Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Town Hall Estates — Hillsboro, Inc.,
(CCN: 67-6033),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-12-1265
Decision No. CR3359

Date: September 8, 2014

DECISION

Petitioner, Town Hall Estates - Hillsboro, was not in substantial compliance with
program participation requirements from June 7, 2012 through July 2, 2012. There is a
basis for the imposition of enforcement remedies. The following enforcement remedies
are reasonable: a per-instance civil money penalty (PICMP) in the amount of $1,000 for
noncompliance with 42 C.F.R. § 483.10(b)(11)' and a PICMP in the amount of $3,000
for noncompliance with 42 C.F.R. § 483.13(c). The determination of substandard quality
of care was clearly erroneous and Petitioner remained eligible to be approved to conduct
a nurse aide training and competency evaluation program (NATCEP).

' Citations are to the 2011 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
I. Background

Petitioner is located in Hillsboro, Texas, and participates in Medicare as a skilled nursing
facility (SNF) and the state Medicaid program as a nursing facility (NF). On June 7,
2012, Petitioner was surveyed by the Texas Department of Aging and Disability Services
(state agency) and found not in substantial compliance with program participation
requirements due to multiple regulatory violations. The Centers for Medicare &
Medicaid Services (CMS) notified Petitioner by letter dated July 20, 2012, that it was
imposing the following enforcement remedies: termination of Petitioner’s provider
agreement, unless the facility achieved substantial compliance before December 7, 2012;
PICMPs in the amount of $1,000 for an alleged violation of 42 C.F.R. § 483.10(b)(11)
(Tag F157) and $3,000 for an alleged violation of 42 C.F.R. § 483.13(c) (Tag F224); and
a denial of payment for new admissions (DPNA) beginning July 7, 2012. CMS Exhibit
(Ex.) 4 at 1-3. On August 24, 2012, CMS notified Petitioner that Petitioner returned to
substantial compliance with program participation requirements on July 3, 2012, and the
termination and DPNA were rescinded but the PICMPs were unchanged. CMS Ex. 5.

Petitioner requested a hearing before an administrative law judge (ALJ) on September 12,
2012. The case was assigned to me for hearing and decision on September 25, 2012, and
an Acknowledgement and Prehearing Order (Prehearing Order) was issued at my
direction. This case was set for hearing on July 17 and 18, 2013. On July 9, 2013,
Petitioner waived an oral hearing and requested judgment on the pleadings and

documentary evidence. CMS did not request an opportunity to present oral testimony
and on July 15, 2013, I accepted the waiver of oral hearing and set a briefing schedule.

The parties filed opening briefs (CMS Br. and P. Br.) and reply briefs (CMS Reply and
P. Reply). CMS offered CMS Exs. | through 17 and Petitioner offered exhibits (P. Exs.)
1 through 27.” No objection has been made to my consideration of CMS Exs. | through
15 and P. Exs. | through 27 and they are admitted as evidence. On August 23, 2013,
Petitioner filed objections to CMS Exs. 16 and 17 that CMS filed with its opening brief
on August 14, 2013. Petitioner cited multiple grounds for why CMS Exs. 16 and 17

> Petitioner’s exhibits were not properly marked in accordance with the Prehearing Order
4 ILJ and the Civil Remedies Division Procedures (CRDP) § 9. Petitioner numbered the
pages of its 27 exhibits consecutively 1 through 82, beginning with page 1 on the first
page of P. Ex. 1 and continuing through page 82 on the last page of P. Ex. 27. The
Prehearing Order and CRDP require that the pages of each individual exhibit be
numbered consecutively beginning with 1. The exhibits were not returned to Petitioner
as the error does not pose any risk for confusion when referring to Petitioner’s exhibits.
should not be admitted as evidence and should be stricken. Petitioner’s objections to the
admission of CMS Exs. 16 and 17 as evidence are sustained. The exhibits are not
admitted as evidence but will remain part of the record.

The Secretary of the Department of Health and Human Services (the Secretary) requires
that witnesses in this proceeding testify under oath or affirmation. 42 C.F.R. § 498.62.
Therefore, I may not consider witness testimony, in any form, that is not sworn or
affirmed. CMS Ex. 16 purports to be the declaration of Daniel J. McElroy, RN. CMS
Ex. 17 purports to be the declaration of Linda McClain, RN. Neither document reflects
that it was executed under oath in the presence of one authorized to administer oaths such
as a notary. Therefore, CMS Exs. 16 and 17 are unsworn statements of the purported
declarants. The Prehearing Order, § II.L.8 provides in pertinent part:

A written witness’ statement may be submitted in lieu of live
direct testimony at hearings, or in support of a motion for
summary judgment, or when a hearing is waived. Written
witness statements must be submitted in the form of an
affidavit made under oath or as a written unsworn declaration
executed in accordance with 28 U.S.C. § 1746.

The Prehearing Order clearly notified counsel for CMS that an unsworn statement must
be executed in accordance with 28 U.S.C. § 1746. Congress provided an exception to the
requirement that testimony be under oath or affirmation in 28 U.S.C. § 1746, as follows:

Wherever, under any law of the United States or under any
tule, regulation, order, or requirement made pursuant to law,
any matter is required or permitted to be supported,
evidenced, established, or proved by the sworn declaration,
verification, certificate, statement, oath, or affidavit, in
writing of the person making the same (other than a
deposition, or an oath of office, or an oath required to be
taken before a specified official other than a notary public),
such matter may, with like force and effect, be supported,
evidenced, established, or proved by the unsworn declaration,
certificate, verification, or statement, in writing of such
person which is subscribed by him, as true under penalty of
perjury, and dated, in substantially the following form:

(1) If executed without the United States: “I declare (or
certify, verify, or state) under penalty of perjury under the
laws of the United States of America that the foregoing is true
and correct. Executed on (date).

(Signature)”.
(2) If executed within the United States, its territories,
possessions, or commonwealths: “I declare (or certify, verify,
or state) under penalty of perjury that the foregoing is true
and correct. Executed on (date).

(Signature)”.

The declarations marked as CMS Exs. 16 and 17 were not sworn or affirmed and they do
not “substantially” comply with the simple requirements of 28 U.S.C. § 1746.
Accordingly, CMS Exs. 16 and 17 are not admissible as witness testimony but must be
excluded from consideration as substantive evidence on the merits.

IL. Discussion
A. Issues

Whether there is a basis for the imposition of an enforcement
remedy; and,

Whether the remedy imposed is reasonable.
B. Applicable Law

The statutory and regulatory requirements for participation of a SNF in Medicare are
found at section 1819 of the Social Security Act (Act) and at 42 C.F.R. pt. 483. Section
1819(h)(2) of the Act authorizes the Secretary to impose enforcement remedies against a
SNF for failure to comply substantially with the federal participation requirements
established by sections 1819(b), (c), and (d) of the Act.? The Act requires that the
Secretary terminate the Medicare participation of any SNF that does not return to
substantial compliance with participation requirements within six months of being found
not to be in substantial compliance. Act § 1819(h)(2)(C). The Act also requires that the
Secretary deny payment of Medicare benefits for any beneficiary admitted to a SNF, if
the SNF fails to return to substantial compliance with program participation requirements
within three months of being found not to be in substantial compliance — commonly
referred to as the mandatory or statutory DPNA. Act § 1819(h)(2)(D). The Act grants
the Secretary discretionary authority to terminate a noncompliant SNF’s participation in

> Participation of a NF in Medicaid is governed by section 1919 of the Act. Section
1919(h)(2) of the Act gives enforcement authority to the states to ensure that NFs comply
with their participation requirements established by sections 1919(b), (c), and (d) of the
Act.
Medicare, even if there has been less than 180 days of noncompliance. The Act also
grants the Secretary authority to impose other enforcement remedies, including a
discretionary DPNA, CMPs, appointment of temporary management, and other remedies
such as a directed plan of correction. Act § 1819(h)(2)(B).

The Secretary has delegated to CMS and the states the authority to impose remedies
against a long-term care facility that is not complying substantially with federal
participation requirements. “Substantial compliance means a level of compliance with
the requirements of participation such that any identified deficiencies pose no greater risk
to resident health or safety than the potential for causing minimal harm.” 42 C.F.R.

§ 488.301 (emphasis in original). A deficiency is a violation of a participation
requirement established by sections 1819(b), (c), and (d) of the Act or the Secretary’s
regulations at 42 C.F.R. pt. 483, subpt. B. Noncompliance refers to any deficiency that
causes a facility not to be in substantial compliance. 42 C.F.R. § 488.301. State survey
agencies survey facilities that participate in Medicare on behalf of CMS to determine
whether the facilities are complying with federal participation requirements. 42 C.F.R.
§§ 488.10-.28, 488.300-.335. The regulations specify the enforcement remedies that
CMS may impose if a facility is not in substantial compliance with Medicare
requirements. 42 C.F.R. § 488.406.

The regulations specify that a CMP that is imposed against a facility on a per-day basis
will fall into one of two ranges of penalties. 42 C.F.R. §§ 488.408, 488.438. The upper
range of a CMP, $3,050 per day to $10,000 per day, is reserved for deficiencies that pose
immediate jeopardy to a facility’s residents and, in some circumstances, for repeated
deficiencies. 42 C.F.R. § 488.438(a)(1)(i), (d)(2). “dmmediate jeopardy means a
situation in which the provider’s noncompliance with one or more requirements of
participation has caused, or is likely to cause, serious injury, harm, impairment, or death
to a resident.” 42 C.F.R. § 488.301 (emphasis in original). The lower range of CMPs,
$50 per day to $3,000 per day, is reserved for deficiencies that do not pose immediate
jeopardy, but either cause actual harm to residents, or cause no actual harm but have the
potential for causing more than minimal harm. 42 C.F.R. § 488.438(a)(1)(ii). CMS is
also authorized to impose a PICMP for each instance that a facility is not in substantial
compliance, whether or not the deficiency poses immediate jeopardy. 42 C.F.R.

§ 488.430(a). The authorized range for a PICMP is $1,000 to $10,000. 42 C.F.R.

§ 488.438(a)(2).

The state agency notified Petitioner by letter dated June 22, 2012, that a determination of
substandard quality of care based on the alleged violation of 42 C.F.R. § 483.13 (Tag
F224), triggered an extended or partial extended survey. Therefore, the state was
required to withdraw approval of Petitioner to run a NATCEP. CMS Ex. 4 at 8. Pursuant
to sections 1819(b)(5) and 1919(b)(5) of the Act, SNFs and NFs may only use nurse aides
who have completed a training and competency evaluation program. Pursuant to sections
1819(f)(2) and 1919(f)(2) of the Act, the Secretary was tasked to develop requirements
for approval of NATCEPs and the process for review of those programs. Sections
1819(e) and 1919(e) of the Act impose upon the states the requirement to specify what
NATCEPs they will approve that meet the requirements that the Secretary established
and a process for reviewing and re-approving those programs using criteria the Secretary
set. The Secretary promulgated regulations at 42 C.F.R. pt. 483, subpt. D. Pursuant to
42 C.F.R. § 483.151(b)(2) and (f), a state may not approve and must withdraw any prior
approval of a NATCEP offered by a SNF or facility NF that has been: (1) subject to an
extended or partial extended survey under sections 1819(g)(2)(B)(i) or 1919(g)(2)(B)(i)
of the Act; (2) assessed a CMP of not less than $5,000; or (3) subject to termination of its
participation agreement, a DPNA, or the appointment of temporary management.
Extended and partial extended surveys are triggered by a finding of “substandard quality
of care” during a standard or abbreviated standard survey and involve evaluating
additional participation requirements. “Substandard quality of care” is identified by the
situation where surveyors identify one or more deficiencies related to participation
requirements established by 42 C.F.R. § 483.13 (Resident Behavior and Facility
Practices), § 483.15 (Quality of Life), or § 483.25 (Quality of Care) that are found to
constitute either immediate jeopardy, a pattern of or widespread actual harm that does not
amount to immediate jeopardy, or a widespread potential for more than minimal harm
that does not amount to immediate jeopardy and there is no actual harm. 42 C.F.R.

§ 488.301.

The Act and regulations make a hearing before an ALJ available to a long-term care
facility against which CMS has determined to impose an enforcement remedy. Act

§§ 1128A(c)(2), 1866(h); 42 C.F.R. §§ 488.408(g), 498.3(b)(13). A facility has a right to
appeal a “certification of noncompliance leading to an enforcement remedy.” 42 C.F.R.
§§ 488.408(g)(1); 488.330(e), 498.3. However, the choice of remedies, or the factors
CMS considered when choosing remedies, are not subject to review. 42 C.F.R.

§ 488.408(g)(2). A facility may only challenge the scope and severity level of
noncompliance determined by CMS, if a successful challenge would affect the range of
the CMP that may be imposed or impact the facility’s authority to conduct a NATCEP.
42 C.F.R. § 498.3(b)(14), (16), (d)(10)(i). The CMS determination as to the level of
noncompliance, including the finding of immediate jeopardy, “must be upheld unless it is
clearly erroneous.” 42 C.F.R. § 498.60(c)(2); Woodstock Care Ctr., DAB No. 1726 at 9,
38 (2000), aff’d, 363 F.3d 583 (6th Cir. 2003). The Departmental Appeals Board (the
Board) has long held that the net effect of the regulations is that a provider has no right to
challenge the scope and severity level assigned to a noncompliance finding, except in the
situation where that finding was the basis for an immediate jeopardy determination. See,
e.g., Ridge Terrace, DAB No. 1834 (2002); Koester Pavilion, DAB No. 1750 (2000).
ALJ review of a CMP is subject to 42 C.F.R. § 488.438(e).

The hearing before an ALJ is a de novo proceeding, that is, “a fresh look by a neutral
decision-maker at the legal and factual basis for the deficiency findings underlying the
remedies.” Life Care Ctr. of Bardstown, DAB No. 2479 at 32 (2012) (citation omitted).
The Board has long held that the petitioner bears the burden of persuasion to show by a
preponderance of the evidence that it was in substantial compliance with participation
requirements or any affirmative defense. Batavia Nursing & Convalescent Inn, DAB No.
1911 (2004); Batavia Nursing & Convalescent Ctr., DAB No. 1904, aff'd, Batavia
Nursing & Convalescent Ctr. v. Thompson, 129 F. App’x 181 (6th Cir. 2005); Emerald
Oaks, DAB No. 1800 (2001); Cross Creek Health Care Ctr., DAB No. 1665 (1998);
Hillman Rehab. Ctr., DAB No. 1611, aff’d, Hillman Rehab. Ctr. v. United States, No. 98-
3789 (GEB), 1999 WL 34813783 (D.N.J. May 13, 1999). However, only when CMS
makes a prima facie showing of noncompliance, is the facility burdened to show, by a
preponderance of the evidence on the record as a whole, that it was in substantial
compliance or had an affirmative defense. Evergreene Nursing Care Ctr., DAB No.
2069 at 4.

The standard of proof, or quantum of evidence required, is a preponderance of the
evidence. CMS has the burden of coming forward with the evidence and making a prima
facie showing of a basis for imposing an enforcement remedy. The Board has stated that
CMS must come forward with “evidence related to disputed findings that is sufficient
(together with any undisputed findings and relevant legal authority) to establish a prima
facie case of noncompliance with a regulatory requirement.” Evergreene Nursing Care
Ctr., DAB No. 2069 at 7 (2007); Batavia Nursing & Convalescent Ctr., DAB No 1904.
“Prima facie” means generally that the evidence is “[s]ufficient to establish a fact or raise
a presumption unless disproved or rebutted.” Black’s Law Dictionary 1228 (8th ed.
2004). In Hillman Rehab. Ctr., the Board described the elements of the CMS prima facie
case in general terms as follows:

HCFA [now known as CMS] must identify the legal criteria
to which it seeks to hold a provider. Moreover, to the extent
that a provider challenges HCFA’s findings, HCFA must
come forward with evidence of the basis for its determination,
including the factual findings on which HCFA is relying and,
if HCFA has determined that a condition of participation was
not met, HCFA’s evaluation that the deficiencies found meet
the regulatory standard for a condition-level deficiency.

DAB No. 1611 at 8. Thus, CMS has the initial burden of coming forward with sufficient
evidence to show that its decision to impose an enforcement remedy is legally sufficient
under the statute and regulations. To make a prima facie case that its decision was
legally sufficient, CMS must: (1) identify the statute, regulation or other legal criteria to
which it seeks to hold the provider; (2) come forward with evidence upon which it relies
for its factual conclusions that are disputed by Petitioner; and (3) show how the
deficiencies it found amount to noncompliance that warrants an enforcement remedy, that
is, that there was a risk for more than minimal harm due to the regulatory violation. In
Evergreene Nursing Care Ctr., the Board explained its “well-established framework for
allocating the burden of proof on the issue of whether a SNF is out of substantial
compliance” as follows:

CMS has the burden of coming forward with evidence related
to disputed findings that is sufficient (together with any
undisputed findings and relevant legal authority) to establish
a prima facie case of noncompliance with a regulatory
requirement. If CMS makes this prima facie showing, then
the SNF must carry its ultimate burden of persuasion by
showing, by a preponderance of the evidence, on the record
as a whole, that it was in substantial compliance during the
relevant period.

DAB No. 2069 at 7. CMS makes a prima facie showing of noncompliance if the credible
evidence CMS relies on is sufficient to support a decision in its favor absent an effective
rebuttal. The regulation gives Petitioner notice of the criteria or elements it must meet to
comply with the program participation requirement established by the regulation.

5 U.S.C. §§ 551(4), 552(a)(1). Therefore, in order to make a prima facie showing of
noncompliance, CMS must show that Petitioner violated the regulation by not complying
with one or more of the criteria or elements of the regulation, which is a

deficiency. CMS must also show that the deficiency amounted to “noncompliance,” that
is, that Petitioner was not in substantial compliance because the deficiency posed a risk
for more than minimal harm. See Jennifer Matthew Nursing & Rehab. Ctr., DAB No.
2192 at 20 n.12 (2008). A facility can overcome CMS’s prima facie case either by
rebutting the evidence upon which that case rests, or by proving facts that affirmatively
show substantial compliance. “An effective rebuttal of CMS’s prima facie case would
mean that at the close of the evidence the provider had shown that the facts on which its
case depended (that is, for which it had the burden of proof) were supported by a
preponderance of the evidence.” Jd. at 7-8 (citations omitted).

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

My conclusions of law are set forth in bold text followed by my findings of fact and
analysis. I have carefully considered all the evidence and the arguments of both parties,
though not all may be specifically discussed in this decision. I discuss in this decision the
credible evidence given the greatest weight in my decision-making.‘ I also discuss any

* “Credible evidence’ is evidence that is worthy of belief. Black's Law Dictionary 596
(8" ed. 2004). The “weight of evidence” is the persuasiveness of some evidence
compared to other evidence. Id. at 1625.
evidence that I find is not credible or worthy of weight. The fact that evidence is not
specifically discussed should not be considered sufficient to rebut the presumption that I
considered all the evidence and assigned such weight or probative value to the credible
evidence that I determined appropriate within my discretion as an ALJ. There is no
requirement for me to discuss the weight given every piece of evidence considered in this
case, nor would it be consistent with notions of judicial economy to do so. Charles H.
Koch, Jr., Admin. L. and Prac. § 5:64 (3d ed. 2013).

The state agency cited Petitioner with the following deficiencies based on the survey
completed on June 7, 2012: 42 C.F.R. §§ 483.10(b)(11) (Tag F157, ° scope and severity
(s/s) H°); 483.13(a) (Tag F221, s/s E); 483.13(c) (Tag F224, s/s H); 483.13(c)(1)(ii)-(iii),
(c)(2)-(4) (Tag F225, s/s E); 483.13(c) (Tag F226, s/s E); 483.20(d) and 483.20(k)(1)
(Tag F279, s/s E); 483.20(k)(3)(ii) (Tag F282, s/s E); 483.75(i) (Tag F501, s/s C);
483.75(I)(1) (Tag F514, s/s C); and 483.75(c)(1) (Tag F520, s/s C). CMS proposes to

> This is a “Tag” designation as used in CMS Publication 100-07, State Operations
Manual (SOM), app. PP — Guidance to Surveyors for Long Term Care Facilities
(http://www.cms.hhs.gov/Manuals/IOM/list.asp). The “Tag” refers to the specific
regulatory provision allegedly violated and CMS’s policy guidance to surveyors.
Although the SOM does not have the force and effect of law, the provisions of the Act
and regulations interpreted clearly do have such force and effect. Ind. Dept. of Pub.
Welfare v. Sullivan, 934 F.2d 853 (7th Cir. 1991); Northwest Tissue Ctr. v. Shalala,

1 F.3d 522 (7th Cir. 1993). Thus, while the Secretary may not seek to enforce the
provisions of the SOM, she may seek to enforce the provisions of the Act or regulations
as interpreted by the SOM.

® Scope and severity levels are used by CMS and a state when selecting remedies. The
scope and severity level is designated by an alpha character, A through L, selected by
CMS or the state agency from the scope and severity matrix published in the SOM, chap.
7, § 7400.5 (Sep. 10, 2010). A scope and severity level of A, B, or C indicates a
deficiency that presents no actual harm but has the potential for minimal harm, which is
an insufficient basis for imposing an enforcement remedy. Facilities with deficiencies of
a level no greater than C remain in substantial compliance. 42 C.F.R. § 488.301. A
scope and severity level of D, E, or F indicates a deficiency that presents no actual harm
but has the potential for more than minimal harm that does not amount to immediate
jeopardy. A scope and severity level of G, H, or I indicates a deficiency that involves
actual harm that does not amount to immediate jeopardy. Scope and severity levels J, K,
and L are deficiencies that constitute immediate jeopardy to resident health or safety.
The matrix, which is based on 42 C.F.R. § 488.408, specifies which remedies are
required and optional at each level based upon the frequency of the deficiency.

10

impose a $1,000 PICMP for the deficiency cited as a violation of 42 C.F.R.

§ 483.10(b)(11) (Tag F157) and a $3,000 PICMP for the deficiency cited as a violation of
42 C.F.R. § 483.13(c)(Tag F224). The finding of substandard quality of care that caused
the loss of NATCEP approval was also caused by the citation under 42 C.F.R.

§ 483.13(c) (Tag F224). No enforcement remedies are proposed based upon the other
cited deficiencies and they are not subject to my review. 42 C.F.R. §§ 488.408(g),
498.3(b)(13)-(15).

1. Judgment on the written pleadings and documentary evidence is
permissible in this case.

Pursuant to 42 C.F.R. § 498.66(a), an affected party, such as Petitioner, may waive its
right to appear and present evidence at an oral hearing by filing a written waiver. When a
written waiver is filed by a petitioner, an ALJ need not conduct an oral hearing except in
two circumstances: the ALJ concludes witness testimony is necessary to clarify facts at
issue; or CMS shows good cause for presenting oral testimony. 42 C.F.R. § 498.66(b).
Petitioner waived its right to an oral hearing consistent with the requirements of 42
C.F.R. § 498.66(a). After review of the evidence and pleadings of the parties, I conclude
that oral testimony is not necessary for clarification of the facts at issue. CMS has not
argued that oral testimony is necessary or otherwise shown good cause to convene an oral
hearing.

In accordance with 42 C.F.R. § 498.66, the record of the hearing in this case without oral
testimony consists of the documentary evidence admitted and the parties’ pleadings. The
parties also had a reasonable opportunity for rebuttal as reflected by their various filings.

Accordingly, this decision is on the merits.

2. CMS has made a prima facie showing, which Petitioner has not
rebutted, that Petitioner violated 42 C.F.R. § 483.10(b)(11) (Tag F157)
and that the violation posed a risk for more than minimal harm.

a. Facts

Both alleged deficiencies subject to my review arise from the same incident involving
Resident 1. The following facts are based on Resident 1’s clinical records and are not
disputed by Petitioner. P. Prehearing Brief at 3-5; P. Br. at 3-5; P. Reply 2-4.

Resident | was an 88-year-old, non-ambulatory woman, unable to bear her own weight,
and she had not walked in a year. Resident 1 was receiving anticoagulant therapy using
Coumadin since 2007 and was at risk for bleeding. Resident | suffered from
thrombocytopenia (low platelet count) (P. Ex. 12 at 32, 34), anemia, cerebrovascular
disease, peripheral vascular disease, osteoporosis, congestive heart failure, hypertension,
11

gout, chronic swelling in both feet, loss of bone density, and she was at risk for fractures.
Resident 1 was cognitively impaired due to Alzheimer’s disease. Resident 1 had a
history of combative behavior against staff and against other residents and was easily
agitated. Resident 1 had chemical restraints and had physical restraints ordered for her in
the form of bedside rails. P. Ex. 10 at 25, P. Ex. 26 at 79; CMS Ex. 10 at 1, 3-8, 16-34.

Resident | was assessed as at risk for bleeding and bruising due to her anticoagulant
therapy. She was also assessed as at risk for spontaneous fractures due her diagnosis of
osteoporosis. Resident 1’s care plan required Petitioner’s staff to monitor her for
hematomas and bruising and to ensure no falls or spontaneous fractures occurred. CMS
Ex. 10 at 25, 30, 33.

On May 30 and 31, and up to June 1, 2012, at around 7:00 a.m., Resident 1 was observed
as having no bruises on her left leg. P. Exs. 2 at 4; 4 at 10; 11 at 30; CMS Ex. 12 at 2-4.
At about 8:45 a.m. on June 1, staffed called for the charge nurse, RN Charrie Evans, to
come to Resident 1’s room. RN Evans observed that Resident | had a bruise on her left
outer ankle, approximately one centimeter in diameter, with a small tear or open area that
was bleeding. Resident 1’s ankles were both swollen but that was normal for her
according to RN Evans. Resident | said “ouch” when the wound was cleaned with saline
but did not otherwise complain of pain while antibiotic ointment and a dressing were
applied. On June 2, 2012, RN Evans was again called to Resident 1’s room to inspect the
left ankle wound. RN Evans noted that the wound was still bleeding so she applied
pressure for five minutes but the bleeding would not stop. RN Evans called for the
weekend RN supervisor, Rebeka Calhoun. RN Calhoun entered Resident 1’s room and
noted that her left ankle was exposed with an old dressing with serosanguineous drainage
present. She asked RN Evans whether the wound was a pressure sore or traumatic injury.
RN Evans and the CNA present denied any knowledge of how the wound occurred.
However, RN Evans told her that the wound was bleeding on June | and again on June 2,
2012. RN Calhoun described the wound as two centimeters (nickel-size), purple, on the
eft outer ankle, with a tiny open area in the center. The left foot was swollen and there
was light purple bruising. RN Calhoun reported that when she lifted the foot she
observed serosanguineous drainage coming from the tiny, open area of the wound. When
RN Calhoun moved the left foot she could feel crepitus and Resident | complained of
pain. RN Calhoun determined that further assessment of the left foot was required, and
she contacted the physician and obtained an order for the resident to be sent to the
emergency room. RN Calhoun contacted the Assistant Director of Nursing (ADON)
Margaret Green, and reported the condition of Resident 1 and the transfer. But RN
Calhoun did not contact the abuse coordinator because she assessed no evidence of abuse
or neglect. P. Exs. 8 at 19; 17 at 48; 18 at 50; 22 at 71; 25 at 77; CMS Exs. 10 at 37-38;
12 at 1, 5-6. Resident 1 was transported to the emergency room. Resident 1 was
admitted to the hospital for surgical repair of a tibia and fibula fracture at the level of her
ankle. CMS Exs. 10 at 13, 38; 13 at 1, 5, 11; P. Exs. 7 at 16; 14 at 39-42; 23 at 72.

12

Resident 1’s wound and bruise were not reported to her physician until 1:05 p.m. on June
2, 2012, 28 hours after the wound was first discovered at approximately 8:45 a.m. on
June 1, 2012. P. Ex. 8 at 19; 25 at 77; CMS Ex. 10 at 38; CMS Ex. 12 at 1.

Petitioner’s notification procedures entitled “Before calling MD/NP/PA” requires a
complete evaluation of the resident documented in the clinical record prior to reporting a
change in condition to a physician, nurse practitioner or physician’s assistant. The
notification procedures require immediate notification of the physician when the resident
displays a sign or symptom of: “any suspected fracture or discoloration” (CMS Ex. 15 at
10); “any wound that will not stop bleeding OR that exposes subcutaneous tissue”(CMS
Ex. 10 at 16, emphasis in original); and for “deep or open wounds, OR with more than
minor bleeding” (CMS Ex. 15 at 13) (emphasis in original).

b. Analysis
Section 483.10(b)(11)(i) of 42 C.F.R. entitled, “Resident rights,” requires:

(11) Notification of changes. (i) A facility must immediately
inform the resident; consult with the resident’s physician; and
if known, notify the resident’s legal respresentative (sic) or an
interested family member when there is --
(A) An accident involving the resident which results in
injury and has the potential for requiring physician
intervention;
(B) A significant change in the resident's physical, mental,
or psychosocial status (i.e., a deterioration in health,
mental, or psychosocial status in either life-threatening
conditions or clinical complications);
(C) A need to alter treatment significantly (i.e., a need to
discontinue an existing form of treatment due to adverse
consequences, or to commence a new form of treatment);
or
(D) A decision to transfer or discharge the resident from
the facility as specified in Sec. 483.12(a).

42 CFR. § 483.10(b)(1 1)(i).

The regulatory language is clear but has often been misconstrued. Therefore, further
analysis of the regulation and its history is appropriate not because interpretation is
required but for the sake of clarity in application.

Residents in long-term care facilities have the rights enumerated in 42 C.F.R. § 483.10.
Among the rights listed are the right to notice of rights and services, including the right to
notice of changes in the resident’s condition to the resident, the resident’s physician, and
13

the resident’s legal representative or interested family member. The language of the
regulation is very specific that the facility “must immediately inform the resident;
consult the physician; and . . . notify the legal representative or an interested family
member.” 42 C.F.R. § 483.10(b)(11) (emphasis added). The regulation creates a
distinction between informing the resident and family and the requirement that Petitioner
“must immediately .. . consult with the resident’s physician . . . when there is a
significant change in the resident’s physical, mental, or psychosocial status” (meaning a
deterioration in the resident’s condition); an accident that may require physician
intervention; a need to alter treatment; or a decision to transfer or discharge the resident
to another facility or institution. /d. (emphasis added). It is clear from the regulatory
language that the requirement to consult is not discretionary and requires more than
merely informing or notifying the physician. The preamble to the final rule reflects the
drafters’ specific intention that the facility should “inform” the resident of the changes
that have occurred but should “consult with the physician about actions that are needed.”
56 Fed. Reg. 48,826 at 48,833 (Sept. 26, 1991).

Thus, it is clear from the language of the regulation and its history that the requirement of
the regulation to consult with the physician means more than to simply notify the
physician. Consultation implies the requirement for a dialogue with and a responsive
directive from the resident’s physician as to what actions are needed; it is not enough to
merely notify the physician. Nor is it enough to leave a message for the physician. The
regulation also requires notification and consultation “immediately” upon discernment of
a change in condition of the resident or the occurrence of an accident that may require
physician intervention; or the occurrence of any of the other triggers in the regulation.
The use of the term “immediately” in the regulatory requirement indicates that
consultation is expected to be done as soon as the change is detected, without any
intervening interval of time. It does not mean that the facility can wait hours or days
before notification of the resident and his or her representative and consultation with the
physician. The preamble to the final rule indicates that originally the proposed rule
granted the facility up to 24 hours in which to consult with the resident’s physician and to
notify the legal representative or family. However, after the receipt of comments that
time is of the essence in such circumstances, the final rule amended that provision to
require that the physician be consulted and the legal representative or family be notified
immediately. 56 Fed. Reg. 48,826, 48,833 (Sept. 26, 1991). The point of using the word
“immediately” recognized that in such situations a delay could result in a situation where
a resident is beyond recovery or dies. The Board has been consistent in its interpretation
of the regulation that consultation with a physician must occur immediately, that is,
without delay, after a significant change is detected or observed. Magnolia Estates
Skilled Care, DAB No. 2228 at 9 (2009).

Furthermore, if we balance the relative inconvenience to a physician and the facility staff
to consult with the possibility for dire consequences to the resident if the physician is not
consulted, it seems that any inconvenience certainly is inconsequential and outweighed

14

by the potential for significant harm if the facility fails to consult the physician. This
regulation is entitled “Resident rights” and the requirements of this specific regulation
provide that every resident has the right to a dignified existence and access to and
communication with persons and services inside and outside the facility. Therefore, the
regulatory requirements make inconsequential any inconvenience under the regulation to
the resident’s physician or to the facility staff when compared to the protection and
facilitation of the rights of the resident. See 56 Fed. Reg. at 48,834. Finally, the
regulation does not allow the facility to pick and choose whom to notify and whom to
consult. Rather, it requires the facility to immediately inform the resident, consult the
physician and notify the resident’s legal representative or interested family member. The
regulation also directly burdens the facility to consult and notify and does not permit a
facility to rely upon a notification or consultation being accomplished by the resident or a
third-party such as an emergency room.

The surveyors allege in the Statement of Deficiencies (SOD) for the survey completed on
June 7, 2012, that Petitioner violated 42 C.F.R. § 483.10(b)(11) because Petitioner’s staff
failed to consult with Resident 1’s physician when there was a need to alter treatment
significantly when Resident 1 exhibited a change in condition. CMS Ex. | at 2. CMS
also argues that Resident | had a significant change that triggered the requirement to
immediately consult under 42 C.F.R. § 483.10(b)(11)(B). Alternatively, CMS argues that
there was a need to significantly alter treatment that triggered the requirement for
immediate consultation under 42 C.F.R. § 483.10(b)(11)(C). CMS Br. at 7-11; CMS
Reply at 5-6. Petitioner limits its argument to whether or not there was a significant
change in Resident 1’s condition that triggered the immediate notification requirement of
42 CFR. § 483.10(b)(11)(B). P. Br. at 2-3, 7-8; P. Reply at 2-4, 5-6.

Neither party addressed either 42 C.F.R. § 483.10(b)(11)(A) and (D) or their application
in this case. I am satisfied that 42 C.F.R. § 483.10(b)(11)(D) is not violated in this case
as on June 2, 2012, the physician directed that Resident | be transferred to a hospital for
care Petitioner could not deliver. 42 C.F.R. § 483.12(a)(2)(i). The evidence is not clear
that Resident 1 suffered a significant change in physical condition at about 8:45 a.m. on
June 1, 2012, thus, triggering the duty to immediately consult under 42 C.F.R.

§ 483.10(b)(11)(B). The evidence is also not clear that at 8:45 a.m. on June 1, 2012,
there was a need to significantly alter Resident 1’s treatment, thus, triggering the duty to
immediately consult under 42 C.F.R. § 483.10(b)(11)(C). However, the evidence is clear
that at 8:45 a.m. June 1, 2012, Resident 1 had a bruise, one centimeter in diameter that
had a wound in the center that was bleeding. None of Petitioner’s staff has admitted
knowing how the resident suffered the injury to her left ankle. Therefore, on June 1,
2012, Resident 1’s injury could only be attributable to an accident, that is, an unexpected,
unintended event that can cause a resident bodily injury, excluding adverse outcomes
associated as a direct consequence of treatment or care (e.g., drug side effects or
reactions). SOM, app. PP, Tag F323 (Aug. 17, 2007); Woodstock Care Ctr., DAB No.
1726, at 4. Pursuant to 42 C.F.R. § 483.10(b)(11)(A), the duty to consult with the

15

physician is triggered whenever there is an accident involving the resident that “results in
injury and has the potential for requiring physician intervention.” The evidence is clear
that Resident 1 was at increased risk for bleeding, bruising, and factures due to Coumadin
therapy and her osteoporosis. Because staff did not know the cause of the injury, staff
could not rule out that Resident 1 had suffered a traumatic accidental injury that had
caused a deep puncture wound or a fracture of bones of the tarsals, the tibia, or the fibula.
Therefore, the bruised area with bleeding was likely to require physician intervention and
staff should have immediately consulted with Resident 1’s physician and not waited to
see what might develop.

Accordingly, I conclude that Petitioner violated 42 C.F.R. § 483.10(b)(11), specifically
the requirement for physician consultation in the event of an accident that resulted in an
injury that had the potential to require physician intervention. In reaching this
conclusion, I have considered that the SOD and the CMS arguments did not specifically
notify Petitioner that the violation was based on 42 C.F.R. § 483.10(b)(11)(A). I
conclude that the deficiency should not be excused on a theory that Petitioner was not
adequately notified of the basis for the imposition of an enforcement remedy. The
surveyors correctly cited to 42 C.F.R. § 483.10(b)(11) in the SOD and they did not cite
specific subsections of the regulation allegedly violated. CMS Ex. | at 1. Therefore, the
SOD adequately notified Petitioner of the regulatory basis and the need to defend against
violation of the entire regulation. The SOD also adequately notified Petitioner of the
factual bases for the alleged deficiency. The failure of counsel for CMS to correctly
identify the defect in the surveyors’ allegations in the SOD and focus on 42 C.F.R.

§ 483.10(b)(11)(A) is inexplicable.’ It is understandable that Petitioner’s counsel would
choose not to highlight the error of counsel for CMS, particularly where, as here, the
violation of 42 C.F.R. § 483.10(b)(11)(A) is both evident and indefensible. Because
Petitioner had adequate notice that the deficiency was based on violation of 42 C.F.R.

§ 483.10(b)(11) and the factual bases for the deficiency, I conclude that Petitioner had
adequate notice of what to defend.

I also conclude that Resident | was at risk for more than minimal harm and suffered
actual harm due to the deficiency. The surveyors specifically allege in the SOD that the
failure to immediately consult the physician resulted in additional pain for Resident 1 and
risked additional tissue trauma, infection, and loss of limb. The identified risk for
systemic infection and amputation are supported by the medical opinions of the
physicians who evaluated Resident | at the hospital and decided to proceed with surgery

7 Counsel for CMS is encouraged to exercise caution and not overstate or
mischaracterize the evidence or permissible inferences to draw from the evidence.
Mischaracterization may not always be excused as zealous representation, may be
sanctionable, and also damages the credibility of the government case.
16

despite her co-morbidities. CMS Ex. 13 at 12. The evidence is undisputed that on June
2, 2012, Resident 1 complained of pain when RN Calhoun moved her left foot — pain
Resident 1 would not have experienced if she had been promptly treated on June 1, 2012.
However, as discussed hereafter, I conclude that surveyors’ scope determination that
there was a pattern of actual harm was clearly erroneous.

3. CMS has made a prima facie showing, which Petitioner has not
rebutted, that Petitioner violated 42 C.F.R. § 483.13(c) (Tag F224) and
that the violation posed a risk for more than minimal harm.

a. Facts

The surveyors cited Petitioner for a violation of 42 C.F.R. § 483.13(c)(Tag F224). The
surveyors allege that Petitioner failed to prevent the neglect of Resident 1, based on the
same facts discussed under Tag F157. ®

b. Analysis

Section 1819(c)(1)(A)(ii) of the Act requires that a SNF protect its residents and promote
their “right to be free from physical or mental abuse, corporal punishment, involuntary
seclusion, and any physical or chemical restraints imposed for purposes of discipline or
convenience and not required to treat the resident’s medical symptoms.” The Act does
not specifically address neglect. However, the Secretary requires that a facility must
develop and implement written policies and procedures prohibiting mistreatment,
neglect, and abuse of residents and the misappropriation of residents’ property.

42 C.F.R. § 483.13(c). Neglect is defined in the regulations as “failure to provide goods
and services necessary to avoid physical harm, mental anguish, or mental illness.”

42 C.F.R. § 488.301. The regulatory definition of “neglect” includes two elements: (1)
any “failure to provide goods and services” and (2) the goods and service are “necessary
to avoid physical harm, mental anguish, or mental illness.” 42 C.F.R. § 488.301. The
definition of neglect does not include an element of knowledge or notice, and the

® The SOM instructs surveyors to cite the mistreatment, neglect, or misappropriation of
resident property under Tag F224. Surveyors are instructed to cite the failure to develop
and implement policies and procedures prohibiting mistreatment, neglect, and abuse of
residents and misappropriation of resident property under Tag F226. SOM app. PP, Tags
F224 and F226 (May 21, 2004). The surveyors also cited Petitioner for deficiencies
under Tag F225 for failure to investigate and report the neglect of Resident | and under
Tag F226 based on the inadequacy and/or failure to implement its policy and procedures.
Neither Tag F225 nor F226 are before me as no enforcement remedy was imposed based
on either deficiency. CMS Ex. 4.
17

definition of neglect may be satisfied whether or not staff was aware that the resident was
in need of goods and services to avoid physical harm, mental anguish, or mental illness.
The definition of neglect does not consider the intent of Petitioner’s staff. Neglect may
occur even if the failure to deliver necessary goods and services was unintended. Under a
strict application of the definition of neglect, neglect is complete the instant that staff fails
to deliver care or services necessary to avoid physical harm, mental anguish, or mental
illness. The definition of neglect does not specifically permit a period for a facility to
assess and intervene to meet the need for goods and services. However, it has been noted
by the Board in a number of different SNF enforcement cases that SNFs are generally not
treated as being “strictly liable” for violations of statutory and regulatory requirements
for participation. See, e.g., Tri-County Extended Care Ctr., DAB No. 1936, at 7 (2004),
aff'd, Tri-County Extended Care Ctr. v. Leavitt, No. 04-04199 (6th Cir. Dec. 14, 2005);
Cherrywood Nursing and Living Ctr., DAB No. 1845 (2002). A limited number of
defenses have been recognized for specific noncompliance, such as unavoidability,
unforeseeability, and reasonableness. The Board has recognized, based mostly on
interpretation of the regulations, that SNFs are not subject to enforcement remedies for
unavoidable negative outcomes, or unforeseen or unpreventable circumstances that
produce a risk for or an actual negative outcome. Tri-County Extended Care Ctr., DAB
No. 1936, at 7; Woodstock Care Ctr., DAB No. 1726, at 21, 25, 40. Furthermore, not all
regulatory or statutory violations, including instances of neglect, are subject to the
imposition of enforcement remedies by CMS. Noncompliance occurs and CMS is
authorized to impose an enforcement remedy, only if a statutory or regulatory violation
poses a risk for more than minimal harm. 42 C.F.R. §§ 488.301, 488.402(b).

On June 1, 2012, staff identified that Resident 1 had a one centimeter diameter bruise on
er left ankle with a small wound near the center that was bleeding. The evidence shows
that staff applied antibiotic ointment and a dressing. There is no dispute that Resident |
was assessed and care planned as being at risk for bruising and bleeding due to her
anticoagulant therapy. There is no dispute that Resident 1 was at risk for fractures due to
er osteoporosis. There is no dispute that staff admitted no knowledge of how Resident 1
suffered the injury discovered on June 1, 2012. As discussed under Tag F157, Petitioner
was required by the regulations to consult with Resident 1’s physician. Petitioner’s
failure to consult was a failure to deliver a service necessary to avoid physical harm and
mental anguish. Accordingly, I conclude that Petitioner violated 42 C.F.R. § 483.13(c)
because Petitioner failed to ensure that Resident 1 was not subject to neglect. I further
conclude that Resident 1 suffered actual harm in the form of pain, particularly as
evidenced by her complaint of pain with movement of the foot on June 2, 2012.

Petitioner argues that there is no evidence that its staff knew or should have known on
June 1, 2012, that there was a possibility that Resident | suffered a fracture or dislocation
or that her wound was “deep or open” with more than minor bleeding. P. Br. at 7.
Petitioner’s argument effectively admits that Resident 1 was neglected. Indeed, the
evidence shows that staff did not know whether or not Resident 1 had a fracture, how

18

deep her wound was, or whether she had more than minor bleeding and, the fact staff did
not know these facts is the crux of the problem.’ Resident 1’s records show that her care
planning team assessed her as being at heightened risk for bruising and bleeding and
fractures and the team developed a care plan to address those risks. However, when
confronted with a wound of unknown origin that staff was apparently not qualified to
completely assess, staff rendered minor first aid for this at-risk resident and failed to seek
more qualified assistance to attempt to determine the severity of her accidental injury and
necessary treatment. Therefore, Petitioner’s staff neglected to provide Resident 1
necessary care and services.

Accordingly, I conclude that Petitioner violated 42 C.F.R. § 483.13(c) (Tag F224) and the
violation cause Resident 1 to suffer actual harm.

4. The determination that the deficiency cited as a violation of
42 C.F.R. § 483.13(c) (Tag F224) constituted a pattern of
noncompliance was clearly erroneous.

5. There was no substandard quality of care that triggered an
extended or partial extended survey.

6. Petitioner remained eligible to conduct a NATCEP .

A facility may only challenge the level of noncompliance determined by CMS, if a
successful challenge would affect the range of the CMP that may be imposed or impact
the facility’s authority to conduct a NATCEP. 42 C.F.R. § 498.3(b)(14), (16). Pursuant
to 42 C.F.R. § 498.3(b)(16) “the finding of substandard quality of care that leads to the
loss by a SNF or NF of the approval of its nurse aide training program,” is an initial
determination that is subject to ALJ and Board review. In a civil money penalty case,
such as this case, the CMS determination of the level of noncompliance must be upheld
unless it is clearly erroneous. 42 C.F.R. § 498.60(c)(2).

° Tam willing to assume that had staff correctly assessed the source of the wound and its
severity, staff would have taken immediate action to obtain qualified assistance.
19

The state agency notified Petitioner by letter dated June 22, 2012, that a determination of
substandard quality of care based on noncompliance under Tag F224 caused an extended
or partial extended survey. Therefore, Petitioner approval to conduct a NATCEP was
withdrawn and Petitioner was ineligible to conduct a NATCEP for two years.'° CMS Ex.
4 at 6-9.

Pursuant to 42 C.F.R. § 483.151(b)(2) and (f), a state may not approve and must
withdraw any prior approval of a NATCEP offered by a SNF or NF that has been: (1)
subject to an extended or partial extended survey under sections 1819(g)(2)(B)(i) or
1919(g)(2)(B)(i) of the Act; (2) assessed a CMP of not less than $5,000; or (3) subject to
termination of its participation agreement, a DPNA, or the appointment of temporary
management. In this case the CMP proposed is not $5,000 or more and Petitioner was
not subject to termination, a DPNA, or temporary management. The state agency advised
Petitioner it was ineligible to offer a NATCEP because of the extended or partial
extended survey. Extended and partial extended surveys are triggered by a finding of
“substandard quality of care” during a standard or abbreviated standard survey and
involve evaluating additional participation requirements. “Substandard quality of care” is
identified by the situation where surveyors identify one or more deficiencies related to
participation requirements established by 42 C.F.R. § 483.13 (Resident Behavior and
Facility Practices), § 483.15 (Quality of Life), or § 483.25 (Quality of Care) that are
found to constitute either immediate jeopardy, a pattern of or widespread actual harm that
does not amount to immediate jeopardy, or a widespread potential for more than minimal
harm that does not amount to immediate jeopardy and there is no actual harm. 42 C.F.R.
§ 488.301.

In this case, the violation of 42 C.F.R. § 483.13(c) caused actual harm and triggered the
extended or partial extended survey because the surveyors also concluded that there was
a pattern of actual harm. CMS Ex. 4 at 7-8. Petitioner disputed that there was actual

harm, but I have resolved that issue against Petitioner. Therefore, the issue remaining is

'° CMS argues in a footnote that the state agency had no record that Petitioner was
approved to conduct a NATCEP program and that Petitioner has no right to review of its
loss of an “unsanctioned NATCEP.” CMS Br. at 16, n. 5. CMS apparently overlooked
the June 22, 2012, state agency notice withdrawing NATCEP approval. CMS Ex. 4 at 6-
9. CMS also overlooked the statement of its witness Daniel J. McElroy, RN in which he
states that the state agency withdrew Petitioner’s approval to conduct a NATCEP for two
years, and he opined that the withdrawal of approval to conduct a NATCEP was
“required and appropriate.” CMS Ex. 16 at 10 (not admitted).
20

whether or not Petitioner has shown that the determination that there was a pattern of
actual harm was clearly erroneous. Petitioner argues that the facts show that there was
only an isolated instance of actual harm involving Resident 1. I agree.

The regulation requires that in determining the seriousness of deficiencies it is necessary
to consider whether the deficiencies “constitute a pattern.” 42 C.F.R. § 488.404.
“Pattern” is not specifically defined in the regulation. However, the drafters state in
another section that “[s]ix occurrences might well be indicative of a pattern of
substandard care.” 42 C.F.R. § 488.110(i)(2). Furthermore, the definition of
“substandard quality of care” specifically focuses upon whether there is a pattern actual
of harm not just a pattern of deficiencies. The definition requires that there be “‘a pattern
of or widespread actual harm that is not immediate jeopardy or widespread potential for
more than minimal harm” for substandard quality of care to be determined. 42 C.F.R.

§ 488.301.

The SOM provides much more specific guidance for surveyors on how to determine if
there is a “pattern”:

Scope is a pattern when more than a very limited number of
residents are affected, and/or more than a very limited
number of staff are involved, and/or the situation has
occurred in several locations, and/or the same resident(s) have
been affected by repeated occurrences of the same deficient
practice. The effect of the deficient practice is not found to be
pervasive throughout the facility.

SOM app. P, Task 7, § IV.C. (Apr. 24, 2009).

Applying the CMS policy set forth in the SOM to the facts before me, I conclude that the
determination that the scope for the noncompliance cited under Tag F224 constituted a
pattern, was clearly erroneous. Only Resident 1 was neglected. Only Resident 1 suffered
actual harm. Only a few staff were involved on June 1, 2012 when the neglect occurred,
a couple Certified Nurse Assistants (CNAs) and a RN. There is no evidence that neglect
occurred in several locations or that the same resident experienced repeated occurrences
of neglect. The evidence does not show that neglect was a pervasive problem throughout
the facility.

Accordingly, I conclude that the noncompliance under Tag F224 did not meet the
definition for substandard quality of care and an extended or partial extended survey
should not have been determined to be necessary. Therefore, Petitioner remained eligible
to be approved to conduct a NATCEP.
21

7. A PICMP in the amount of $1,000 is a reasonable enforcement remedy for
noncompliance with 42 C.F.R. § 483.10(b)(11).

8. A PICMP of $3,000 is a reasonable enforcement for noncompliance with
42 C.F.R. § 483.13(c).

Ifa facility is not in substantial compliance with program participation requirements,
CMS has the authority to impose one or more of the enforcement remedies listed in

42 C.F.R. § 488.406, including a CMP. CMS may impose a per-day CMP for the number
of days that the facility is not in compliance or a PICMP for each instance that a facility
is not in substantial compliance, whether or not the deficiencies pose immediate jeopardy.
42 C.F.R. § 488.430(a). The minimum amount of a PICMP is $1,000 and the maximum
is $10,000. 42 C.F.R. § 488.438(a)(2). CMS proposes two PICMP in this case and I
must determine whether they are reasonable.

If I conclude, as I have in this case, that there is a basis for the imposition of an
enforcement remedy and the remedy proposed is a CMP, my authority to review the
reasonableness of the CMP is limited by 42 C.F.R. § 488.438(e). The limitations are:

(1) I may not set the CMP at zero or reduce it to zero; (2) I may not review the exercise
of discretion by CMS in selecting to impose a CMP; and (3) I may only consider the
factors specified by 42 C.F.R. § 488.438(f) when determining the reasonableness of the
CMP amount. In determining whether the amount of a CMP is reasonable, the following
factors specified at 42 C.F.R. § 488.438(f) must be considered: (1) the facility’s history
of noncompliance, including repeated deficiencies; (2) the facility’s financial condition;
(3) the seriousness of the deficiencies as set forth at 42 C.F.R. § 488.404(b), the same
factors CMS and/or the state were to consider when setting the CMP amount; and (4) the
facility’s degree of culpability, including but not limited to the facilities neglect,
indifference, or disregard for resident care, comfort, and safety and the absence of
culpability is not a mitigating factor. The factors that CMS and the state were required to
consider when setting the CMP amount and that I am required to consider when assessing
the reasonableness of the amount are set forth in 42 C.F.R. § 488.404(b): (1) whether the
deficiencies caused no actual harm but had the potential for minimal harm, no actual
harm with the potential for more than minimal harm, but not immediate jeopardy, actual
harm that is not immediate jeopardy, or immediate jeopardy to resident health and safety;
and (2) whether the deficiencies are isolated, constitute a pattern, or are widespread. My
review of the reasonableness of the CMP is de novo and based upon the evidence in the
record before me. I am not bound to defer to the CMS determination of the reasonable
amount of the CMP to impose but my authority is limited by regulation as already
explained. The Board has explained that my task is to determine whether the amount of
any CMP proposed is within reasonable bounds considering the purpose of the Act and
regulations. Emerald Oaks, DAB No. 1800, at 10 (2001); CarePlex of Silver Spring,
22

DAB No. 1683, at 14-16 (1999); Capitol Hill Cmty. Rehab. & Specialty Care Ctr., DAB
No. 1629 (1997). Petitioner has not argued that the proposed PICMP is unreasonable but
has focused upon whether or not there is a basis for imposing such a remedy and whether
the scope and severity determination for Tag F224 was erroneous.

CMS proposes a CMP of $1,000 for the noncompliance with 42 C.F.R. § 483.10(b)(11)
(Tag F157). A PICMP of $1,000 is the smallest PICMP authorized by 42 C.F.R.

§ 488.438(a)(2). Accordingly, I conclude that the PICMP of $1,000 for 42 C.F.R.

§ 483.10(b)(11) (Tag F157) is reasonable.

The proposed $3,000 PICMP for noncompliance with 42 C.F.R. § 483.13(c) (Tag F224)
is at the low end of the authorized range. Petitioner does not argue and has not submitted
any evidence to support an argument that it is unable to pay the PICMP. CMS has
offered no evidence of past noncompliance for me to consider. The deficiency is serious,
caused actual harm to Resident 1, and supports the PICMP proposed. The
noncompliance was isolated. Petitioner was culpable because it did not provide the care
and services that Resident 1 required and delayed getting Resident 1 treatment for her
bleeding wound and fracture which required surgical repair. I conclude based on my
review of all the required factors, that a PICMP of $3,000 for noncompliance with the
violation at 42 C.F.R. § 483.13(c) is reasonable.

II. Conclusion

For the foregoing reasons, I conclude that there is a basis for the imposition of
enforcement remedies. The following enforcement remedies are reasonable: a PICMP
in the amount of $1,000 for noncompliance with 42 C.F.R. § 483.10(b)(11) (Tag F157)
and a PICMP in the amount of $3,000 for noncompliance with 42 C.F.R. § 483.13(c)
(Tag F224). The determination of substandard quality of care was clearly erroneous and
Petitioner remained eligible to be approved to conduct a NATCEP.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-0905)

Complainant
v.
Berhane Kebede d/b/a 7-Eleven 11647,
Respondent.
Docket No. C-14-1401
Decision No. CR3358

Date: September 5, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Berhane Kebede d/b/a 7-Eleven 11647, at 5415 Kenilworth
Avenue, Riverdale, Maryland 20737, and by filing a copy of the complaint with the Food
and Drug Administration’s (FDA) Division of Dockets Management. The complaint
alleges that 7-Eleven 11647 unlawfully sold cigarettes to minors, 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 $250 civil money
penalty against Respondent 7-Eleven 11647.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 8, 2014, CTP served the
complaint on Respondent 7-Eleven 11647 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 7-Eleven 11647 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, I assume that the facts alleged in the complaint (but not its conclusory statements)
are true. Specifically:

e At Respondent’s business establishment, 5415 Kenilworth Avenue, Riverdale,
Maryland 20737, on July 25, 2013, at approximately 12:41 PM, an FDA-
commissioned inspector observed Respondent’s staff sell a package of Newport
Box cigarettes to a person younger than 18 years of age;

e Ina warning letter issued on September 5, 2013, CTP informed Respondent of the
inspector’s observation from July 25, 2013, and that such an action violates federal
law, 21 C.F.R. § 1140.14(a). The letter further warned that if Respondent failed to
correct its violation, the FDA could impose a civil money penalty or take other
regulatory action;

e At Respondent’s business establishment, 5415 Kenilworth Avenue, Riverdale,
Maryland 20737, on November 6, 2013, at approximately 11:37 AM, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age.

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. § 387¢(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 or smokeless tobacco to any person younger than 18 years
of age.

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

For these reasons, | enter default judgment in the amount of $250 against Respondent
Berhane Kebede d/b/a 7-Eleven 11647. Pursuant to 21 C.F.R.

§ 17.11(b), this order becomes final and binding upon both parties after 30 days of the
date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Robin M. Annecharico
(OI File No. H-13-42385-9),

Petitioner,
v.
The Inspector General.
Docket No. C-14-1083
Decision No. CR3357

Date: September 5, 2014

DECISION

I sustain the determination of the Inspector General (I.G.) of the Department of Health
and Human Services to exclude Petitioner, Robin M. Annecharico, from participating in
Medicare, Medicaid, and all other federally funded health care programs for the statutory
minimum period of five years. Petitioner’s exclusion is required pursuant to section
1128(a)(1) of the Social Security Act (Act) because the evidence before me establishes
that she was convicted of six counts of Medicaid fraud.

I. Background

The I.G. excluded Petitioner, a nurse, for five years effective March 20, 2014, based on
her guilty plea in the Berkshire (County) Superior Court, Massachusetts, to, among other
offenses, six counts of Medicaid fraud. I.G. Exhibit (Ex.) 1, at 1. Petitioner requested a
hearing to challenge her exclusion. Following a prehearing conference by telephone, I
directed the parties to file briefs and proposed exhibits. The LG. filed its brief and three
proposed exhibits identified as I.G. Ex. 1 — LG. Ex. 3. Petitioner filed a brief and 12
proposed exhibits identified as P. Ex. | — P. Ex. 12. The LG. waived its opportunity to

file a reply brief. In the absence of objections, I receive the parties’ exhibits into the
record. Neither party requested an in-person hearing, so I decide this case based on the
written record.

IL. Issue

The only issue presented here is whether the I.G. has a statutory basis for excluding
Petitioner. The length of exclusion is not at issue because the I.G. has relied on a
mandatory exclusion authority and imposed the statutory minimum exclusion period of
five years. 42 C.F.R. § 1001.2007(a)(2).

III. Findings of Fact and Conclusions of Law

I find that section 1128(a)(1) of the Act mandates Petitioner’s exclusion from
participation in Medicare, Medicaid, and all federally funded health care programs.
Section 1128(c)(3)(B) of the Act mandates that the exclusion in this case be for at least
five years.

The undisputed evidence before me demonstrates that Petitioner pled guilty to, among
other charges, six counts of defrauding the Massachusetts Medicaid system. I.G. Ex. 2.
Specifically, by pleading guilty to these criminal charges, Petitioner admitted that she
“did knowingly and willfully make or cause to be made a false statement or
representation of material fact in an application for payment” under the Massachusetts
Medicaid program. I.G. Ex. 3, at 20-30. She acknowledged a total of $23,126 in false
claims. Submitting false claims to a Medicaid program is an offense directly related to
the delivery of and payment for services under a state health care program. Act

§§ 1128(a)(1), 1128(h)(1) (defining “state health care program” to include a program
under Title XIX of the Act, i.e., Medicaid). The Act considers a guilty plea to be a
“conviction” for purposes of section 1128. Act § 1128(i)(3). Indeed, Petitioner explicitly
agrees that the I.G. has proven a mandatory basis for her exclusion from participation.
P. Br. at 1.

Petitioner argues that there are issues that the Massachusetts Attorney General (AG) did
not consider during her underlying criminal case, and that she was “railroaded” into
providing incriminatory evidence to the State. P. Br. at 1. She claims that she cared for
three special needs siblings, including occasions when Petitioner traveled with the family,
and exceeded the maximum number of hours per week than she was permitted to bill
Medicaid for reimbursement. She overbilled Medicaid as a form of “paid time off”
because she had worked unpaid double-shifts earlier. P. Br. at 2. She also claims that
there is inadequate training for nurses about how to bill Medicaid. Petitioner further
asserts that her guilty plea was to “trumped up charges,” and that no one explained to her
the significant repercussions an exclusion action would have before she pled guilty to the
offenses she did. P. Br. at 2.
All of Petitioner’s assertions and arguments are nothing more than an airing of grievances
against the Massachusetts AG and the Massachusetts Medicaid reimbursement for nurses
who may work longer hours than what Massachusetts Medicaid program will cover.
However, low reimbursement rates, or even slow reimbursement for appropriate claims
do not authorize the fraudulent billing scheme that Petitioner engaged in here. More to
the point, Petitioner’s arguments attempt to explain why she was convicted, and thus
amount to collateral attacks on her conviction. The regulation that provides Petitioner her
right to appeal the I.G.’s exclusion action expressly precludes my review of any such
collateral attacks. 42 C.F.R. § 1001.2007(d). Thus, while Petitioner has plenty to say
about Massachusetts Medicaid policy and about the facts of her case demonstrating a
systemic issue with that Medicaid program, I have no authority to consider Petitioner’s
arguments or modify her exclusion based on those arguments.

Finally, Petitioner disputes “the severity of [her] sentencing and subsequent punishment
relative to mitigating evidence.” P. Br. at 3. It is not clear from her argument whether
Petitioner is referring to the length and scope of her exclusion or to the state court’s
sentence of her in the underlying criminal case. Clarifying that discrepancy is not
important because I do not have authority to reduce Petitioner’s mandatory exclusion to a
period of less than five years, and I certainly do not have authority to modify or address
the correctness of the state court’s sentence of Petitioner. 42 C.F.R. § 1001.2007(a)(2).
Petitioner’s “mitigating evidence,” simply relates back her ongoing criticisms about the
policies of the Massachusetts Medicaid program, but, even if those complaints met the
mitigating factors recognized in the applicable regulations — which they clearly do not —
they are not reviewable because the I.G. here imposed the minimum exclusion period and
did not rely on aggravating factors. 42 C.F.R. § 1001.102(c). Finally, to the extent
Petitioner challenges the scope of her exclusion, which she may view as “punishment,”

I note that Congress long ago outlined the broad scope of exclusions, which it deemed
necessary to protect federally funded health care programs. Act § 1128(a). Regardless of
iow much she may regret it, based on her convictions Petitioner fits squarely into the
type of individual from whom Congress sought to protect federal health care programs.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Dinesh R. Patel, M.D.,
(OI File No. 2-11-40392-9),

Petitioner,
v.
The Inspector General.
Docket No. C-14-847
Decision No. CR3355

Date: September 4, 2014

DECISION

Petitioner, Dinesh R. Patel, M.D., is a physician, licensed to practice in the State of New
Jersey. He was convicted of violating the federal anti-kickback statute. Based on his
conviction, the Inspector General (I.G.) has excluded him for five years from
participating in Medicare, Medicaid, and all federal health care programs, as provided for
in section 1128(a)(1) of the Social Security Act (Act). Petitioner appeals the exclusion.
For the reasons discussed below, I find that the I.G. properly excluded Petitioner and that
the statute mandates a minimum five-year exclusion.

Background

By letter dated January 31, 2014, the I.G. notified Petitioner that he was excluded from
participating in Medicare, Medicaid, and all federal health care programs for a period of
five years, because he had been convicted of criminal offenses related to the delivery of
an item or service under the Medicare or state health care program. The letter explained
that section 1128(a)(1) of the Act authorizes the exclusion. I.G. Ex. 1.

Each party submitted a written argument (I.G. Br.; P. Br.). The I.G. submitted ten
exhibits (I.G. Exs. 1-10) and a reply brief (1.G. Reply). Petitioner submitted 96 exhibits
(P. Exs. 1-96). In the absence of any objection, I admit into evidence I.G. Exs. 1-10 and
P. Exs. 1-96.

I directed the parties to indicate in their briefs whether an in-person hearing would be
necessary. If so, I directed the party requesting an in-person hearing to: describe the
testimony it wants to present; provide the name of each witness and a summary of the
witness’s proposed testimony; explain why the testimony is relevant; and show that the
testimony does not duplicate written evidence submitted by either party. Order and
Schedule for Filing Briefs and Documentary Evidence at 2 (May 1, 2014).

The L.G. indicates that an in-person hearing is not necessary and submits no declarations
from proposed witnesses. I.G. Br. at 9. Petitioner, on the other hand, asserts that an in-
person hearing is necessary, and lists two witnesses who will testify about the
community’s need for Petitioner Patel’s medical services. He does not submit written
declarations from the proposed witnesses but provides letters from them. P. Exs. 94, 95;
P. Br. at 7-8. As discussed below, the proposed testimony of these witnesses is simply
not relevant to the narrow issues before me. By regulation, I must exclude that
testimony. 42 C.F.R. § 1005.17(c). I therefore decline to schedule a hearing that would
serve no purpose.

Discussion

Petitioner must be excluded from program participation
because he was convicted of a criminal offense 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).

Under section 1128(a)(1) of the Act, the Secretary of Health and Human Services must
exclude an individual who has been convicted under federal or state law of a criminal
offense related to the delivery of an item or service under Medicare or a state health care
program. 42 C.F.R. § 1001.101(a). Petitioner concedes that he was convicted of a
criminal offense involving the delivery of Medicare or Medicaid services. P. Br. at 2.
On September 19, 2012, he pled guilty to one count of soliciting and receiving illegal
remuneration in violation of the federal Anti-Kickback statute, 42 U.S.C. § 1320a-
7b(b)(1)(A). He accepted payments for referring Medicare, Medicaid, and privately
insured patients to a supplier of diagnostic imaging services. On April 15, 2013, the
district court judge adjudicated him guilty. I.G. Exs. 4, 8, 9.

' [make this one finding of fact/conclusion of law.
This should end the discussion, because the statute mandates exclusion for a minimum
period of five years and provides me no discretion to alter either the exclusion itself or
the period of exclusion. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). Where, as here,
the I.G. imposes an exclusion of five years, the length of the exclusion is not reviewable.
42 C.F.R. § 1001.2007(a)(2).

Petitioner nevertheless argues that he need not be excluded and that the period of
exclusion is disproportionate to his crime. He argues that his exclusion should be waived
pursuant to 42 C.F.R. § 1001.1801(b). P. Br. at 2. Section 1001.1801(b) authorizes the
1.G. to grant or deny a state health care program’s request that exclusion be waived “if the
individual .. . is . . . the sole source of essential specialized services in a community.”
Thus, a state health care official — not the practitioner himself — must present the request
to the I.G., and the I.G.’s “decision to grant, deny, or rescind a request for a waiver is not
subject to administrative or judicial review.” 42 C.F.R. § 1001.1801(f); Act

§ 1128(c)(3)(B).

Petitioner also points out that the Centers for Medicare & Medicaid Services (CMS),
which oversees the Medicare and Medicaid programs, has revoked his Medicare Part B
billing privileges for between one and three years, pursuant to 42 C.F.R. § 424.535(a)(3).
He characterizes the differing periods as “anomalous and inconsistent,” and argues that if
the shorter period is sufficient to protect the integrity of the Part B program, “it should be
wholly sufficient to protect the integrity of all other Federal healthcare programs, as well.
...” P. Br. at 3. The Departmental Appeals Board has rejected such reasoning, pointing
out that CMS acts pursuant to a separate grant of authority, and its determination has no
bearing on the I.G.’s exclusion authority. Gregory J. Salko, M.D., DAB No. 2437 at 6
(2012). Having concluded that the I.G. has a basis to exclude Petitioner under section
1128(a)(1), I must uphold the five-year exclusion.

Finally, Petitioner raises some constitutional challenges that I have no authority to
review. Donna Rogers, DAB No. 2381 at 5 (2011); see 42 C.F.R. § 1005.4(c)(1).

Conclusion

Because he was convicted of a criminal offense related to the delivery of an item or
service under Medicare or a state health care program, Petitioner Patel must be excluded
from program participation for a minimum period of five years.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Howard Deckter, M.D., et al.
v.
Centers for Medicare & Medicaid Services
Docket No. C-14-896'
Decision Number: CR3354

Date: September 4, 2014

DECISION

I grant summary judgment in favor of the Centers for Medicare & Medicaid Services
(CMS) against each of the Petitioners whose names are recited in the caption of this
decision. CMS correctly determined that April 14, 2013 was the earliest date on which
an entity, TriHealth Physicians of Indiana, could claim reimbursement for services
provided by any of the Petitioners.

I. Background

The Petitioners are physicians and a nurse practitioner. On May 14, 2013, each of them
filed an application to reassign his or her Medicare Part B billing privileges to TriHealth
Physicians of Indiana. A contractor, acting on behalf of CMS, accepted these
applications effective their filing date and established April 14, 2013 as the earliest date
on which Medicare reimbursement claims would be accepted from TriHealth Physicians
of Indiana on behalf of any of the Petitioners.

Petitioners were dissatisfied with the April 14 date and requested reconsideration of
CMS’s determination. They contended that Medicare should accept reimbursement
claims filed on their behalf by TriHealth Physicians of Indiana beginning January 1,

' An Appendix, attached after my signature on this decision, lists the names of all
Petitioners and the respective docket numbers of their cases.
2013. The contractor, again acting on behalf of CMS, denied the reconsideration
requests. Petitioners then requested hearings.

CMS moved for summary judgment. It filed nine proposed exhibits that are identified as
CMS Ex. 1 — CMS Ex. 9. Petitioner opposed the motion and filed four proposed exhibits
that are identified as P. Ex. A— P. Ex. D. I receive the parties’ exhibits into the record.
Neither party requested an in-person hearing.

IL. Issues, Findings of Fact and Conclusions of Law
A. Issue

The issue is whether Petitioners are entitled to reassign their benefits to TriHealth
Physicians of Indiana prior to the date that Petitioners filed their applications and prior to
the date that TriHealth Physicians of Indiana was enrolled.

B. Findings of Fact and Conclusions of Law

There are no disputed facts in these cases. The undisputed facts establish that TriHealth
Physicians of Indiana was not enrolled in the Medicare program prior to filing an
enrollment application on its own behalf on May 14, 2013. Prior to May 14, 2013,
Petitioners were associated with businesses other than TriHealth Physicians of Indiana.
The entities include: Gastroenterology Consultants of Greater Cincinnati (Indiana
location); TriHealth Digestive Diseases Institute, LLC; and Gastroenterology Consultants
of Greater Cincinnati (Ohio locations).? These other entities may have been associated
with TriHealth Physicians of Indiana or may have had common ownership, but they did
business as separate entities. None of them operated from the same address as that used
by TriHealth Physicians of Indiana, nor did any of them treat beneficiaries using the
name of TriHealth Physicians of Indiana. CMS Ex. 6 at 2-3; CMS Ex. 7 at 2; CMS Ex.
8 at 18; CMS Ex. 9 at 2.

A health care provider or supplier must be enrolled in the Medicare program in order to
receive payment for covered items or services. 42 C.F.R. § 424.505. TriHealth
Physicians of Indiana was, therefore, not eligible to claim Medicare reimbursement for
the services that it provided prior to its becoming enrolled in Medicare. The earliest date
that it could seek reimbursement for services was 30 days prior to the effective date of its
enrollment. 42 C.F.R. §§ 424.520(d), 424.521(a). The regulations establish the earliest
possible effective date of enrollment as being the later of the date of filing of an
application or the date when an enrolled physician begins furnishing services at a new
practice location. 42 C.F.R. § 424.520(d). Thus, for TriHealth Physicians of Indiana, the

? Not all Petitioners were associated with all of the other entities, but all Petitioners were
associated with at least some of them.
earliest date when it could claim reimbursement for Petitioners’ services was April 14,

2013, 30 days prior to the dat
of Indiana may be associated

e of its application. It is irrelevant that TriHealth Physicians
with or owned by another entity or entities that were

enrolled previously in Medicare. TriHealth Physicians of Indiana is, for Medicare

reimbursement purposes, a se}

parate entity operating out of a unique address that is not

shared with other entities under common ownership. Therefore, it must qualify on its

own for enrollment.

So also is the case with the in
previously in Medicare is irre’
which they had not been asso
enrolled providers. Accordin;

to qualify for reassignment of billing privileges to TriHe:
because, for these individual Petitioners, TriHealth Phys

practice location” and reimbu:

only on the /ater of the following dates: the date when t

dividual Petitioners. Whether or not they were enrolled
levant. TriHealth Physicians of Indiana is an entity with
ciated previously and for whom they had not qualified as
gly, they were required to file enrollment applications and
alth Physicians of Indiana
icians of Indiana was a “new
sement for their services could be claimed by that entity
ey filed applications for

reassignment of Medicare benefits or the date when they began providing services at the

office location of TriHealth P
they filed reassignment of bil

reimbursement claims being accepted retroactively to Aj

42 CFR. § 424.521 (a).

Petitioners’ argument is that tl
TriHealth Physicians of India
contend that their preexisting
without the need re-enroll. T

The regulation at 42 C.F.R. §
submit a new enrollment app

date was, in fact, the date when
, May 14, 2013 (with
pril 13, 2013, courtesy of

rysicians of Indiana. That
ing privileges applications

ey were entitled to reassign their billing privileges to

ina because they were already enrolled in Medicare. They
enrollment was transferrable to a new provider group

at argument is wrong, as a matter of law.

424.520(d) does not state explicitly that a physician must
ication if he or she begins practice from a new location.

But, that is the only possible rational reading of the regulation, because the regulation
states that the earliest date that a physician may claim reimbursement for services

delivered at a new practice lo
enrollment application or beg
cannot claim reimbursement

that location. None of Petitioi
Indiana previously and, there’

cation is the later of the date when the physician files an

ins to provide care from that location. Thus, a physician

for services provided at a new location without enrolling for
mers had provided services from TriHealth Physicians of
ore, all of them were required to file a new enrollment

application to reflect their new status.

Importantly, TriHealth Physicians of Indiana could not have filed reimbursement claims
on behalf of Petitioners until it was enrolled in Medicare. A provider or supplier of care
may not claim reimbursement from Medicare without enrolling. 42 C.F.R. § 424.505.

TriHealth Physicians of India
2013. Consequently, it was n

na did not file an enrollment application until May 14,
ot eligible to claim reimbursement for services prior to
April 14, 2013 (30 days prior to the date of its application) and it could not lawfully file
claims on behalf of Petitioners on any date prior to that date. So, even if Petitioners
reassigned their billing privileges to TriHealth Physicians of Indiana prior to April 14,
2013, those reassignments would be ineffective as a matter of law prior to that date.

/s/
Steven T. Kessel
Administrative Law Judge

Appendix

Docket No. _| Petitioner PTAN NPI
C-14-887 Grace E. Bell, N.P. IN39500005 36654217
C-14-888 Manojkumar S. Singh, M.D. IN1395014 295934719
C-14-889 Carmen B. Meier, M.D. IN1395004 306043107
C-14-890 Allan L. Peck, M.D., IN1395011 588663561
C-14-891 Michel P. Ghastine, M.D. IN1395008 417956475
C-14-892 Maritza Palusiak, M.D. IN1395006 184623159
C-14-893 Nav K. Grandhi, M.D. IN1395012 497754469
C-14-894 Greg D. Anderson, M.D. IN1395013 093714651
C-14-895 Rajagopal Chadalavada, M.D. IN3950009 336115443
C-14-896 Howard Deckter, M.D., IN1395010 073512729


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Jesse Lofton
d/b/a Stumpy’s,

Respondent

Docket No. C-14-1389
FDA Docket No. FDA-2014-H-0886

Decision No. CR3353

Date: September 2, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Jesse Lofton d/b/a Stumpy’s, alleging facts and
legal authority sufficient to justify imposing 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 a minor, thereby violating the Federal Food, Drug, and Cosmetic
Act (Act) and its implementing regulations, found at 21 C.F.R. pt. 1140. CTP
seeks a civil money penalty of $500.
On July 1, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days Respondent should
pay the 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 by
default ordering Respondent to pay the full amount of the proposed penalty. 21
C.F.R. § 17.11.

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 Stumpy’s, an establishment that sells tobacco products
and is located at 9001 South Ashland Avenue, Chicago, Illinois 60620.
Complaint §[ 3.

e CTP previously initiated a civil money penalty action against Respondent,
CRD Docket Number C-13-1209, FDA Docket Number FDA-2013-H-
1004, by filing an Administrative Complaint dated August 21, 2013,
(August 21, 2013 Complaint) alleging two violations of 21 C.F.R. pt. 1140
within a 12-month period. Specifically, CTP alleged Respondent sold
cigarettes to a minor on August 2, 2012, and on March 11, 2013.
Complaint 410; August 21, 2013 Complaint § 1.

e This action concluded when Jesse Lofton settled the claims on
Respondent’s behalf. On October 24, 2013, Mr. Lofton signed an
Acknowledgment Form in which he “admitt[ed] that the violations . . .
occurred, waiv[ed] his ability to contest the violations in the future, and
stat[ed] that he understood that that violations may be counted in
determining the total number of violations for purposes of future
enforcement actions.” The Administrative Law Judge closed the case on
November 20, 2013. Complaint §§ 10-11.

e During a subsequent inspection of Respondent’s establishment conducted
on February 27, 2014, FDA-commissioned inspectors documented that “a
person younger than 18 years of age was able to purchase a package of
Newport Box cigarettes . . . at approximately 4:27 PM.” 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). 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).

Here, Respondent had three violations of regulations found at 21 C.F.R. pt. 1140
within a 24-month period. Respondent acknowledged that two violations occurred
when its representative settled the previous civil money penalty action. Most
recently, on February 27, 2014, Respondent sold cigarettes to a person younger
than 18 years of age, in violation of 21 C.F.R. § 1140.14(a). Respondent’s actions
constitute violations of law that merit a civil money penalty.

The regulations require me to impose a civil money penalty in the amount that is
either the maximum provided for by law or the amount sought in the Complaint,
whichever is smaller. 21 C.F.R. § 17.11(a)(1)-(2). The regulations currently
allow a maximum penalty of $500 for three violations within a 24-month period.
21 C.F.R. § 17.2. Accordingly, I find that a civil money penalty in the amount 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,
(FDA No. FDA-2014-H-0895)

Complainant
v.
Abass Beydoun d/b/a Shamrock,
Respondent.
Docket No. C-14-1396
Decision No. CR3351

Date: September 2, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Abass Beydoun d/b/a Shamrock, at 15111 Houston Whittier
Street, Detroit, Michigan 48205, and by filing a copy of the complaint with the Food and
Drug Administration’s (FDA) Division of Dockets Management. The complaint alleges
that Shamrock unlawfully sold cigarettes to minors and failed to verify, by means of
photo identification containing a date of birth, that cigarette purchasers were 18 years of
age or older, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21
U.S.C. § 301 et seg., and its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to
impose a $500 civil money penalty against Respondent Shamrock.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 2, 2014, CTP served the
complaint on Respondent Shamrock 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 Shamrock 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, I assume that the facts alleged in the complaint (but not its conclusory statements)
are true. Specifically:

e At Respondent’s business establishment, 15111 Houston Whittier Street, Detroit,
Michigan 48205, on June 20, 2013, at approximately 1:56 PM, an FDA-
commissioned inspector observed Respondent’s staff sell a package of Newport
Box 100s cigarettes to a person younger than 18 years of age. The inspector also
noted that Respondent’s 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 18, 2013, CTP informed Respondent of the
inspector’s observations from June 20, 2013, 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, 15111 Houston Whittier Street, Detroit,
Michigan 48205, on November 21, 2013, at approximately 5:51 PM, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box 100s cigarettes 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 cigarette 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 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 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
Abass Beydoun d/b/a Shamrock. 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