Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Michigan Neurology Associates, P.C.,
(NPI: 1581824725),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1820
Decision Number. CR3704

Date: March 10, 2015

DECISION

The Centers for Medicare & Medicaid Services (CMS) denied Petitioner enrollment in
the Medicare program as an ambulatory surgical center (ASC) based on a survey that the
Accreditation Association for Ambulatory Health Care (AAAHC) conducted on
November 25 and 26, 2013. The AAAHC survey found Petitioner out of compliance
with Medicare participation requirements. CMS concluded that the noncompliance was
serious enough to constitute noncompliance with four Medicare conditions for coverage,
and therefore CMS was “not required to, and in fact could not, allow enrollment... .”
CMS Brief (Br.) at 1.

Petitioner appealed CMS’s denial of enrollment. Petitioner does not dispute whether it
was noncompliant at the time of the AAAHC survey. Petitioner’s position is that CMS’s
denial of its enrollment is “incorrect and/or unlawful” because by the time it applied for
enrollment, AAAHC had accepted Petitioner’s plan of correction (POC) and
accompanying proof of correction, determined that Petitioner did not need to be re-
surveyed, accredited Petitioner for a three-year period, and recommended Petitioner be
enrolled in Medicare. Thus, Petitioner argues it should be enrolled in Medicare based on
AAAHC’s ultimate findings of compliance and subsequent recommendation for
accreditation.

CMS moved for summary judgment to affirm the denial of Petitioner’s enrollment. For
the reasons set forth below, I grant CMS’s motion for summary judgment because, as a
matter of law, once CMS properly determined that Petitioner was out of compliance with
conditions for coverage, CMS was not obligated to enroll Petitioner based on AAAHC’s
acceptance of Petitioner’s POC and accreditation recommendation.

I. Background

Petitioner sought to participate in Medicare Part B as an ASC. Petitioner applied for a
survey and accreditation through AAAHC, a national accrediting organization that CMS
recognizes as having deeming status to determine compliance with Medicare
requirements pursuant to 42 C.F.R. § 488.6. AAAHC conducted a survey of Petitioner
on November 25 and 26, 2013. On December 16, 2013, AAAHC notified Petitioner that
it discovered four “standard” level deficiencies. AAAHC requested that Petitioner
submit a POC. Petitioner did so and, after some revision and supplementation, AAAHC
accepted the POC. AAAHC declined to re-survey Petitioner, and it instead accepted
Petitioner’s POC and proof of corrections. By letter dated January 21, 2014, AAAHC
issued full accreditation to Petitioner and recommended that CMS enroll Petitioner in
Medicare. Petitioner then attempted to enroll in Medicare as an ASC based on its
achievement of full accreditation through AAAHC. CMS Exs. 1, 3.

On June 12, 2014, CMS denied Petitioner enrollment, alleging that Petitioner did not
meet Medicare participation requirements. CMS stated that based on AAAHC’s
November 25 and 26, 2013 survey, Petitioner was noncompliant not only with Medicare
standards but also with Medicare conditions for coverage found at 42 C.F.R. §§ 416.43
(Quality Assessment and Performance Improvement), 416.44 (Environment), 416.45
(Medical Staff), and 416.47 (Medical Records). CMS stated Petitioner might “take steps
to correct the deficiencies and reapply to establish eligibility.” However, CMS also
explained to Petitioner that “current survey funding levels (as appropriated by Congress)
may not allow for a resurvey. CMS’ priority for use of the limited funds available [is] to
ensure the health and safety of Medicare beneficiaries at currently participating facilities.
Contact the State agency for the status of initial surveys of non-participating facilities.”
CMS Ex. 2.

Petitioner requested reconsideration on June 22, 2014. On August 7, 2014, CMS
affirmed its denial of Petitioner’s enrollment. CMS acknowledged that AAAHC
“recommended [Petitioner’s] facility be deemed to participate as an ASC... .”
However, CMS stated that its review of the results of the November 25 and 26, 2013
AAAHC survey showed CMS that Petitioner “was not in compliance with several of the
Medicare Conditions for Coverage at the time of the survey.” CMS stated that Petitioner
could “take steps to correct the deficiencies and reapply to establish eligibility.”
However, CMS noted, as it did in its initial denial on June 12, 2014, that survey funding
levels might not allow for a resurvey. CMS Ex. 4.

Petitioner requested a hearing on August 25, 2014. Petitioner argued specifically that “at
the time of enrollment, Petitioner was in compliance with all Conditions for Coverage,
irrespective of the fact that at the time of the survey, it may not have been.” Petitioner’s
earing request (H.R.) (emphasis in original). The case was assigned to me for hearing
and decision, and I issued an Acknowledgment and Pre-Hearing Order (Order) on
September 15, 2014, setting a schedule for the parties to file pre-hearing exchanges.
CMS filed a motion for summary judgment, pre-hearing brief, and seven exhibits (CMS
Exs. 1 —7). Petitioner filed a response to CMS’s motion and pre-hearing brief (P. Br.),
accompanied by 23 exhibits (P. Exs. 1 — 23), including the written direct testimony of
three witnesses. Petitioner does not object to the exhibits CMS filed, and I admit CMS
Exs. 1 —7.

On December 2, 2014, CMS filed objections to Petitioner’s exhibits. Specifically,
pursuant to 42 C.F.R. § 498.56(e), CMS objects to P. Exs. 8 through 16. CMS asserts
that Petitioner neither identified the evidence as new nor made the showing of good cause
to admit the documents required by paragraph 6 of my September 15, 2014 Order. CMS
asserts these documents “appear to be undated, unsigned draft policies and related
documents, which Petitioner’s witnesses have not identified or explained . . . [t]hus .. .
they have little or no evidentiary value.” Petitioner has not responded to CMS’s
objection to explain why there is good cause for the submission of these documents at
this level of review. At most, it appears the documents may relate to Petitioner’s
accomplishment of its POC, but whether or not Petitioner accomplished its POC is not
relevant to my decision. Accordingly, I do not admit P. Exs. 8 through 16, although they
remain in the case record.

CMS also objects to certain paragraphs in the written direct testimony of two of
Petitioner’s witnesses.' With regard to the written direct testimony of R.V. (P. Ex. 19),
CMS objects to paragraphs 17 and 21, asserting that whether Petitioner was in
compliance with regulatory requirements at any time is a legal conclusion. CMS also
objects to paragraph 22 on relevance grounds because it contains anonymous hearsay. I
will admit R.V.’s testimony in its entirety and will consider CMS’s arguments as to the
weight I should assign to R.V.’s testimony rather than the admissibility of P. Ex. 19.
With regard to the written direct testimony of J.C. (P. Ex. 21),” CMS objects to
paragraphs 17 and 21 on the basis that whether Petitioner was in compliance with
regulatory requirements at any given time is a legal conclusion. CMS also objects to

' [refer to witnesses by their initials.
> CMS references J.C.’s written direct testimony as P. Ex. 20, but it is actually P. Ex. 21.
paragraph 23 on relevance grounds and because it contains anonymous hearsay. For the
same reasons | admit P. Ex. 19 in its entirety, I will also admit P. Ex. 21.

Finally, Petitioner objects to P. Exs. 1 — 7 and 17 and 18, asserting they are already
included in CMS’s exhibits, their admission is not in the interest of judicial economy, and
that rejecting them will prevent confusion. CMS notes that highlighting has been added
to some of the pages of Petitioner’s exhibits. Although the exhibits may be duplicates,
they are relevant to the case, and I admit them. However, where there are duplicate
exhibits I refer only to CMS’s exhibits. In sum, I admit P. Exs. 1 through 7 and 17
through 23. I reject P. Exs. 8 through 16, although they will remain in the electronic
record of the case.

IL. Issue

Whether the undisputed evidence establishes that CMS had a legitimate basis to deny
Petitioner enrollment in Medicare as an ASC, despite the undisputed fact that AAAHC
determined that Petitioner had corrected all its deficiencies of Medicare requirements at
the time it applied to enroll in the program.

III. Findings of Fact and Conclusions of Law.
A. This case is appropriate for summary judgment.
The applicable standard for summary judgment is as follows:

Summary judgment is appropriate when the record shows that there
is no genuine issue as to any material fact, and the moving party is
entitled to judgment as a matter of law... . The party moving for
summary judgment bears the initial burden of showing that there are
no genuine issues of material fact for trial and that it is entitled to
judgment as a matter of law... . To defeat an adequately supported
summary judgment motion, the non-moving party may not rely on
the denials in its pleadings or briefs, but must furnish evidence of a
dispute concerning a material fact — a fact that, if proven, would
affect the outcome of the case under governing law. ... In
determining whether there are genuine issues of material fact for
trial, the reviewer must view the evidence in the light most favorable
to the non-moving party, drawing all reasonable inferences in that
party’s favor.

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The role of an ALJ in deciding a summary judgment motion differs from the ALJ’s role
in resolving a case after a hearing. The ALJ should not assess credibility or evaluate the
weight of conflicting evidence. Holy Cross Vill. at Notre Dame, DAB No. 2291, at 4-5
(2009).

CMS argues that summary judgment is appropriate because the “crux of the dispute is
whether AAAHC accepting [Petitioner’s] POC and accrediting it means that CMS must
approve its enrollment, even if CMS finds that the accreditation survey showed
condition-level noncompliance.” CMS Br. at 6. CMS notes that Petitioner did not
challenge the factual accuracy of the survey findings or present evidence casting doubt on
them. CMS further argues that even if I determine to rule on whether the survey findings
rise to condition-level noncompliance, the case is still appropriate for summary judgment
because the “undisputed evidence consisting of the AAAHC survey report (CMS Ex. 1)
supports CMS’s finding of condition-level deficiencies.” CMS Br. at 6.

While Petitioner asserts that the issues raised in its request for hearing are not strictly
legal issues, it argues that as of the date it applied for enrollment it had corrected the
deficiencies that AAAHC found. It states that Petitioner immediately addressed all the
deficiencies cited and corrected them by January 6, 2014. P. Br. at 1, 9. Petitioner
acknowledges that CMS has the “ultimate authority to determine a supplier’s satisfaction
of conditions of coverage.” Petitioner argues, however, that CMS’s decision must be
more than arbitrary. CMS should not be able to “willfully” ignore relevant information
and facts related to the survey, such as the “plan of correction and proof of corrections
accomplished by Petitioner, and acknowledged by the AAAHC.” P. Br. at 9. However,
even if I accept that Petitioner corrected all of its deficiencies that AAAHC identified as
of the date Petitioner applied for enrollment, by law I must still affirm CMS’s denial of
its enrollment.’

> Tt appears from the June 12, 2014 letter CMS sent to Petitioner denying it Medicare
enrollment that Petitioner must now apply to the state agency for enrollment and undergo
an initial survey. It also appears that given “current funding levels” CMS may not be
able to ensure Petitioner a “resurvey.”” CMS’s August 7, 2014 reconsideration
determination echoes this statement. CMS Exs. 2, 4. I recognize also that AAAHC, as
Petitioner notes, “praised Petitioner’s staff for ‘assistance and diligence in complying
with AAAHC and CMS Standards,”” which “reflect[ed] on the high quality of care and
safety your organization provides to its patients and the community.” P. Br. at 6, citing
P. Ex. 7. [have no authority, however, to address that assessment or order that CMS
have the state agency resurvey Petitioner.
B. CMS had a legitimate basis to deny Petitioner enrollment in Medicare.
1. Applicable Law

Section 1832(a)(2)(F) of the Social Security Act (Act) (42 U.S.C. § 1395k(a)(2)(F))
authorizes Medicare Part B coverage for ASC services provided to Medicare
beneficiaries. An ASC is a supplier to Medicare. 42 C.F.R. §§ 488.1; 498.2. A
prospective supplier must meet applicable Medicare requirements to be approved for
participation. 42 C.F.R. § 488.3(a). For an ASC, Medicare “conditions for coverage” are
the requirements the ASC must meet to participate in Medicare. 42 C.F.R. § 488.1. The
conditions for coverage for ASCs are found at 42 C.F.R. Part 416. Each Medicare
condition represents a broad category of services, which the regulations divide into
subparts called standards. 42 C.F.R. Part 416, Supbart C. Noncompliance with a
Medicare condition for coverage exists “where the deficiencies are of such character as to
substantially limit the . . . supplier’s capacity to furnish adequate care or which adversely
affect the health and safety of patients.” 42 C.F.R. § 488.24(b). Compliance with a
particular condition for coverage is determined by “the manner and degree to which the .

. . supplier satisfies the various standards within each condition.” 42 C.F.R. § 488.26(b).

A prospective supplier found to have deficiencies during a survey is allowed to submit a
POC only when CMS has determined that the deficiencies are at less than a condition
level. 42 C.F.R. § 488.28. The regulation permits a prospective supplier to submit a
POC only when it “is found to be deficient with respect to one or more of the standards in
the conditions,” and it may participate only when the identified deficiencies neither
“jeopardize the health and safety of patients nor are of such character as to seriously limit
the provider’s capacity to render adequate care” and it has submitted an acceptable POC
for achieving compliance “within a reasonable period of time acceptable to the
Secretary.” 42 C.F.R. § 488.28(a)-(b).

Section 1865 of the Act (42 U.S.C. § 1395bb) allows CMS to treat a prospective supplier
as meeting the Medicare conditions for coverage applicable to it based on accreditation
from a CMS-approved accreditation organization. Accreditation organizations have their
own requirements apart from the regulatory requirements. However, the accreditation
organization’s requirements must be at least as stringent as those in the regulations. CMS
may deem a supplier accredited by such an organization in compliance with the
appropriate Medicare conditions for coverage. 42 C.F.R. §§ 416.26; 488.6(a).

Accreditation, however, does not mean that a prospective supplier is automatically
enrolled in Medicare. Section 1865(c) of the Act (42 U.S.C. §1395bb(c)) states that
“(notwithstanding any other provision of this title, if the Secretary finds that a provider
entity [such as a supplier] has significant deficiencies (as defined in regulations
pertaining to health and safety), the entity shall, after the date of notice . . . be deemed not
to meet the conditions or requirements the entity has been treated as meeting pursuant to
subsection (a)(1).” The regulations provide further that CMS is not required to accept an
accreditation organization’s finding of compliance. “CMS may deem the . . . suppliers
the program accredits to be in compliance with the appropriate Medicare conditions.”

42 C.F.R. § 488.6(a) (emphasis added). The regulations also provide that “CMS may
determine that a provider or supplier does not meet the Medicare conditions on the basis
of its own investigation of the accreditation survey or any other information related to the
survey.” 42 C.F.R. § 488.6(c)(2). Such information (which a supplier must authorize its
accreditation organization to release to CMS and the applicable state survey agency),
would include “a copy of its most current accreditation survey, together with any
information related to the survey that CMS may require (including corrective action
plans).” 42 C.F.R. § 488.6(c)(1).

Regulations specific to ASCs provide that CMS may treat an ASC as meeting Medicare
conditions for coverage either based on accreditation by an accreditation organization or
based on a recommendation from a state survey agency. 42 C.F.R. § 416.26(a)-(b).
Whether an accreditation organization or a state agency verifies an ASC’s compliance
with the conditions for coverage, however, CMS retains the decisional authority to enroll
the ASC in Medicare; it reviews the resulting recommendations and other evidence
relating to the survey before deciding to accept an ASC as qualified to furnish ambulatory
surgical services. 42 C.F.R. § 416.26(c). There is no requirement that an additional
survey of a prospective supplier be performed before CMS makes its decision.

If CMS refuses to enter into a Medicare participation agreement with a prospective ASC,
the regulations provide hearing rights to the ASC, incorporating the hearing procedures at
42 CFR. Part 498. 42 C.F.R. §§ 416.26(f); 488.24(c).

2. CMS is not required to accept AAAHC’s recommendation to enroll
Petitioner in Medicare.

CMS may “deem” an ASC to be in compliance with any or all of the conditions for
participation if the ASC is accredited by a national accrediting organization such as
AAAHC. 42 C.F.R. § 416.26. CMS is not required to accept the recommendation of an
accreditation organization such as AAAHC to enroll an ASC. As noted above, CMS may
treat an ASC as meeting Medicare conditions for coverage based on a recommendation
from an accreditation organization. However, CMS retains the decisional authority to
enroll the ASC after reviewing the evidence relating to the accreditation agency’s
determination, including a copy of the most current accreditation survey, as well as
information related to the survey, including any POCs. Act, section 1865(c) (42 U.S.C.

§ 1395bb(c)); 42 C.F.R. §§ 416.26(a)-(c); 488.6(c)(1), (2).
3. CMS has the authority to deny enrollment based on the presence of
condition-level deficiencies.

If CMS finds that a supplier has “significant deficiencies,” as defined in regulations
pertaining to health and safety, CMS is entitled to deny enrollment to the supplier despite
a recommendation by an accreditation organization. Act, section 1865(c); 42 C.F.R.

§ 488.6(a); see 42 C.F.R. § 488.26(b).

A prospective supplier found to have deficiencies during a survey is allowed to submit a
POC only when CMS has determined that the deficiencies are at less than a condition
level. 42 C.F.R. § 488.28. The supplier is allowed to submit a POC when “[t]he existing
deficiencies noted either individually or in combination neither jeopardize the health and
safety of patients nor are of such character as to seriously limit the provider’s capacity to
render adequate care.” 42 C.F.R. § 488.28(b); Apollo Behavioral Health Hosp., L.L.C.,
DAB No. 2561, at 8 (2014); see Profound Health Care, DAB No. 2371, at 8-10 (2011).
Moreover, CMS’s decision not to accept a provider’s POC does not constitute an initial
determination subject to review, even if a petitioner had an opportunity to correct.
Apollo, DAB No. 2561, at 9 (and cases cited therein).

4. CMS properly determined that Petitioner had condition-level
deficiencies at the time of its survey because AAAHC found undisputed
deficiencies that either individually, or in combination, could jeopardize
the health and safety of patients or were of such character as to seriously
limit Petitioner’s capacity to render adequate care.

Although AAAHC determined Petitioner was noncompliant only with standards of
compliance during the November 25 and 26, 2013 survey, CMS determined instead that
the deficiencies that AAAHC cited at 42 C.F.R. §§ 416.43, .44, .45, and .47 constituted
noncompliance with conditions for coverage, in that they either individually or in
combination jeopardized the health and safety of patients or were of such character as to
seriously limit Petitioner’s capacity to render adequate care.

CMS asserts that undisputed evidence from the AAAHC survey supports its finding that
the noncompliance was at a condition level and that Petitioner was not allowed to file a
POC. For instance, with respect to credentialing and record keeping, CMS notes that
with regard to 42 C.F.R. § 416.45, the condition for coverage regarding “Medical Staff,”
AAAHC found Petitioner had a systemic problem with staff credentialing because it
found no verification of education and training in its credentialing files; two of the three
files reviewed had no peer references at the time of credentialing; Petitioner did not
verify education and training or check Drug Enforcement Administration (DEA)
registration at the time of credentialing; and DEA registrations that were on file were not
verified for currency or validity. CMS Br. at 11-12; CMS Ex. 1, at 16, 17, 19,22. CMS
asserts that it is important for patient safety to ensure that members of an ASC’s medical
staff are actually qualified to perform the procedures they are performing. CMS Br. at
12. Petitioner admits that it was noncompliant at the time of survey but asserts it
corrected the noncompliance by the time it applied to enroll. P. Br. at 8. Even assuming
for purposes of summary judgment that Petitioner later corrected its deficiencies, I find
the undisputed evidence supports CMS’s determination that Petitioner had condition-
level deficiencies at the time of the survey because the nature of the cited deficiencies
could jeopardize the health and safety of patients or were of such character as to seriously
limit Petitioner’s capacity to render adequate care.

CMS asserts that with regard to 42 C.F.R. § 416.47, the condition for coverage regarding
“Medical Records” requiring an ASC to maintain complete, comprehensive, and accurate
medical records to ensure adequate patient care, AAAHC found Petitioner out of
compliance with two requirements because individual pages in medical records reviewed
did not consistently contain identification and, in some places, the only identification in
the record consisted of the patient’s signature. Most records were found to have a sticker
sheet in the record, but they were not consistently adhered to each page of the record.
Some of the stickers had the date of service in the date of birth area. Further, when
patients had allergies, there was no documentation of the “untoward effect of the
allergen” in seven of 11 medical records. Medication dosages were not consistently
documented in ten of 11 medical records. CMS Br. at 12; CMS Ex. 1, at 61-63.
Petitioner admits that it had these deficiencies at the time of survey, but it argues that it
addressed and corrected them. P. Br. at 8-9. Even assuming for purposes of summary
judgment that Petitioner later corrected its deficiencies, I find the undisputed evidence
supports CMS’s determination that Petitioner had these condition-level deficiencies at the
time of the survey because they could jeopardize the health and safety of patients or were
of such character as to seriously limit Petitioner’s capacity to render adequate care. For
example, patients could suffer an allergic reaction jeopardizing their health and safety if
Petitioner did not properly document their allergies.

CMS asserts that with regard to 42 C.F.R. § 416.44, the condition for coverage regarding
“Environment,” that AAAHC found several deficiencies. CMS notes that while AAAHC
did not cite noncompliance with this section of the regulations, instead citing to
noncompliance with its own standards, CMS determined the report lists numerous ways
in which Petitioner failed to comply with applicable regulatory requirements. CMS Br. at
13-18. For instance, AAAHC found that humidity is supposed to be monitored to ensure
that it is between 30-60%. However, AAAHC found numerous dates on the 2013
temperature humidity logs where the temperature and humidity were not being monitored
in the pre-op and post-op areas. CMS Ex. 1, at 78-79, 87. CMS asserts this violated the
regulation at 42 C.F.R. § 416.44(a), which requires an ASC to provide a functional and
sanitary environment for the provision of surgical services including that each operating
room be designed and equipped so that the types of surgery conducted can be performed
in a manner that protects the lives and assures the physical safety of all individuals in the
area. CMS Br. at 13. CMS also determined that AAAHC’s survey found numerous
10

deficiencies related to 42 C.F.R. § 416.44(b), which references the provisions applicable
to Ambulatory Health Care Centers of the 2000 edition of the Life Safety Code (LSC) o:
the National Fire Protection Association (NFPA). CMS found condition-level
noncompliance justified because Petitioner’s emergency power and lighting systems did
not comply with NFPA requirements; Petitioner was out of compliance with NFPA
requirements dealing with storage of oxygen; and Petitioner was also out of compliance
with NFPA requirements related to the passage of smoke. CMS Br. at 13-18; CMS Ex. 1,
at 89-101. Petitioner does not assert that it was in compliance, but asserts only that it
corrected the noncompliance. P. Br. at 7-8. Even assuming for purposes of summary
judgment that Petitioner later corrected its deficiencies, I find the undisputed evidence
supports CMS’s determination that Petitioner had these condition-level deficiencies at the
time of the survey because lack of proper sanitation and fire prevention protections could
jeopardize the health and safety of patients or were of such character as to seriously limit
Petitioner’s capacity to render adequate care.*

5. Petitioner was not entitled to review of its POC for CMS’s enrollment
considerations because the undisputed evidence establishes that
Petitioner had condition-level deficiencies at the time of its survey.

A prospective supplier found to have deficiencies during a survey is allowed to submit a
POC only when CMS has determined that the deficiencies are at less than a condition
level, i.e., only where the identified deficiencies neither jeopardize the health and safety
of patients nor are of such a character as to seriously limit the supplier’s capacity to
render adequate care. 42 C.F.R. § 488.28. The regulation does not differentiate between
accreditation organization and state agency surveys. Thus, when CMS properly
determined that the AAAHC survey showed condition-level noncompliance, CMS was
not required to consider Petitioner’s POC for enrollment purposes, even though AAAHC
eventually accepted Petitioner’s POC as demonstrating compliance with Medicare
requirements.

* CMS also asserts that with regard to 42 C.F.R. § 416.43, the condition for coverage
governing quality assessment and performance improvement, AAAHC found
deficiencies. I do not address them because the other deficiencies I address amply
support CMS’s finding that Petitioner was out of compliance with conditions for
coverage at the time of the survey.
11

IV. Conclusion

I grant CMS’s motion for summary judgment. CMS had a legitimate basis upon which to
deny Petitioner enrollment because Petitioner had undisputed deficiencies after its
survey, which constituted condition-level violations that necessarily precluded any
requirement that CMS later enroll Petitioner in the Medicare program based on
AAAHC’s acceptance of Petitioner’s POC.

/s/
Joseph Grow
Administrative Law Judge


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

Erick Antoine Falconer, M.D.,
(OI File No.: H-14-41347-9),

Petitioner,
v.
The Inspector General.
Docket No. C-14-1940
Decision No. CR3698

Date: March 10, 2015

DECISION

Petitioner, Erick Antoine Falconer, M.D., appeals the determination of the Inspector
General (IG) for the U.S. Department of Health and Human Services to exclude him from
participating in Medicare, Medicaid, and all federal health care programs pursuant to
section 1128(a)(3) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)) for the
minimum statutory period of five years. For the reasons discussed below, I conclude that
the IG has a basis for excluding Petitioner from program participation and that the five-
year exclusion is mandated by law.

I. Background and Procedural History

By letter dated August 29, 2014, the IG notified Petitioner that he was being excluded
from Medicare, Medicaid, and all federal health care programs for a minimum period of
five years pursuant to section 1128(a)(3) of the Act (42 U.S.C. § 1320a-7(a)(3)). The IG
advised Petitioner that the exclusion was based on his felony conviction in the United
States District Court for the Eastern District of Missouri of a criminal offense related to

fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial
misconduct in connection with the delivery of a health care item or service. IG Ex. 1
at 1.

Petitioner timely filed his request for hearing before an administrative law judge (ALJ)
and this case was assigned to me for hearing and decision. A prehearing telephone
conference was held with the parties on November 19, 2014, the substance of which

I summarized in my Order and Schedule for Filing Briefs and Documentary Evidence
issued November 24, 2014 (Order). See 42 C.F.R. § 1005.6. During the prehearing
conference, I explained to Petitioner that he was entitled to representation by counsel, but
that I could not appoint counsel for him. I also told Petitioner that if he should choose
later to be represented by counsel, he need only have his attorney submit a Notice of
Appearance to my office as soon as possible. Petitioner proceeded to represent himself.

Pursuant to my Order, the IG filed his brief (IG Br.) together with seven exhibits (IG Exs.
1-7). Petitioner submitted his brief (P. Br.) together with sixteen exhibits (P. Exs. 1-16).
The IG submitted a reply brief (IG Reply). Absent objection, I admit IG Exs. 1-7 and

P. Exs. 1-16.'

Both parties indicated that a hearing was not necessary in this case and that they did not
have any testimony to offer at a hearing. IG Br. at 11-12; P. Br. at 12. Therefore, I
decide this case on the written record. See Order { 4.

II. Discussion

A. Issues
The only issue before me is whether the IG was authorized to exclude Petitioner from
participating in Medicare, Medicaid, and all federal health care programs for five years
pursuant to section 1128(a)(3) of the Act. 42 C.F.R. § 1001.2007(a)(1)-(2).

B. Findings of Fact and Conclusions of Law
The IG is excluding Petitioner based on section 1128(a)(3) of the Act (42 U.S.C.

§ 1320a-7(a)(3)). The four essential elements necessary in this case to support the IG’s
exclusion are: (1) the individual to be excluded must have been convicted of a felony

' On January 1, 2015, Petitioner filed a motion seeking a one-hour extension to
supplement his exhibits due to technical difficulties uploading the exhibits to the
Departmental Appeals Board’s electronic filing system. Petitioner electronically filed his
exhibits and then uploaded amended versions of the exhibits. The IG did not object to
Petitioner’s motion. I grant the motion and admit the amended versions of Petitioner’s
exhibits into the record.
offense; (2) the felony offense must have been based on conduct relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other financial misconduct; (3) the
felony offense must have been for conduct in connection with the delivery of a health
care item or service; and (4) the felonious conduct must have occurred after August 21,
1996. Act § 1128(a)(3); 42 C.F.R. § 1001.101(c).

My findings of fact and conclusions of law (FFCL) are set forth below in bold and italics
as headings in this section, followed by an analysis for each FFCL.

I. Petitioner pled guilty to one count of Making a False Statement in
violation of 18 U.S.C. § 1001(a)(2) and agreed to forfeit $20,000 in
proceeds from his illegal activity.

The following facts are undisputed. During the relevant period at issue here, Petitioner
was licensed to practice medicine in the state of Missouri as a physician and as a surgeon.
IG Ex. 2. Petitioner operated several medical offices at various locations in St. Louis
County, Missouri. IG Ex. 3 at 3; IG Ex. 4 at 1. Petitioner’s medical practice, the
Youthful Body, Inc., provided cosmetic treatments to patients that included injections of
the prescription drug OnabotulinumtoxinA that is marketed in the United States as
Botox® Cosmetic. IG Ex. 3 at 3; IG Ex. 4 at 2. From August 2009 to February 2013,
Petitioner’s medical practice purchased 50 separate prescription drugs from a wholesale
online drug distributor identified in court documents as Company A. IG Ex. 3 at 3; 1G
Ex. 4 at 5. Petitioner bought “Botox (Turkish)” from Company A for $354.99 per vial,
which was less than the $525 per vial being charged by U.S.-licensed wholesale
distributors selling the Food and Drug Administration (FDA)-approved version of
Botox® Cosmetic. IG Ex. 4 at 4-5. Petitioner paid for the prescription drugs that his
practice bought from Company A with his medical practice’s checking account and also
his personal credit card. IG Ex. 3 at 3; IG Ex. 4 at 5. Petitioner “ultimately provided
these drugs to his patients without informing them of the source of the drugs, and the
Youthful Body received over $70,000 in proceeds from administering these illegal drugs
to patients.” IG Ex. 3 at 3.

The FDA was concerned that the product sold by Company A could be unsafe,
ineffective, and could cause harm to patients. P. Ex. 11. The FDA believed that the
prescription drugs sold by Company A and labeled as “Botox®” did not undergo FDA-
review and did not meet the legal requirement for sale in the United States. P. Ex. 11.
The FDA’s Office of Criminal Investigations initiated a review into Company A’s sales.
FDA agents were investigating the purchases Petitioner made from Company A, and, on
February 12, 2013, Petitioner was interviewed by these agents. During that interview,
Petitioner represented to the FDA agents that his medical practice had made just three
purchases of Botox® from Company A, and that these purchases were made over a three-
month time period in 2012. IG Ex. 3 at 3-4; IG Ex. 4 at 6. Following the interview, the
FDA agents found out that Petitioner had falsely represented the number of orders his
medical practice had placed and received for Botox® from Company A. Instead of the
three orders in 2012 as reported by Petitioner, his medical practice had placed 50 separate
orders for Botox® from Company A over a three-year period between August 2009 and
February 2013. IG Ex. 3 at 3; IG Ex. 4 at 5; IG Ex. 6 at 16, 19-20. After obtaining
samples of the Botox® product Company A was selling to Petitioner, the FDA
determined that the drugs were adulterated, misbranded, and counterfeit. IG Ex.5 at 2, 3;
IG Ex. 4 at 5.

On November 6, 2013, an Information was filed in the Eastern District of Missouri
charging Petitioner with one count of Making a False Statement in violation of 18 U.S.C.
§ 1001(a)(2). IG Ex. 4. That same day, Petitioner entered into a plea agreement with the
Office of the United States Attorney and also pled guilty in the U.S. District Court for the
Eastern District of Missouri to the charge. IG Ex. 3 at 1-4; IG Ex. 6 at 3; IG Ex. 7 at 1.
The District Court accepted Petitioner’s guilty plea and convicted Petitioner of one count
of Making a False Statement in violation of 18 U.S.C. § 1001(a)(2). IG Ex. 6 at 21; 1G
Ex. 7 at 1. Petitioner was sentenced to five months of imprisonment, one year of
supervised release, and payment of a $100 assessment. IG Ex. 6 at 21; IG Ex. 7 at 1-5.
Additionally, Petitioner agreed to forfeit $20,000 representing the proceeds of his illegal
activity. IG Ex. 3 at 8.

2. The IG had a legitimate basis to exclude Petitioner from Medicare,
Medicaid, and all other federal health care programs under Section
1128(a)(3) of the Act.

a. Petitioner was convicted of a felony offense.

To support an exclusion under section 1128(a)(3) of the Act, the individual must have
been “convicted of a felony offense.” An individual is “convicted” of a criminal offense
“when a judgment of conviction has been entered against the individual . . . by a Federal .
. . court”; “when there has been a finding of guilt against the individual . . . by a Federal .
. . court”; or “when a plea of guilty . . . by the individual . . . has been accepted by a
Federal... court. Act § 1128(i); see also 42 C.F.R. § 1001.2. The record is clear, and
Petitioner agrees, that he was convicted of a felony under federal law that occurred after
August 21, 1996. P. Br. at 1. Petitioner entered a guilty plea to one count of Making a
False Statement in violation of 18 U.S.C. § 1001(a)(2). IG Ex. 3; IG Ex. 6 at 3; IG Ex7
at 1. The charge to which Petitioner pled guilty to is a Class D felony, which provides for
imprisonment of up to five years, a fine of up to $250,000, or both, and up to one year of
supervised release. IG Ex. 3 at 4; IG Ex. 6 at 14;18 U.S.C. §§ 1001(a), 3559(a)(4). The
plea was accepted by the District Court. IG Ex. 6 at 21; see also IG Ex. 7 at 1. Further,
the District Court then entered a Judgment in a Criminal Case in which Petitioner was
“adjudged guilty” of the 18 U.S.C. § 1001(a)(2) violation and sentenced to
imprisonment. IG Ex. 7. Therefore, I find that Petitioner’s offense meets the definition
for a conviction under section 1128(i) of the Act.

b. Petitioner’s felony conduct related to fraud or financial misconduct.

Petitioner pled guilty to, and was convicted of, making a false statement, a criminal
offense that is in violation of 18 U.S.C. § 1001(a)(2). It is illegal under 18 U.S.C.

§ 1001 to knowingly and willfully make “any materially false, fictitious, or fraudulent
statement or presentation” in “any matter within the jurisdiction of the executive,
legislative, or judicial branch of the Government.” 18 U.S.C. § 1001(a)(2).

During his November 6, 2013 plea hearing, Petitioner admitted to the stipulated facts in
the negotiated plea agreement. IG Ex. 6 at 20 (stating to the District Court that the facts
in the plea agreement are true); see also IG Ex. 3 at 2-4; P. Ex. 1 at 2-4. Petitioner noted
further that the stipulated facts in the plea agreement accurately described what he did.
Id. During his plea colloquy, Petitioner admitted that on February 13, 2013, he “gave a
false statement to FDA investigators when they made a visit to [his] medical office.” IG
Ex. 6 at 16. He further admitted that the false statement he made to the FDA agents was:
“the number of orders that had been placed by my business, medical practice . . . [for]
Botox® cosmetics.” IG Ex. 6 at 17. He admitted that he knew the FDA agents were
investigating the purchases his practice made of Botox® from Company A. He further
admitted that he told the FDA agents that in 2012 his medical practice made three
purchases in a three-month period from Company A and that at the time he made the
statement to the FDA agents he knew “[t]hat [it] was not a true statement,” and he
acknowledged that he intentionally told the FDA agents a lie as to the number of orders
he had placed with Company A. IG Ex. 6 at 18-20. Further, Petitioner bought “Botox
(Turkish)” from Company A for $354.99 per vial, which was less than the $525 per vial
being charged by U.S.-licensed wholesale distributors selling the FDA-approved version
of Botox® cosmetic. IG Ex. 4 at 4-5. Petitioner also admitted that in using the Botox®,
he “received over $70,000 in proceeds from administering these illegal drugs to patients.”
IG Ex. 3 at 3; P. Ex. 1 at 3.

With this background, it is significant that Petitioner agreed to forfeit $20,000, which he
stipulated were the proceeds of his illegal activities: “The defendant specifically admits
that the funds supporting this cashier’s check constitute the proceeds of defendant’s
illegal activities and that he has no rightful interest in those funds.” IG Ex. 3 at 8; P. Ex.
1 at 8; see also IG Ex. 6 at 12. The admission of facts about the scheme in the guilty plea
and the agreement that Petitioner forfeit the illegal proceeds from his conduct show that
Petitioner’s crime is related to the money he illegally obtained as part of his criminal
scheme. Specifically, Petitioner purchased the Botox® at a significantly reduced price
and generated $70,000 in proceeds from administering the Botox®, $20,000 of which he
considered proceeds of illegal activities.

In order for a conviction to qualify as one mandating exclusion under section 1128(a)(3),
it must be “a felony relating to fraud . . . or other financial misconduct.” The terms
“related to” and “relating to” simply mean that there must be a nexus or common sense
connection. See James Randall Benham, DAB No. 2042 (2006) (internal citations
omitted); see also Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing
the phrase “related to” in another part of section 1320a-7 as “deliberately expansive
words,” “the ordinary meaning of [which] is a broad one,” and one that is not subject to
“crabbed and formalistic interpretation”) (internal quotes omitted). In the present case,
Petitioner derived $20,000 in illegal proceeds from purchasing cheaper non-FDA
approved Botox® and providing that to patients without their knowledge. IG Ex. 3 at 3.
Because the forfeiture is part of the plea agreement in Petitioner’s criminal case, there is a
sufficient nexus between the criminal offense for which he was convicted and fraud or
other financial misconduct.

c. Petitioner’s felonious conduct was in connection with the delivery of a
health care item or service.

In order for Petitioner to be excluded under section 1128(a)(3), the felony offense that
was the basis of Petitioner’s conviction must have been for conduct in connection with
the delivery of a health care item or service. Petitioner maintains that his conviction for
making a false statement to FDA agents is not in connection with the delivery of a health
care item or service. P. Br. at 2-8. However, to be “in connection with” the delivery of a
health care item or service, there only needs to be a nexus or common sense connection
to the delivery of a health care item or service. Charice D. Curtis, DAB No. 2430, at 5
(2011).

In his plea agreement, Petitioner admitted that he used the Botox® he obtained from
Company A in medical procedures with patients at his medical practice. He admitted that
patients were injected with the Botox®. IG Ex. 3 at 3-4; P. Ex. 1 at 3-4. Petitioner also
admitted that in using the Botox®, he “received over $70,000 in proceeds from
administering these illegal drugs to patients.” IG Ex. 3 at 3; P. Ex. 1 at 3. Further, the
Information also confirms that Petitioner provided the adulterated, misbranded, and
counterfeit drugs he obtained from Company A to his patients. IG Ex. 4 at 5.

Petitioner argues that the FDA agents were not at his medical practice for the purpose of
“investigat[ing] conduct in connection with the delivery of a health care item or
services.” P. Br. at 8. However, the evidence shows otherwise. The plea agreement
clearly shows that FDA agents specifically asked Petitioner about his administration of
the illegal drugs to patients. IG Ex. 3 at 2; P. Ex. 1 at 2. The evidence also shows that
the FDA agents were investigating Petitioner’s receipt of adulterated, misbranded, or
counterfeit drugs — the same drugs Petitioner admitted were purchased by his medical
practice and injected into his patients as part of the services provided by his practice. IG
Ex. 3 at 4; IG Ex. 4 at 7. When Petitioner lied about the number of Botox® orders he had
made from Company A during the three-month period in 2012, the FDA agents were
obviously investigating health care crimes related to the purchase of adulterated,

misbranded, and counterfeit drugs from an unlicensed online pharmacy vendor and the
potential health risks these illegal drugs could pose for patients being treated with
Botox®. I.G. Ex. 5 at 2; P. Ex. 3 at 1-2; P. Ex. 11 at 2. The facts listed in the plea
agreement and in the Information outline the entire scheme for which Petitioner was
being investigated and not just the facts related to his false statement.

d. The underlying conduct of Petitioner’s felony conviction occurred
after August 21, 1996.

Under section 1128(a)(3), Petitioner’s felony offense “must have occurred after August
21, 1996.” The record shows that the conduct on which Petitioner’s conviction was
based occurred in February 2013, well after 1996. IG Ex. 3 at 3; IG Ex. 4 at 6; IG Ex. 6
at 16; IG Ex. 7 at 1. Petitioner agrees. P. Br. at 1.

For the reasons outlined above, I find that Petitioner’s conviction meets the four elements
of a mandatory exclusion under section 1128(a)(3) of the Act and, therefore, the IG was
authorized to impose a mandatory exclusion.

3. Petitioner’s five-year exclusion is mandated by law.

An exclusion that is imposed pursuant to section 1128(a)(3) of the Act must be for a
minimum period of five years. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). Based on
my findings, I concluded that the IG was authorized to exclude Petitioner under section
1128(a)(3); therefore, the minimum mandatory period of exclusion is for five years.

Act § 1128(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2).

Petitioner discusses several mitigating factors that I cannot consider here because the IG
imposed the minimum five-year mandatory exclusionary period. These include
Petitioner’s characterization of the facts emphasizing that: there was an absence of fraud
or financial harm to any federal or state health care program; there was no harm to
patients; his misconduct was an isolated incident; his involvement in the misconduct was
as a Chief Executive Officer of a company that does not participate in any federal or state
health care program; the misconduct neither involved patients nor occurred during his
practice of medicine; he cooperated with the investigation; he paid $20,000 to the federal
government as a result of the offense, showing that he was responsible and willing to
conform to the laws and regulations; there is minimal risk that he will repeat the offense;
and his medical specialty of emergency physician is unrelated to the offense. P. Br. at
17-18. Lam, however, only authorized to consider aggravating and mitigating factors
where the IG has imposed more than the minimum mandatory period of exclusion.

42 C.F.R. § 1001.102(c). Here, the IG did not rely on any aggravating factors to expand
the period of exclusion; consequently, I am precluded from considering any of the factors
Petitioner claims are mitigating.
Further, Petitioner disputes that he should be excluded under section 1128(a)(3) of the
Act and argues that his conviction of making a false statement in violation of 18 U.S.C.
§ 1001(a)(2) falls into a category of a permissive exclusion under section 1128(b)(2) of
the Act, which deals with a conviction relating to obstruction of an investigation. P. Br.
at 2-4, 17-19. However, I cannot review whether the IG ought to have excluded
Petitioner based on a different ground than the IG selected. I can only apply the facts to
determine if a section 1128(a)(3) exclusion is warranted. The preamble to the final rule
establishing the exclusion regulations indicates that a criminal offense may invoke both a
mandatory exclusion and permissive exclusion (i.e., they are not necessarily exclusive),
and if it does, then the IG will proceed under the mandatory exclusion. 55 Fed. Reg.
12,205, 12,207 (Apr. 2, 1990).

Petitioner asserts that the Assistant United States Attorney stated that he thought that the
IG would treat Petitioner’s conviction as a permissive exclusion and not a mandatory
one. P. Ex. 2. However, Petitioner’s plea agreement does not mention this matter
specifically and, as the plea agreement indicates, it only binds the U.S. Attorney’s
Office. IG Ex. 3 at 1; P. Ex. 1 at 1; see also IG Ex. 6 at 7, 10 (Petitioner telling the
District Court that he had not been promised anything beyond the plea agreement to
induce his waiver of rights and his guilty plea).

Petitioner also sets forth arguments which amount to collateral attacks on the accuracy of
the charge underlying his conviction. Petitioner denies any culpability for the crime and
maintains that his guilty plea was a result of both prosecutorial misconduct and fabricated
evidence. P. Br. at 13-14, 16. Petitioner denies that he even knew that the Botox® that
he purchased from Company A was adulterated, misbranded, or counterfeit. According
to Petitioner, he did not know that the information he provided to the FDA agents was
false. He also argues that the statement he did provide was not material to the FDA’s
investigation. P. Br. at 13-14, 16. I cannot consider these argument as the regulations
explicitly preclude any collateral attack on Petitioner’s conviction. 42 C.F.R.

§ 1001.2007(d). Further, as noted above, the court records in this case are clear as to the
facts to which Petitioner pled guilty and the conduct of which he was convicted.

Finally, Petitioner asserts that he is seeking withdrawal of his guilty plea and has filed a
motion to vacate or set aside his judgment with the District Court. P. Br. at 12-13. Under
the Act, an individual has been “convicted” of a criminal offense if a judgment of
conviction has been entered, “regardless of whether there is an appeal pending... .” Act
§ 1128(4)(1). Moreover, the applicable regulations consider a conviction to be no longer
valid for purposes of an exclusion only if it is “reversed or vacated on appeal.” 42 C.F.R.
§ 1001.3005(a)(1). Consequently, unless and until the District Court takes the action
sought by Petitioner, Petitioner’s motion to vacate or set aside his judgment has no
bearing on this decision. If Petitioner later receives relief from the court, Petitioner may
seek reinstatement from the IG. 42 C.F.R. § 1001.3005.
III. Conclusion

For the foregoing reasons, the IG has a basis to exclude Petitioner from participating in
Medicare, Medicaid, and all federal health care programs. The five-year exclusion is for
the statutory minimum period. Act § 1128(a)(3), (c)(3)(B). Therefore, I affirm the IG’s
exclusion of Petitioner for five years.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-2342)

Complainant
v.

Emin Goroveci
d/b/a Michael’s Grocery and Deli,

Respondent.
Docket No. C-15-809
Decision No. CR3697

Date: March 6, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Emin Goroveci d/b/a Michael’s Grocery and Deli, at 18 Van
Houten Street, Patterson, New Jersey 07505, and by filing a copy of the complaint with
the Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Michael’s Grocery and Deli impermissibly sold cigarettes to a
minor, failed to verify, by means of photo identification containing a date of birth, that
that a tobacco purchaser was 18 years of age or older and sold individual cigarettes,
thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.

§ 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose
a $2,000 civil money penalty against Respondent Michael’s Grocery and Deli.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 6, 2015, CTP served the
complaint on Respondent Michael’s Grocery and Deli 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 Michael’s Grocery and Deli has neither filed an answer within the time
prescribed, nor requested an extension of time within which to file an answer. Pursuant
to 21 C.F.R. § 17.11, l assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e At approximately 12:02 PM, on April 13, 2014, at Respondent’s business
establishment, 18 Van Houten Street, Patterson, New Jersey 07505, an FDA-
commissioned inspector observed Respondent’s staff selling an individual
Newport cigarette to a minor. The inspector also documented that Respondent’s
staff failed to verify, by means of photographic identification containing a date of
birth, that the purchaser was 18 years of age or older;

e Ina warning letter dated June 5, 2014, CTP informed Respondent of the
inspector’s April 13, 2014 observations, and that such actions violate federal law,
21 C.F.R. § 1140.14(a), (b)(1) and (d). The letter further warned that
Respondent’s failure to correct its violations could result in a civil money penalty
or other regulatory action;

e At approximately 11:10 AM, on August 12, 2014, at Respondent’s business
establishment, 18 Van Houten Street, Patterson, New Jersey 07505, FDA-
commissioned inspectors documented Respondent’s staff selling an individual
Newport cigarette to a person younger than 18 years of age. The inspectors also
documented that Respondent’s staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older.

These facts establish Respondent Michael’s Grocery and Deli’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. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years
of age.
Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age. Additionally, under 21 C.F.R. § 1140.14(d) retailers are
prohibited from selling individual cigarettes.

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

For these reasons, | enter default judgment in the amount of $2,000 against Respondent
Emin Goroveci d/b/a Michael’s Grocery and Deli. 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

Center for Tobacco Products,
(FDA No. FDA-2015-H-0040)

Complainant,
v.

Corner Shoppe LLC / Stuart Cohen
d/b/a Corner Shop,

Respondent.
Docket No. C-15-841
Decision No. CR3696
Date: March 6, 2015
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Corner Shoppe LLC / Stuart Cohen d/b/a Corner Shop, at 745
South Kanawha Street, Beckley, West Virginia 25801, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Corner Shop unlawfully sold cigarettes to
minors and failed to verify, by means of photo identification containing a date of birth,
that a tobacco purchaser was 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 $250 civil money penalty against Respondent
Corner Shop.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 9, 2015, CTP served the
complaint on Respondent Corner Shop 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 Corner Shop 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, Lassume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At Respondent’s business establishment, 745 South Kanawha Street, Beckley,
West Virginia 25801, on December 30, 2013, at approximately 1:50 PM, an FDA-
commissioned inspector observed Respondent’s staff sell a package of Pall Mall
Menthol 100’s cigarettes to a person younger than 18 years of age. The inspector
also observed that Respondent’s staff failed to verify, by means of photo
identification containing the bearer’s date of birth, that the tobacco purchaser was
18 years of age or older;

e Ina warning letter issued on March 27, 2014, CTP informed Respondent of the
inspector’s observations from December 30, 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, 745 South Kanawha Street, Beckley,
West Virginia 25801, on June 22, 2014, at approximately 5:10 PM, FDA-
commissioned inspectors observed Respondent’s staff sell a package of Pall Mall
Red 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. § 387£(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.

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

§ 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any person younger
than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of
photo identification containing the bearer’s date of birth, that no cigarette or smokeless
tobacco purchaser is younger than 18 years of age.

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

For these reasons, I enter default judgment in the amount of $250 against Respondent
Corner Shoppe LLC / Stuart Cohen d/b/a Corner Shop. 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

Center for Tobacco Products,
(FDA No. FDA-2015-H-0103)

Complainant
v.

East End Kitchen and Market, LLC /
Tageldin Banaga
d/b/a East End Kitchen and Market,

Respondent.
Docket No. C-15-904
Decision No. CR3695

Date: March 6, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, East End Kitchen and Market, LLC / Tageldin Banaga d/b/a
East End Kitchen and Market, at 1159 Stratford Avenue, Bridgeport, Connecticut 06607,
and by filing a copy of the complaint with the Food and Drug Administration’s (FDA)
Division of Dockets Management. The complaint alleges that East End Kitchen and
Market impermissibly sold cigarettes to minors and failed to verify, by means of photo
identification containing a date of birth, that the purchasers were 18 years of age or older,
thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.

§ 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose
a $500 civil money penalty against Respondent East End Kitchen and Market.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 14, 2015, CTP served the
complaint on Respondent East End Kitchen and Market 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 East End Kitchen and Market failed to file an answer within the time
prescribed. I do note that, on February 17, 2015, Respondent filed a request for an
extension of time to file an answer. This request for an extension was filed more than 30
days after the complaint was served on Respondent, is consequently untimely, and cannot
serve to prevent a default judgment. However, as noted in my March 6, 2015 order, I do
treat Respondent’s pleading as a timely motion to reopen. I have ordered CTP to respond
to Respondent’s motion to reopen by March 16, 2015. In the event that Respondent’s
motion to reopen is ultimately granted, this Initial Decision and Default Judgment will be
vacated.

In the meantime, pursuant to 21 C.F.R. § 17.11, l assume that the facts alleged in the
complaint (but not its conclusory statements) are true. Specifically:

e At approximately 10:06 a.m. on September 24, 2013, at Respondent’s business
establishment, 1159 Stratford Avenue, Bridgeport, Connecticut 06607, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age. The inspector
also observed that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older;

e Ina warning letter dated November 27, 2013, CTP informed Respondent of the
inspector’s September 24, 2013 observations, and that such actions violate federal
law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that
Respondent’s failure to correct its violations could result in a civil money penalty
or other regulatory action;

e At approximately 1:17 p.m. on July 28, 2014, at Respondent’s business
establishment, 1159 Stratford Avenue, Bridgeport, Connecticut 06607,
FDA-commissioned inspectors documented Respondent’s staff selling a package
of Newport Non-Menthol Box 100s cigarettes to a person younger than 18 years
of age. The inspectors also documented that staff failed to verify, by means of
photographic identification containing a date of birth, that the purchaser was 18
years of age or older.

These facts establish Respondent East End Kitchen and Market’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. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years
of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against Respondent
East End Kitchen and Market, LLC / Tageldin Banaga d/b/a East End Kitchen and
Market. 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

Center for Tobacco Products,
(FDA No. FDA-2015-H-0078)

Complainant
v.

132 Third, LLC / Gitaben Patel
d/b/a Third Ave Grocery / 132 Third Avenue,

Respondent.
Docket No. C-15-879
Decision No. CR3691

Date: March 6, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, 132 Third, LLC / Gitaben Patel d/b/a Third Ave Grocery / 132
Third Avenue, at 132 Third Avenue, Halethorpe, Maryland 21227, and by filing a copy
of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Third Ave Grocery / 132 Third Avenue
impermissibly sold cigarettes to minors and failed to verify, by means of photo
identification containing a date of birth, that a cigarette purchaser was 18 years of age or
older, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.

§ 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose
a $500 civil money penalty against Respondent Third Ave Grocery / 132 Third Avenue.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 14, 2015, CTP served the
complaint on Respondent Third Ave Grocery / 132 Third Avenue 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 Third Ave Grocery / 132 Third Avenue 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 approximately 2:54 p.m. on February 7, 2014, at Respondent’s business
establishment, 132 Third Avenue, Halethorpe, Maryland 21227, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age;

e Ina warning letter dated April 24, 2014, CTP informed Respondent of the
inspector’s February 7, 2014 observation, and that such action violates federal law,
21 C.F.R. § 1140.14(a). The letter further warned that Respondent’s failure to
correct its violation could result in a civil money penalty or other regulatory
action;

e At approximately 3:55 p.m. on July 29, 2014, at Respondent’s business
establishment, 132 Third Avenue, Halethorpe, Maryland 21227,
FDA-commissioned inspectors documented Respondent’s staff selling a package
of Newport Box cigarettes to a person younger than 18 years of age. The
inspectors also documented that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older.

These facts establish the liability of Respondent Third Ave Grocery / 132 Third Avenue
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. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010).
Under 21 C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person younger than
18 years of age.
Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against Respondent 132
Third, LLC / Gitaben Patel d/b/a Third Ave Grocery / 132 Third Avenue. 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

Center for Tobacco Products,
(FDA No. FDA-2015-H-0116)

Complainant
v.

Madison Ave Mart LLC
d/b/a Madison Ave Mart / BP,

Respondent.
Docket No. C-15-920
Decision No. CR3690

Date: March 6, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Madison Ave Mart LLC d/b/a Madison Ave Mart / BP, at
3725 Madison Avenue, Bridgeport, Connecticut 06606, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Madison Ave Mart / BP impermissibly sold
cigarettes to minors and failed to verify, by means of photo identification containing a
date of birth, that the purchasers were 18 years of age or older, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose a $500 civil money
penalty against Respondent Madison Ave Mart / BP.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 15, 2015, CTP served the
complaint on Respondent Madison Ave Mart / BP 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 Madison Ave Mart / BP has neither filed an answer within the time
prescribed, nor requested an extension of time within which to file an answer. Pursuant
to 21 C.F.R. § 17.11, l assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e At approximately 9:24 a.m. on September 25, 2013, at Respondent’s business
establishment, 3725 Madison Avenue, Bridgeport, Connecticut 06606, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Marlboro Eighty-Threes cigarettes to a person younger than 18 years of age. The
inspector also observed that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older;

e Ina warning letter dated December 5, 2013, CTP informed Respondent of the
inspector’s September 25, 2013 observations, and that such actions violate federal
law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that
Respondent’s failure to correct its violations could result in a civil money penalty
or other regulatory action;

e At approximately 2:28 p.m. on July 28, 2014, at Respondent’s business
establishment, 3725 Madison Avenue, Bridgeport, Connecticut 06606,
FDA-commissioned inspectors documented Respondent’s staff selling a package
of Newport Box cigarettes to a person younger than 18 years of age. The
inspectors also documented that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older.

These facts establish Respondent Madison Ave Mart / BP’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. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years
of age.
21 C.F.R. § 1140.14(b)(1) states that retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against Respondent
Madison Ave Mart LLC d/b/a Madison Ave Mart / BP. 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

Center for Tobacco Products,
Complainant
v.

Keyes Canoe Rental Inc.
d/b/a Ozark Outdoors Riverfront Resort,

Respondent.

Docket No. C-15-881
FDA Docket No. FDA-2015-H-0080

Decision No. CR3683

Date: March 4, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Keyes Canoe Rental Inc. d/b/a Ozark Outdoors Riverfront Resort,
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 January 13, 2015, 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), am 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 Ozark Outdoors Riverfront Resort, an establishment that sells
tobacco products and is located at 200 Ozark Outdoor Lane, Leasburg, Missouri
65535. Complaint § 3.

e CTP previously initiated a civil money penalty action, CRD Docket Number C-14-
689, FDA Docket Number FDA-2014-H-0187, against Respondent for two
violations of 21 C.F.R. pt. 1140 within a 24-month period. Specifically, on April
21, 2013 and September 23, 2013, Respondent sold tobacco products to a minor
and failed to verify, by means of photographic identification, that the tobacco
purchaser was 18 years of age or older. Complaint § 10.

e The previous civil money penalty action concluded when Tera Reed,
Respondent’s authorized representative, settled the action with CTP on
Respondent’s behalf. On April 6, 2014, Ms. Reed signed an Acknowledgment
Form in which she “‘admitt[ed] that the violations . . . occurred, waiv[ed]
Respondent’s ability to contest the violations in the future, and stat[ed] that he
understood that the violations may be counted in determining the total number of
violations for purposes of future enforcement actions against Respondent.” The
Administrative Law Judge closed the case on Aprill6, 2014. Complaint § 11.

e During a subsequent two-part inspection of Respondent’s establishment conducted
on July 14 and 18, 2014, FDA-commissioned inspectors documented that a person
younger than 18 years of age was able to purchase a package of Marlboro
cigarettes on July 14, 2014 at approximately 8:46 AM. 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 has 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 July 14,
2014, Respondent sold cigarettes to a person younger than 18 years of age, in violation of
21 C.F.R. § 1140.14(a). Therefore, Respondent’s actions constitute violations of law that
merit a civil money penalty.

CTP has requested a fine of $500, which is a permissible fine for three violations of the
regulations found at 21 C.F.R. pt. 1140. 21 C.F.R. § 17.2. Therefore, I find that a civil
money penalty of $500 is warranted and so order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2015-H-0050)

Complainant
v.

S & S Petroleum Enterprises Inc.
d/b/a Sunoco,

Respondent.
Docket No. C-15-852
Decision No. CR3681

Date: March 4, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, S & S Petroleum Enterprises Inc. d/b/a Sunoco, at 2739
Annapolis Road, Hanover, Maryland 21076, and by filing a copy of the complaint with
the Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Sunoco impermissibly 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 Sunoco.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 12, 2015, CTP served the
complaint on Respondent Sunoco by United Parcel Service. In the complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent should pay
the penalty, file an answer, or request an extension of time in which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30 days, the
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering it to pay the full amount of the proposed penalty.

Respondent Sunoco has neither filed an answer within the time prescribed, nor requested
an extension of time within which to file an answer. Pursuant to 21 C.F.R. § 17.11, 1
assume that the facts alleged in the complaint (but not its conclusory statements) are true.
Specifically:

e At approximately 10:48 a.m. on September 14, 2013, at Respondent’s business
establishment, 2739 Annapolis Road, Hanover, Maryland 21076, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age;

e Ina warning letter dated November 14, 2013, CTP informed Respondent of the
inspector’s September 14, 2013 observation, and that such an action violates
federal law, 21 C.F.R. § 1140.14(a). The letter further warned that Respondent’s
failure to correct its violation could result in a civil money penalty or other
regulatory action;

e At approximately 10:34 a.m. on July 9, 2014, at Respondent’s business
establishment, 2739 Annapolis Road, Hanover, Maryland 21076,
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 Sunoco’s liability under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if sold or distributed in violation of regulations issued under section 906(d) of the Act.

21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1; see 21 U.S.C.

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

§ 1140.14(a), no retailer may sell cigarettes 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, I enter default judgment in the amount of $250 against Respondent S
& S Petroleum Enterprises Inc. d/b/a Sunoco. Pursuant to 21 C.F.R. § 17.11(b), this
order becomes final and binding upon both parties after 30 days of the date of its
issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2015-H-0063)

Complainant
v.

Kotli, Inc. / Harbir Salh
d/b/a 7-Eleven 34131,

Respondent.
Docket No. C-15-861
Decision No. CR3678

Date: March 4, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Kotli, Inc. / Harbir Salh d/b/a 7-Eleven 34131, at 19390 East
Quincy Avenue, Aurora, Colorado 80015, 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 34131 impermissibly sold cigarettes to minors and failed
to verify, by means of photo identification containing a date of birth, that the purchasers
were 18 years of age or older, thereby violating the Federal Food, Drug, and Cosmetic
Act (Act), 21 U.S.C. § 301 et seg., and its implementing regulations, 21 C.F.R. pt. 1140.
CTP seeks to impose a $250 civil money penalty against Respondent 7-Eleven 34131.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 13, 2015, CTP served the
complaint on Respondent 7-Eleven 34131 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 34131 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, Lassume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At approximately 12:47 p.m. on August 27, 2013, at Respondent’s business
establishment, 19390 East Quincy Avenue, Aurora, Colorado 80015, an FDA-
commissioned inspector observed Respondent’s staff selling a package of
Marlboro 100’s cigarettes to a person younger than 18 years of age. The inspector
also observed that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older;

e Ina warning letter dated October 24, 2013, CTP informed Respondent of the
inspector’s August 27, 2013 observations, and that such actions violate federal
law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that
Respondent’s failure to correct its violations could result in a civil money penalty
or other regulatory action;

e At approximately 11:52 a.m. on July 9, 2014, at Respondent’s business
establishment, 19390 East Quincy Avenue, Aurora, Colorado 80015, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Marlboro 100’s cigarettes to a person younger than 18 years of age.

These facts establish Respondent 7-Eleven 34131’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. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years
of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age.

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

For these reasons, I enter default judgment in the amount of $250 against Respondent
Kotli, Inc. / Harbir Salh d/b/a 7-Eleven 34131. 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

Center for Tobacco Products,
(FDA No. FDA-2015-H-0037)

Complainant
v.

V. J.’s Country Pantry, Inc. / Joseph Biger
d/b/a VJ’s Country Pantry,

Respondent.
Docket No. C-15-838
Decision No. CR3676

Date: March 4, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, V. J.’s Country Pantry, Inc. / Joseph Biger d/b/a VJ’s Country
Pantry, at 36888 Huron River Drive, New Boston, Michigan 48164, and by filing a copy
of the complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that VJ’s Country Pantry impermissibly 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 VJ’s Country Pantry.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 9, 2015, CTP served the
complaint on Respondent VJ’s Country Pantry 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 VJ’s Country Pantry 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, Lassume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At approximately 1:00 p.m. on March 29, 2014, at Respondent’s business
establishment, 36888 Huron River Drive, New Boston, Michigan 48164, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Newport Kings cigarettes to a person younger than 18 years of age;

e Ina warning letter dated May 29, 2014, CTP informed Respondent of the
inspector’s March 29, 2014 observation, and that such an action violates federal
law, 21 C.F.R. § 1140.14(a). The letter further warned that Respondent’s failure
to correct its violation could result in a civil money penalty or other regulatory
action;

e At approximately 9:35 a.m. on August 1, 2014, at Respondent’s business
establishment, 36888 Huron River Drive, New Boston, Michigan 48164,
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 VJ’s Country Pantry’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. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes 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, I enter default judgment in the amount of $250 against Respondent
V. J.’s Country Pantry, Inc. / Joseph Biger d/b/a VJ’s Country Pantry. 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