a result, in an order dated May 23, 2000, the Utah licensing authority revoked
Petitioner Mann’s nursing license, effective June 22, 2000, finding that she engaged in
“unprofessional conduct.” I.G. Ex. 4 at 4-6; 1.G. Ex. 7. Specifically, the Utah licensing
authority adopted the findings of its administrative law judge (ALJ), who concluded that,
under state law, Petitioner Mann’s failure to comply with the conditions placed on her
license constituted unprofessional conduct and justified license revocation. I.G. Ex. 4 at
4-6. Thus, the licensing authority’s documents establish that Petitioner’s license was
revoked because of her professional competence or performance, and the LG. may
appropriately exclude her from program participation under section 1128(b)(4) of the
Act. Where the facts have been adjudicated and a final decision issued by another
government agency, the basis for that determination is not reviewable. 42 C.F.R.

§ 1001.2007(d); see Donna Rogers, DAB No. 2381 at 4-5 (2011).

Petitioner does not seem to question the reasons that her license was revoked but
complains that, although licensed in Utah, she has not worked as a nurse in that state.
She argues that she was never charged with taking drugs from patients, being under the
influence of drugs or alcohol while at work, or abusing or endangering the life and
welfare of patients. Hearing Request at 1. I find these arguments irrelevant.

Petitioner also maintains that she does not plan to return to nursing and complains that
the exclusion will preclude her from working in a hospital or nursing home in any
capacity. But I may not reverse a section 1128(b)(4) exclusion on the ground that the
person might suffer personal or professional hardships as a result. Donna Rogers, DAB
No. 2381 at 6.

The statute requires that Petitioner Mann’s period of exclusion “shall not be less than the
period during which [her] . . . license. . . is. . . revoked.” Act § 1128(c)(3)(E); see also
42 CFR. § 1001.501(b)(1).

Conclusion
For the above reasons, I conclude that the I.G. properly excluded Petitioner Mann from

participation in Medicare, Medicaid, and all other federal health care programs for so
long as her nursing license is revoked.

/s/
Carolyn Cozad Hughes
Administrative Law Judge