Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Better Living/Better Health, LLC,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-1119
ALJ Ruling No. 2014-36

Date: July 11, 2014

ORDER OF REMAND

Palmetto GBA National Supplier Clearinghouse (NSC), an administrative contractor
acting on behalf of the Centers for Medicare & Medicaid Services (CMS), determined
that Petitioner, Better Living/Better Health, LLC, failed to be accessible and staffed
during posted hours of operation. Because NSC revoked Petitioner’s Medicare billing
privileges, Petitioner requested a hearing before an administrative law judge to dispute
NSC’s determination. For the reasons stated below, I remand this case to CMS.

I. Background

Petitioner was enrolled in the Medicare program as a supplier of durable medical
equipment, prosthetics, orthotics, and supplies (DMEPOS). See CMS Exhibit (Ex.) 1, at
3. On April 9 and 10, 2013, an NSC inspector attempted to conduct a site inspection at
Petitioner’s location on file with CMS. CMS Ex. 3, at 20-31. The NSC inspector could
not complete an inspection on either date and, on April 25, 2013, NSC issued an initial
determination revoking Petitioner’s Medicare supplier number because Petitioner: was
not operational (42 C.F.R. § 424.535(a)(5)(ii)); was not accessible or staffed during
posted hours of operation (42 C.F.R. § 424.57(c)(7)); did not have comprehensive
liability insurance in an amount equal to at least $300,000 (42 C.F.R. § 424.57(c)(10));
and was not accredited by a CMS-approved accrediting organization (42 C.F.R. §
424.57(c)(22)). CMS Ex. 3, at 17-18. NSC stated that the revocation was effective April
10, 2013, the date CMS determined that Petitioner’s practice location was not
operational. CMS Ex. 3, at 17. NSC barred Petitioner from re-enrolling in the Medicare
program for two years from the effective date. CMS Ex. 3, at 17.

On May 16, 2013, Petitioner filed a timely request for reconsideration with NSC. CMS
Ex. 3, at 7-19. On June 24, 2013, an NSC hearing officer issued an unfavorable
reconsidered determination upholding the revocation of Petitioner’s Medicare billing
privileges. CMS Ex. 2. The reconsidered determination expressly upheld revocation
based on Petitioner’s failure to be open during posted hours of operation and not properly
staffed (42 C.F.R. § 424.57(c)(7)), and failure to be accredited by a CMS-approved
accrediting organization (42 C.F.R. § 424.57(c)(22)). CMS Ex. 2, at 3-4. The
reconsidered determination also found Petitioner compliant with the requirement that it
ave liability insurance (42 C.F.R. § 424.57(c)(10)). CMS Ex. 2, at 4. The reconsidered
determination did not directly address whether it upheld the failure to be operational (42
CFR. § 424.535(a)(5)(ii)). CMS Ex. 2.

On August 2, 2013, Petitioner timely filed a request for hearing (RFH) before an
administrative law judge. On August 9, 2013, I issued an Acknowledgement and Pre-
hearing Order (Order). Pursuant to the Order, CMS filed a motion for summary
judgment (CMS Motion) with four exhibits (CMS Exs. 1-4). Petitioner submitted a brief
in opposition to the CMS Motion (P. Opposition) with nine exhibits (P. Exs. 1-9).

My Order advised the parties that they must submit written direct testimony for each
proposed witness and that an in-person hearing would only be necessary if the opposing
party requested an opportunity to cross-examine a witness. Order §§ 8-11; see Vandalia
Park, DAB No. 1940 (2004); Pacific Regency Arvin, DAB No. 1823, at 7-8 (2002)
(holding that the use of written direct testimony for witnesses is permissible so long as
the opposing party has the opportunity to cross-examine those witnesses).' Here, CMS
listed one witness, the NSC inspector, and relied on his site investigation report as his
written direct testimony. See CMS Ex. 3, at 20-31. Petitioner requested to cross-examine
the NSC inspector and listed as witnesses its owner and operator, Marlene Thomas, and
two other individuals whose businesses are on the same street as Petitioner. Petitioner
submitted their affidavits as P. Exs. 1, 8, and 9.

CMS filed objections to P. Exs. 1-9 and Petitioner’s witnesses. CMS argued that the case
should be decided on the written submissions without an in-person hearing, but expressed
its intention to cross-examine Petitioner’s witnesses if they were permitted to testify.

' Departmental Appeals Board (DAB) decisions cited in this decision are accessible on
the internet at: http://www.hhs.gov/dab/decisions/index.html.
On November 20, 2013, I issued an Order, in which I ruled as follows: I denied the CMS
Motion and stated that I would schedule a hearing for the purpose of allowing the parties
to cross-examine their party-opponent’s witnesses; I admitted CMS Exs. 1-4, except that
I did not admit the NSC inspector’s report (CMS Ex. 3, at 20-31) pending cross-
examination of the inspector. I overruled CMS’s objections to P. Exs. 1, 8, and 9, but I
reserved admitting those exhibits into the record until CMS had an opportunity to cross-
examine those witnesses. I sustained CMS’s objection to P. Ex. 7 and I excluded that
exhibit from the record as irrelevant. I reserved ruling on CMS’s objections to P. Exs. 2-
6 until the hearing. Order dated November 20, 2013.

I convened a hearing by video teleconference on January 28, 2014. The NSC site
inspector testified, as did Ms. Thomas, and one of Petitioner’s other witnesses
(Petitioner’s witness). At the hearing, I admitted pages 20-31 of CMS Ex. 3 (Hearing
Transcript (Tr.) 80-81) and P. Exs. 1-4 (Tr. 135), 6 (Tr. 135), and 9 (Tr. 29). I did not
admit P. Ex. 8 because Petitioner did not call the affiant to testify. Tr. 7-8. Petitioner
withdrew P. Ex. 5. Tr. 117.

I gave the parties the opportunity to file post-hearing briefs. Petitioner filed a brief (P.
Br.), and CMS subsequently filed a reply (CMS Br.). With its post-hearing brief,
Petitioner requested that I admit a new exhibit, P. Ex. 10, consisting of Petitioner’s
Corrective Action Plan (CAP) and cover letter that it had submitted to NSC on May 6,
2013. Petitioner requested that I admit P. Ex. 10 on the grounds that it is relevant and
also that it should have been included in CMS Ex. | as part of the correspondence
between Petitioner and CMS/NSC. P. Br. at 6 n.3. In the absence of objection from
CMS, I admit P. Ex. 10 into the record.

II. Issue

Whether CMS had a legitimate basis for revoking Petitioner’s Medicare billing privileges
for failing to be accessible and staffed during posted hours of operation (42 C.F.R.
§ 424.57(c)(7)).

Although the reconsidered determination upheld the initial determination’s finding that
Petitioner failed to be accredited by a CMS-approved accrediting organization (42 C.F.R.
§ 424.57(c)(22)), CMS has, in this proceeding, conceded that this is no longer a basis to
revoke Petitioner’s Medicare billing privileges. CMS Motion at 9 n.3; see also CMS Ex.
4. Therefore, this is not an issue in this case.

Further, although the reconsidered determination defined the term “operational” and
found that Petitioner was not open, the reconsidered determination did not expressly
uphold the initial determination’s finding that Petitioner was not operational under

42 C.F.R. § 424.535(a)(5)(ii). Based on very recent DAB decisions that indicate review
of issues not stated in the reconsidered determination is precluded, I will not consider
whether the initial determination’s finding that Petitioner was not operational is a basis
for revocation.” Neb Group of Arizona LLC, DAB No. 2573, at 7 (2014); see also
Benson Ejindu, d/b/a Joy Medical Supply, DAB No. 2572, at 8-9 (2014).

Il. Jurisdiction

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

VI. Findings of Fact, Conclusions of Law, and Analysis*

In order fora DMEPOS supplier to receive Medicare payments for items furnished to a
Medicare-eligible beneficiary, the Secretary of Health and Human Services (Secretary)
must first issue a supplier number to that supplier. 42 U.S.C. § 1395m(j)(1)(A). The
Social Security Act establishes as a basic requirement that a DMEPOS supplier must
maintain a physical facility on an appropriate site, but further authorizes the Secretary to
create other DMEPOS supplier requirements. Jd. § 1395m(j)(1)(B)(ii). The Secretary
promulgated regulations establishing DMEPOS supplier enrollment standards, which a
DMEPOS supplier must meet and maintain. 42 C.F.R. § 424.57(c).

> T believe that the regulations governing provider and supplier enrollment cases preclude
new issues from being raised to an administrative law judge (see Integrated Homecare
Services Chicago Corporation, DAB CR3070, at 3 (2014)); however, I also believe that
the regulations do not consider issues articulated in the initial or reconsidered
determinations to be new issues. See 42 C.F.R. § 498.56(a)(2); Improving Life Home
Care, LLC, DAB CR3076, at 5 (2014). In an effort to harmonize the regulations and the
decision in Fady Fayad, M.D., DAB No. 2266, at 9-11 (2009), I have generally permitted
CMS to raise issues in its brief from the initial determination that were not expressly
ruled upon in the reconsidered determination. However, if CMS did not raise such issues
in its brief, I would only adjudicate the issues in the reconsidered determination. See
NORPRO Orthotics & Prosthetics, Inc., DAB CR3081, at 6 (2014). Because the CMS
Motion clearly raised the issue, from the initial determination, that Petitioner was not
operational, I stated it was an issue at the hearing. Tr. 6. However, as stated above, I will
not consider whether Petitioner was not operational as an issue in this case.

> My numbered findings of fact and conclusions of law are set forth in italics and bold in
the discussion captions of this decision.
In addition to maintaining a physical facility on an appropriate site, the supplier standards
require that the facility must be “open to the public a minimum of 30 hours per week”
and the supplier must “post[] hours of operation.” Jd. §§ 424.57(c)(7)(i)(D), (c)(30).
Most important for this case, the facility must be “accessible and staffed during posted
hours of operation.” Jd. § 424.57(c)(7)()(C).

CMS may conduct on-site reviews and inspections to ascertain supplier compliance with
enrollment requirements and supplier standards, and to determine if a supplier is
operational. Id. §§ 424.57(c)(8), 424.510(d)(8), 424.515(c), 424.517(a). CMS will
revoke the enrollment of a DMEPOS supplier if it fails to comply with any of the supplier
standards stated in 42 C.F.R. § 424.57(c). See Id. § 424.57(d).

I. The NSC inspector could not gain entry to Petitioner’s facility at 2901
W. Girard Avenue in Philadelphia, Pennsylvania when he attempted
site inspections on April 9 and 10, 2013.

On Tuesday, April 9, 2013, at approximately 11:45 a.m., the NSC inspector attempted to
conduct an unannounced site inspection at Petitioner’s facility located at 2901 W. Girard
Avenue in Philadelphia, Pennsylvania. CMS Ex. 3, at 22, 27. Petitioner’s posted hours
of operation, as indicated by the door sign, were listed as Monday through Friday from
9:00 a.m. to 5:00 p.m. CMS Ex. 3, at 29; see also CMS Ex. 3, at 23. In his site
investigation report, the NSC inspector stated that “[n]o one answered the door during the
posted hours of operation” and the “[s]upplier was not open.” CMS Ex. 3, at 20, 27. On
Wednesday, April 10, 2013, at approximately 9:45 a.m., the inspector attempted another
site inspection. However, he reported that “[a]gain, no one responded to the bell and the
doors were locked.” CMS Ex. 3, at 27. The inspector documented his attempted site
inspections with date and time-stamped photographs. CMS Ex. 3, at 28-31.

At the hearing, the NSC inspector testified, consistent with his inspection report, that
when he arrived at approximately 11:45 a.m. on April 9, 2013, for the first site
inspection, he took photos and “‘attempt[ed] to open the door and the door was locked.”
Tr. 38. The NSC inspector testified that there were two doorbells — a doorbell on the
entrance door and a doorbell next to the handicapped sign on the entrance — and he rang
both bells several times. Tr. 38, 43, 71, 75-76, 84. He stated that there was no response,
and he waited several minutes and then left. Tr. 38, 44, 76. The NSC inspector testified
that when he returned at 9:45 a.m. on April 10 for the second site visit, he took photos
and attempted to open the door, but it was locked. Tr. 45; see also CMS Ex. 3, at 31. He
stated that he rang both doorbells several times, and again, no one responded. Tr. 45, 72;
see also CMS Ex. 3, at 27. The NSC inspector testified that “no Medicare beneficiary
would have been able to access the supplier” on either April 9 or 10, 2013. Tr. 38-39.
He stated that he had not encountered a situation before where, on two consecutive days,
a supplier who was operational was unavailable on both site visits. Tr. 48-49.

CMS offered the NSC inspector’s site investigation report and his date and time-stamped
photos (CMS Ex. 3, at 20-31) as contemporaneous evidence of his site visits. As noted
above, Petitioner objected to these documents, and I deferred admitting them into the
record pending cross-examination of the inspector. Order dated November 20, 2013. On
direct examination, the inspector confirmed that he had completed the report on April 10,
2013, and verified his signature on it. Tr. 39-41. He testified further that he took photos
during the course of both of his site visits on April 9 and 10, 2013, and that he took the
photos found at pages 28-31 of CMS Ex. 3. Tr. 42-45. On cross-examination, the
inspector testified that he used an NSC issued digital camera that automatically stamped
on the date and time on each picture he took. Tr. 72. When asked about three photos
which all had the time stamp of “11:43,” the inspector stated that he had no reason to
question the time stamp’s accuracy. Tr. 73-75. Petitioner withdrew its objection to the
investigation report, but questioned whether the photos were “true and accurate
depictions,” and claimed that the fact that three photos all had the time stamp of “11:43”
shows that the inspector’s camera may not have been calibrated. Tr. 79-80. Petitioner
offered no evidence to suggest the camera had a calibration problem. Noting that the
inspector had thoroughly testified regarding his photos, I admitted pages 20-31 of CMS
Ex. 3. Tr. 80-81.

I find that the inspector testified credibly. His testimony regarding the site visits on April
9 and 10 was consistent with his contemporaneous documentation of the attempted
inspections. His investigation report indicates the dates and times of when the site visits
occurred, and states that, on both visits, no one answered the door during the posted hours
of operation and the facility was locked. Moreover, the dates and times in the report are
corroborated by the date and time stamps on the photos the inspector took on the two
visits. There are no internal discrepancies with the inspector’s report. I find that his
photos accurately represent what he observed on his site visits of April 9 and 10 and find
no evidence that he fabricated or manipulated the taking of the photos. The fact that the
NSC inspector took several photos from different locations, all bearing the same time
stamp, is not, in and of itself, sufficient grounds to question the reliability of the photos
and when they were taken.

Petitioner offered the testimony of two witnesses — a witness who owns a business across
the street from Petitioner’s office, and its owner/operator, Marlene Thomas. Petitioner’s
witness testified that he cannot see into Petitioner’s office from his location, but he sees
Ms. Thomas in the morning taking out the trash, sweeping, and watering her plants. Tr.
16, 18. When asked whether he saw Ms. Thomas on April 9, he replied that he “usually
see[s] her every morning.” Tr. 17. When asked whether he saw Ms. Thomas on April
10, he replied, “yes,” and stated that his basis for remembering seeing her at any time
during the month of April was due to the fact that he usually sees her car parked outside
her shop. Tr. 17. On cross-examination, the witness confirmed that he is unable to see

inside Petitioner’s office. Tr. 18-19. He testified that he was unable to confirm that Ms.
Thomas was physically present in her office on April 9 and 10, but believed she was
there on those dates because he saw her car parked outside. Tr. 19-20.

I do not find the testimony of Petitioner’s witness to be credible. His testimony at
hearing is not consistent with his written direct testimony, provided in an affidavit dated
October 4, 2013. At the hearing, Petitioner’s witness testified that he is unable to see into
Ms. Thomas’ office from his business, an important detail he omitted from his affidavit.
Thus, he could not definitively state that he could see Ms. Thomas in the facility. He
testified that he believed Ms. Thomas was in her office on April 9 and 10 because he had
seen her car parked outside. However, in his affidavit, Petitioner’s witness stated only
that he observed Ms. Thomas “during the course of [his] work day” “doing the following:
entering the office, cleaning up the block . . . (during the morning hours), or leaving the
office at the end of the day.” P. Ex. 9. Nowhere in his affidavit does the witness mention
Ms. Thomas’ car or claim that he was able to see Ms. Thomas’ car on April 9 and 10 or
even on a daily basis. Further, nowhere in the affidavit did the witness state that he
believed Ms. Thomas was physically present in her office on April 9 at 11:45 a.m. and
April 10 at 9:45 a.m. P. Ex. 9. In fact, the witness conceded on recross-examination that
this information was not in his affidavit. Tr. 25. Given that the witness’ assertions that
Ms. Thomas was present on the dates of the inspections are completely unsupported by
any evidence, his testimony is suspect and not definitive.

Petitioner’s owner and operator, Ms. Thomas, testified on direct examination that she was
present in the facility on April 9 and 10, 2013, at the times of the attempted inspections.
Tr. 93-94, 104, 116; P. Ex. 1, at 4-5. She testified that she did not hear the doorbell on
either date. Tr. 103-04, 112; P. Ex. 1, at 4, 5. According to Ms. Thomas, she did not
conduct any “due diligence” before she submitted her request for reconsideration because
she relied on the representations of an NSC employee who told her “everything should be
fine” if she submitted a CAP. Tr. 114-15. Ms. Thomas testified that she only learned of
the specific times of the site visits when she received the reconsideration determination
from NSC. Tr. 115-16. Ms. Thomas stated that she determined she was at the facility on
the inspection dates by reviewing her phone records, client files, and delivery records.
See Tr. 93-94, 104, 109-10; see also P. Exs. 2-6.

On cross-examination, Ms. Thomas testified that she is the sole person working in the
facility. Tr. 121. She conceded that in her May 2013 request for reconsideration, she had
admitted that she had been out of the office servicing patients with setting up medical
supplies at the time of the two site visits. Tr. 126, 129-30. Ms. Thomas admitted that she
later retracted this admission and that her original admission was made more
contemporaneously with the site inspections than was her affidavit. Tr. 126, 130. Ms.
Thomas testified that the reason she had stated she was not present for the inspections

was due to her not knowing the times of the inspections. Tr. 126. Ms. Thomas testified
that once she learned of the precise times of the site visits upon receiving the unfavorable
reconsideration decision, “[she] immediately knew, a light like hit, I was in the office at
this time.” Tr. 126, 133; P. Ex. 1, at 3-4.

I do not find credible Ms. Thomas’ testimony that she was present in her office at the
times of the two inspections because her statements directly contradict her prior
assertions contained in her request for reconsideration and her request for hearing. When
Ms. Thomas submitted Petitioner’s request for reconsideration in May 2013, she plainly
admitted that she had not been in the office at the times of the site visits. Ms. Thomas
stated, “[a]t the time of the two stated site visits above, owner/operator, Marlene Thomas,
was servicing clients with set ups and/or deliveries.” P. Ex. 10, at 2; CMS Ex. 3, at 11.
Nowhere in the request for reconsideration did she dispute NSC’s findings that
Petitioner’s facility was closed and no one was present on the dates of the site visits.*

During her testimony, Ms. Thomas claimed that she was not able to conduct her due
diligence until she became aware of the precise times of the two site inspections in the
June 24, 2013 reconsideration determination. Tr. 114-16, 126, 133, 141-42. However, if,
as Ms. Thomas claims, seeing the times of the site visits in the reconsideration
determination led to a sort of epiphany in which she realized that she had indeed been
present on those dates, I would have expected Petitioner’s August 2, 2013 request for
hearing to reflect this. However, it does not. Petitioner’s hearing request does not
challenge NSC’s finding that the facility was closed for the attempted inspections on
April 9 and 10, 2013. It does not suggest that the facility was open or that Ms. Thomas
was present and available at the relevant times. Rather, the hearing request references
Petitioner’s CAP and notes that the CAP had set forth new operational hours “to maintain
compliance with Supplier Standards and to assure staffing.” The hearing request also
indicates that additional staff had been hired to ensure that someone would be present at
all times during the posted hours of operation. Thus, Petitioner’s statements in the
hearing request are actually consistent with those expressed in her request for
reconsideration and reinforce the conclusion that she was not present and available at the
time of the attempted inspections.

It is noteworthy that, despite Ms. Thomas’ claim that once she learned of the times of the
site inspections from the reconsidered determination and conducted her “due diligence”
review of records she chose to offer her new recollection of events in her October 13,

4 Th Petitioner’s May 16, 2013 request for reconsideration, Petitioner further stated that,
“[t]o avoid this absence in the future and to adhere to supplier standards,” it had
implemented certain changes in its policies and procedures, including posting new hours
of operation and leaving a sign on the door when the office was left unattended to inform
the public when someone would return. CMS Ex. 3, at 11

2013 affidavit, six months after the site inspections occurred. P. Ex. 1. In this affidavit,
Ms. Thomas stated for the first time that she “‘was present” at Petitioner’s facility on the
dates of the site visits, April 9 and 10, 2013, but did not hear the doorbell ring. P. Ex. 1,
at 4-5.

In light of Ms. Thomas’ change in position based on learning the exact times of the site
inspections on April 9 and 10 from the reconsidered determination, I posed the following
question to her at the hearing: “[W]hat times were you in fact not present at your
location on the dates . . . or are you withdrawing that assertion in its entirety that you
were out of the office at all on the two dates, April 9" and April 10, 20132” Tr. 136.

Ms. Thomas responded:

To the extent that I was out of the office at any time on those
dates between the posted hours of 9:00 and 5:00, no, I was
not. I did on April the 10" I had a patient that I did service.
And I had submitted that documentation but it was after close
of business hours on April the 10". But for April 9 and 10"
the reason why I said I was servicing deliveries is I could
have ran to the store.

Tr. 136-37. I find Ms. Thomas’ response further highlights problems with her credibility,
as I find it to be less than candid and not believable. Given her original assertion in her
request for reconsideration that she had been out of the facility on April 9 and 10
servicing clients, and then her new version in which she claims that she realized she had
actually been in the facility on April 9 and 10 at the times of the inspections, I would
have expected an admission that she had been out of the office at other times on those
dates. I do not find credible Ms. Thomas’s statement that she was never gone from
Petitioner’s facility and was actually there all day on April 9 and 10.°

> T note that Ms. Thomas sent additional documentation to the Medicare Hearing Officer
on June 21, 2013, in support of her request for reconsideration. As explained by Ms.
Thomas, the documents include a “Client/Patient Service Agreement,” which was
executed by her client and herself on April 10, 2013, as well as an “Equipment
Management Admission Assessment and Plan of Service” form, “which was completed
at the time of the set up, service and training for the beneficiary’s medical equipment
which took place on April 10, 2013.” CMS Ex. 3, at 33-34, 44, 45-46. Although at the
hearing Ms. Thomas indicated that she serviced a client after business hours, these
documents could also suggest that Ms. Thomas was out of the office for at least a portion
of the day on April 10, servicing clients, as she admitted in her reconsideration request. I
note further that Ms. Thomas admitted on cross-examination that, “prior to May 16",”
there had been times when she left the facility unattended to go out and service clients
and sometimes she “would leave a sign on the door and sometimes [she] wouldn’t.” Tr.
10

In support of her claim that she was present at Petitioner’s facility on April 9 and 10,
2013, Ms. Thomas produced cellular telephone records from the dates at issue. P. Ex. 2;
see Tr. 133. According to Ms. Thomas, when she compared her cellular telephone
records to her patient files, she realized that she had been present on the inspection dates.
See Tr. 93-94, 104, 109-10;133-34. However, cellular phone records cannot be used to
prove that a DMEPOS supplier was staffed because unlike landlines, cellular phones are
mobile and can be used outside of the DMEPOS supplier’s offices. See Benson Ejindu,
DAB No. 2572, at 7 n.4; see also 42 C.F.R. § 424.57(c)(9) (requiring DMEPOS suppliers
to have a business phone, but prohibiting them from using cellular phones as their
primary business telephone).

I find that Petitioner offered no evidence to corroborate the “new story” that Ms. Thomas
provided in her affidavit and hearing testimony. While she may not have known the
precise times of the site inspections on April 9 and 10, she knew from CMS’s April 25,
2013 letter that the inspections took place during her posted business hours. Ms. Thomas
thus knew that the inspector was at the facility sometime between 9:00 a.m. and 5:00
p.m. on April 9 and 10. Her testimony that she was only able to conduct her “due
diligence” as to her whereabouts once she learned of the specific times of the inspections
is improbable because nothing would have prevented her from immediately reviewing

er records and logs after she received CMS’s April 25, 2013 letter. One would expect a
business person to do that when confronted with a notice such as the initial determination
in this case. Ms. Thomas’ testimony and affidavit clearly contradict her earlier
admissions that she was away from the office and appear to constitute an after the fact
attempt to rebut CMS’s case and avoid revocation of Petitioner’s Medicare billing
privileges.

Based on the evidence of record, I find that the NSC inspector attempted to conduct site
inspections of Petitioner’s facility at 2901 W. Girard Avenue in Philadelphia,
Pennsylvania, on April 9 and 10, 2013, during Petitioner’s posted hours of operation.
However, the NSC inspector was unable to gain entry to the facility and complete the
inspections because Petitioner’s sole employee, Ms. Thomas, was not present on those
dates.

123-24. Therefore, Ms. Thomas admitted that, at times other than the two site visits, she
left the facility unstaffed and unattended during posted hours of operation to service
clients. CMS Br. at 12-13.
11

2. CMS had a legitimate basis to revoke Petitioner’s Medicare billing
privileges because Petitioner’s location was not accessible and staffed
during posted hours of operation as required by 42 C.F.R.

§ 424.57(c)(7(O.

The facts in this case establish that Petitioner’s facility was not open and available for
the NSC inspector to conduct site inspections on April 9 and 10, 2013. Therefore,
CMS had a legitimate basis to conclude that Petitioner was not in compliance with the
supplier standards found at 42 C.F.R. § 424.57(c)(7)(i)(C).

Petitioner argues that Ms. Thomas was in the facility at the time of the site visits and
posits that the NSC inspector waited unreasonably short amounts of time for Ms. Thomas
to respond to the door, or that Ms. Thomas did not hear the doorbell because she was on
the telephone, or even that the doorbell might have malfunctioned. Assuming Ms.
Thomas was in her office on April 9 and 10 when the site inspections occurred, the fact
that she did not hear the inspector ring the doorbells on either date in order to give him
access to the facility means that the facility was not accessible under 42 C.F.R.

§ 424.57(c)(7)(i)(C). A supplier’s place of business must remain publicly accessible
uring posted hours of operation and may not close, even temporarily, during its posted
ours. Complete Home Care, Inc., DAB No. 2525, at 5-6 (2013). A DMEPOS supplier’s
facility “does not ‘provid[e] access’ to a Medicare beneficiary,” nor can it “be ‘used’ or
physically ‘reached’ by the beneficiary, if its entry door is locked during posted hours, no
one responds to a knock on the door, and there is no alternative means of gaining entry
for a customer seeking to purchase or at least consider purchasing Medicare-covered
supplies.” Norpro Orthotics & Prosthetics, DAB No. 2577, at 6, citing Benson Ejindu,
DAB No. 2572, at 6. Here, when the NSC inspector went to Petitioner’s facility on April
9 and 10, 2013, he found it locked on both dates. At each visit, he rang two doorbells
several times and waited for someone to open the door, but no one responded. The
inspector encountered no staff. There were also no instructions posted on the entrance
for how to obtain access and assistance from staff in the event the facility was locked.

On both of the NSC inspector’s visits, Petitioner’s facility was, for all practical purposes,
closed. Petitioner’s facility was, therefore, not “accessible” within the meaning of

42 CFR. § 424.57(c)(7)(i(C).

Further, as I found, the record supports a finding that Ms. Thomas was not present at
Petitioner’s facility on the days and times the NSC inspector attempted inspections.
Since there was no one present, Petitioner’s facility was also not “staffed” during its
posted hours of operation as required by 42 C.F.R. § 424.57(c)(7)(i)(C). A supplier’s
place of business must be continually staffed during its posted hours of operation.
Complete Home Care, Inc., DAB No. 2525, at 6. The preamble to the proposed rule that
added section 424.57(c)(7)(i)(C) to the regulations explained that a “supplier is not in
compliance with this standard if no one is available during the posted hours of
operation.” 73 Fed. Reg. 4503, 4506 (Jan. 25, 2008) (emphasis added). Similarly, the

12

preamble to the final rule stated that exceptions to the staffing requirement have always
been made for emergencies, disasters, and federal and state holidays, but emphasized that
a DMEPOS supplier “should be available during posted business hours” and “should do
its best to plan and staff for temporary absences.” 75 Fed. Reg. 52,629, 52,636 (Aug. 27,
2010). When the NSC inspector was on site on April 9 and 10, 2013, no one answered
the door on two consecutive days, nor did the NSC inspector see anyone on the premises
on either visit. There was no signage that indicated how a customer could reach an
employee of Petitioner for assistance if the door was locked. Therefore, I conclude that
Petitioner’s office was not “staffed” in accordance with 42 C.F.R. § 424.57(c)(7)(i)(C).

In its posthearing brief, Petitioner claims for the first time that the evidence suggests that
“i]t is likely that either the doorbell malfunctioned or the Palmetto inspector did not
press it hard enough.”® P. Br. at 7-8. Petitioner points out that the NSC inspector
testified that he did not hear the doorbell ring through the door on either of his visits on
April 9 and 10, and this confirms Ms. Thomas’ testimony that she did not hear the
doorbell ring on those dates. P. Br. at 7-8; see Tr. 84, 103-04, 112.

I find Petitioner’s attempt to undermine the validity of the NSC inspector’s site visits
unconvincing and unreasonable. As discussed above, I found the NSC inspector to be a
credible witness. His testimony regarding the attempted inspections on April 9 and 10,
2013, was consistent with his contemporaneous documentation of the inspections. In
testifying about his attempts to gain access to Petitioner’s office on April 9 and 10, the
NSC inspector stated that the facility was locked and the doorbells went unanswered on
both visits. The fact that the NSC inspector did not hear the doorbells ringing does not,
in and of itself, mean that the doorbells were not working or that he may not have
“press[ed] hard enough.” In suggesting that both of the doorbells may have been broken
over the course of two days, Petitioner describes nothing more than a speculative
scenario. Petitioner offered no evidence whatsoever, such as an invoice from a
repairman, in support of its assertion that either or both of the doorbells at its facility
malfunctioned when the inspector rang them on April 9 and 10. Petitioner also offered

no evidence to prove that the inspector may not have properly engaged either of the
doorbells.

Moreover, even accepting that both of Petitioner’s doorbells were not working on the
dates of the inspections, then this would further support the finding that Petitioner was
not accessible to the public during its posted hours of operation. Having malfunctioning
doorbells would clearly impede customer access to Petitioner’s office, and, under those

° As testified by the inspector, there were two doorbells at Petitioner’s facility — one on
the entrance door and another next to the handicapped sign on the entrance. Tr. 38. I
will assume that Petitioner is making the argument that both doorbells were
malfunctioning on April 9 and 10 even though it only refers to “doorbell” in the singular
in its brief.
13

circumstances, it would be incumbent upon Petitioner to institute an alternative means of
gaining entry in order to satisfy the requirements of 42 C.F.R. § 424.57(c)(7). Given that
Petitioner had not posted any notice for its customers specifying an alternate means of
gaining entry in the event its doors were locked, its argument that its doorbells likely
malfunctioned does not inure to its benefit.

With respect to Petitioner’s claim that the inspections were flawed because the inspector
“failed to exhaust every effort to determine if [Petitioner] was operational” on his visits, I
find this argument to be without merit. P. Br. at 9. The inspector credibly testified,
consistent with his investigation report, that he went to Petitioner’s facility on two
consecutive days, April 9 and 10, 2013, to conduct inspections. The record shows that
the inspector used reasonable efforts to attempt to gain entry to Petitioner’s facility on
both dates, but was unable to gain access. Although Petitioner argued that the inspector
should have called Petitioner’s phone number when he was at the facility, an inspector is
not required to telephone a supplier to find out why its location is closed. See Complete
Home Care, DAB No. 2525, at 5-6. It is not the inspector’s responsibility to chase down
a supplier in order to gain access to its facility. Furthermore, I note that site inspections
are supposed to be unannounced. 75 Fed. Reg. 52,629, 52,637-52,638 (“We have found
unannounced on-site visits to be a very effective tool in combating fraud and abuse and to
protect the Medicare Trust Fund from unscrupulous suppliers. Moreover, CMS and our
designated contractor, the NSC, have conducted unannounced on-site visits since 2000 to
ensure compliance with those standards which only can be verified by visual
inspection.”), 52,644 (“maintain[ing] a minimum number of hours open to the public...
will ensure that the DMEPOS supplier is operational and allows CMS, the NSC or agents
of CMS or the NSC to conduct unannounced site visits to ensure compliance with the
standards set forth at § 424.57.”) (Aug. 27, 2010). The NSC inspector acted properly in
this case.

I conclude that CMS has a legitimate basis for its determination that Petitioner’s facility
was not accessible and staffed during posted business hours and CMS properly revoked
Petitioner’s Medicare billing privileges. 42 C.F.R. § 424.57(c)(7)(i)(C).

3. Because revocation is premised only on a violation of a supplier standard
and NSC failed to consider Petitioner’s previously submitted CAP request, I
must remand this case to CMS to fully consider Petitioner’s CAP request and
issue a decision as to whether CMS will reinstate or refuse to reinstate
Petitioner’s Medicare billing privileges.

NSC’s initial determination stated that Petitioner was “not operational” and identified
42 C.F.R. § 424.535(a)(5)(ii) as one of the bases for revocation. Due to this finding,
NSC imposed retroactive revocation to April 10, 2013, the date NSC determined that
Petitioner was “not operational.” CMS Ex. 3, at 17. This is consistent with the
regulatory provision that states “the revocation is effective with the date . . . that CMS or
14

its contractor determined that the . . . supplier was no longer operational.” 42 C.F.R.

§ 424.535(g). However, that provision does not provide for a retroactive effective date
for a revocation premised solely on a violation of the supplier standards. The
reconsidered determination did not expressly address the effective date of revocation;
therefore, I assume that CMS has maintained April 10, 2013 as the retroactive effective
date in this case.

In addition to applying a retroactive effective date based on the non-operational finding,
NSC also did not afford Petitioner an opportunity to file a CAP (CMS Ex. 3, at 17-19),
which is consistent with CMS’s finding that Petitioner was non-operational finding. See
42 C.F.R. § 424.535(a)(1). However, the NSC hearing officer’s failure to include a
non-operational finding in the reconsidered determination precludes NSC from making
use of this exception.

Although the reconsidered determination does not expressly cite CMS’s authority to
revoke Petitioner’s Medicare billing privileges for violating the supplier standards, the
initial determination cited 42 C.F.R. § 424.57(e) and 424.535(a)(1). CMS Ex. 3, at 17.
Because section 424.57(e) has not contained any provision related to revocations since
2011, I cannot apply a now-deleted provision in this case to uphold a revocation.
However, as discussed below, 42 C.F.R. § 424.535(a)(1) provides CMS with authority to
revoke Petitioner based on violations of the supplier standards. In order to do so, CMS
must comply with the requirement in section 424.535(a)(1) that Petitioner be granted an
opportunity to file a CAP. Because the application of recent DAB decisions to this case
leads me to a remand of this case, it is necessary to explain why remand is now
necessary.

In 1992, the Secretary established the supplier standards for DMEPOS suppliers at

42 C.F.R. § 424.57. 57 Fed. Reg. 27,290 (June 18, 1992). The first sentence of
paragraph (d) of that new section provided for the revocation of the supplier’s billing
number for failing to meet the standards in paragraph (c) “effective 15 days after the
entity is sent notice of the revocation.” Jd. at 27,308. Although modified over time, the
substance of this sentence remained in paragraph (d) of section 424.57. In 2009, the
Secretary published a final rule in which he sought to move the revocation provision in
paragraph (d) to paragraph (e) so that a surety bond requirement for DMEPOS suppliers
could occupy paragraph (d); the then existing paragraph (e) (renewal of billing privileges)
was to be moved to become paragraph (f). 74 Fed. Reg. 166, 198-200 (Jan. 2, 2009).
The Office of the Federal Register took the position that “these amendments could not be
incorporated due to inaccurate amendatory instruction.” See 42 C.F.R. § 424.57 (2009)
(Editorial Note). As a result, in March 2009, the Secretary issued a “Final rule;
correcting amendment” that stated:

In FR Doc. E8-30802 issued on January 2, 2009 (74 FR 166),
the final rule entitled “Medicare Program; Surety Bond
15

Requirement for Suppliers of Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS)[”] there was
a technical error that is identified and corrected in this
document. The error was the result of a conflicting
amendatory instruction in the ‘‘Payment Policies Under the
Physician Fee Schedule and Other Revisions to Part B for CY
2009”’ final rule with comment period (73 FR 69726) that
was effective January 1, 2009. The correction in this
correcting amendment is effective on March 27, 2009.’

74 Fed. Reg. 13,345, 13,346 (Mar. 27, 2009). Therefore, as of March 27, 2009, CMS’s
authority to revoke billing privileges based on a violation of the supplier standards moved
from paragraph (d) to paragraph (e) of 42 C.F.R. § 424.57.

In 2010, the Secretary published another final rule revising paragraph (e) of 42 C.F.R.
§ 424.57. 75 Fed. Reg. 52,629, 52,648-52,649 (Aug. 27, 2010). As stated in the
preamble to the final rule:

In § 424.57(e) (which was proposed as § 424.57(d)), we are
modifying our proposal with a change to the effective date of
date of revocation. (See the Surety Bond final rule in the

7 The final rule published on January 2, 2009, sought to “[rJedesignat[e] paragraphs (d)
and (e) as paragraphs (e) and (f).” 74 Fed. Reg. at 198. For purposes of drafting final
tules, the use of the term “‘Redesignate’ transfers a [Code of Federal Regulations] unit to
a vacant position and assigns a new designation.” National Archives and Records
Administration, Office of the Federal Register, Federal Register Document Drafting
Handbook 1-26 (1998) available at http://www.archives.gov/federal-
register/write/handbook/. However, because the Secretary added a paragraph (f) to 42
C.F.R. § 424.57 effective January 1, 2009 (73 Fed. Reg. 69,726, 69,939 (Nov. 19, 2008)),
the Secretary could not redesignate paragraph (e) to paragraph (f) because paragraph (f)
was not vacant on January 2, 2009. Therefore, the Secretary, through the issuance of the
“Final rule; correcting amendment,” corrected the instructions in the January 2, 2009
final rule to read that paragraphs (d) and (e) were being redesignated as paragraphs (e)
and (g). 74 Fed. Reg. at 13,346.

® Each edition of title 42 of the Code of Federal Regulations since 2009 has included the
“Editorial Note” at the end of 42 C.F.R. § 424.57 indicating that the amendments made to
paragraphs (d) and (e) could not be incorporated into that code due to the incorrect
amendatory instructions in the January 2, 2009 final rule. Because the Secretary
corrected that error on March 27, 2009, it is unclear why the Office of the Federal
Register has continued to publish the “Editorial Note” and failed to update 42 C.F.R.

§ 424.57.
16

March 27, 2009 Federal Register (74 FR 13345). In order to
be consistent with our regulations at § 424.535(g), we are
extending the effective date of revocation from 15 to 30 days
after notification of the revocation.

75 Fed. Reg. at 52,645. It is clear from this quotation, which referred to the proposed
rule that originally sought to amend paragraph (d) and cited the final rule correcting
amendment redesignating paragraph (d) to (e), that the Secretary believed that paragraph
(e) was now the location of CMS’s authority to revoke billing privileges based on a
violation of the supplier standards. This change to paragraph (e) was meant to harmonize
the effective date of revocations (i.e., 30 days following issuance of an initial
determination to revoke) for violations of the DMEPOS supplier standards with the
general revocation provisions in 42 C.F.R. § 424.535. Further, the actual regulatory text
referenced 42 C.F.R. § 405.874, which also provided that the effective date of a
revocation was 30 days after issuance of the revocation determination. 42 C.F.R.

§ 405.874(b)(2) (2010).° The new revocation effective date provision in 42 C.F.R.

§ 424.57(e) was effective September 27, 2010 (75 Fed. Reg. at 52,629), and appeared in
the 2010 edition of the Code of Federal Regulations.'° See 42 C.F.R. § 424.57(e) (2010).

However, before the revisions to 42 C.F.R. § 424.57(e) were even effective, the Secretary
proposed to completely revise paragraph (e) to require DMEPOS suppliers to revalidate
every three years; the proposed rule did not mention revocations or the effective date for
revocations. 75 Fed. Reg. 58,204, 58,209, 58,240 (Sep. 23, 2010). The Secretary
ultimately issued a final rule effective March 25, 2011, in which paragraph (e) was
revised to provide instructions regarding revalidations. 76 Fed. Reg. 5,862, 5,962 (Feb.
2, 2011). Just as was the case with the proposed rule, the preamble to the final rule did
not mention the existing revocation authority in paragraph (e) of 42 C.F.R. § 424.57. See
id. at 5,868, 5,891-5,892. Because the final rule expressly used the amendatory
instruction that it was “revising” paragraph (e), the revocation provision in paragraph (e)
was deleted in favor of the new text concerning revalidations. See National Archives and
Records Administration, Office of the Federal Register, Federal Register Document
Drafting Handbook 1-27 (1998) available at http://www.archives.gov/federal-
register/write/handbook/ (“‘Revise’ means that an existing [Code of Federal Regulations]
unit is replaced in its entirety.”). The Office of the Federal Register followed the
instruction in the final rule because in the 2011 edition of the Code of Federal

° This provision is now located in 42 C.F.R. § 405.800(b)(2) (2013).

' Tn the 2010 edition of the Code of Federal Regulations, 42 C.F.R. § 424.57(d)
indicated that the effective date for a revocation was 15 days after issuance of the
revocation determination, while 42 C.F.R. § 424.57(e) indicated that it was 30 days after
issuance.
17

Regulations, paragraph (e) only included text about revalidations. 42 C.F.R. § 424.57(e)
(2011). Therefore, despite the fact that the Code of Federal Regulations still provides
obsolete text in 42 C.F.R. § 424.57(d) concerning revocations, there is no longer any
valid provision in 42 C.F.R. § 424.57 that provides CMS with the authority to revoke a
supplier based on a violation of the supplier standards.

I do not believe that the Secretary intentionally removed all reference to revocations from
42 C.F.R. § 424.57. Based on the confused history of paragraphs (d) and (e) of 42 C.F.R.
§ 424.57, it is easy to see why this mistake occurred. Further, before 2009, paragraph (e)
provided rules involving renewal of billing privileges. 42 C.F.R. § 424.57(e) (2008).
When one considers that the stated purpose of the 2011 amendment to paragraph (e) was
to create uniformity in terminology in the regulations with the use of the word
“revalidate” or “revalidation,” it is clear that it was the old paragraph (e) from 2008 that
was meant to be modified in 2011, not the new paragraph (e) involving revocations."

It is significant that the Secretary did not intend to exempt violators of the supplier
standards from revocation. This means that so long as the Secretary has granted CMS
authority to revoke Medicare billing privileges based on the supplier standards
somewhere in the regulations, then CMS may legitimately revoke those privileges
regardless as to the history of paragraphs (d) and (e) of 42 C.F.R. § 424.57.

A review of the regulations shows that CMS has clear authority to revoke a DMEPOS
supplier based on a violation of the supplier standards. CMS may revoke a currently
enrolled supplier if the supplier “is determined not to be in compliance with the
enrollment requirements described in this section, or in the enrollment application
applicable for its .. . supplier type... .” 42 C.F.R. § 424.535(a)(1). DMEPOS suppliers
must use a Form CMS-855S enrollment application, '” which expressly states on page 2
that all DMEPOS suppliers must meet the supplier standards in 42 C.F.R. § 424.57(c) in

"As indicated earlier, the March 23, 2009 final rule (correcting the January 2, 2009
final rule) transferred paragraph (e)’s contents, i.e., the renewal provisions, to new
paragraph (g) of 42 C.F.R. § 424.57. 74 Fed. Reg. at 13,346. However, the Office of the
Federal Register never published a paragraph (g) in the Code of Federal Regulations,
probably leading to some confusion as to the location of the renewal provision in

42 CFR. § 424.57.

The Form CMS-855S may be found on CMS’s website at
http://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/CMS-Forms-
Items/CMS019480.html?DLPage=1 &DLFilter=855&DLSort=0&DLSortDir=ascending.
18

order to obtain and retain Medicare billing privileges.'> That page summarizes the
supplier standards, including the requirement, pertinent to this case, that the DMEPOS
supplier’s “location must be accessible to the public and staffed during posted hours of
business.” Therefore, there is no doubt that the supplier standards are enrollment
requirements that are found in the enrollment application for DMEPOS suppliers.

Although I have concluded above that Petitioner violated the supplier standards at

42 C.F.R. § 424.57(c)(7), a violation which subjects Petitioner to revocation under

42 C.F.R. § 424.535(a)(1), I must remand this case to CMS. Before a final determination
revoking a supplier may be issued under section 424.535(a)(1), the supplier must be
“granted an opportunity to correct the deficient compliance requirement... .” 42 C.F.R.
§ 424.535(a)(1). According to Petitioner, she filed a CAP with NSC shortly after
receiving the initial determination to revoke Medicare billing privileges; however, NSC
returned the CAP to Petitioner “without due consideration.” RFH at 1. Petitioner
submitted a copy of the CAP she submitted to NSC. P. Ex. 10. Petitioner’s assertion that
NSC did not consider her CAP is corroborated by the fact that: the initial determination
does not provide notice of a right to file a CAP; there is no CAP decision in the record;
CMS did not object to P. Ex. 10; and NSC initially revoked billing privileges based, in
part, on a finding that Petitioner was not operational — an offense for which an
opportunity to correct is not afforded. CMS Ex. 3, at 17-19; 42 C.F.R. § 424.535(a)(1).
As stated above, because the NSC hearing officer failed to find in the reconsidered
determination that one of the bases for revocation was that Petitioner was not operational,
Petitioner should have been offered an opportunity to file a CAP before a final
determination was issued revoking billing privileges. There is no evidence this

appened; therefore, I remand this case for NSC to consider Petitioner’s CAP.

Order

Because I have not issued a decision in this case yet, I hereby remand this matter to CMS
under 42 C.F.R. § 498.78(b). On remand CMS shall:

1. Consider the CAP Petitioner submitted to NSC (P. Ex. 10);

2. Consider any supplemental information that Petitioner may submit to CMS within
14 days of the date on this Order of Remand;

3. Conduct a full review of the CAP under 42 C.F.R. § 405.809;

8 The regulations, consistent with the form, state that “[t]he supplier must meet and
must certify in its application for billing privileges that it meets and will continue to meet
the following [supplier] standards ....” 42 C.F.R. § 424.57(c) (introductory text).
4.

19

Issue a decision reinstating Petitioner’s Medicare billing privileges or refusing to
reinstatement those privileges within 45 days of the date on this Order of
Remand;

File a copy of the CAP decision with the DAB’s Civil Remedies Division along
with a request that I dismiss the RFH (if CMS has reinstated billing privileges) or
a request that I issue a decision consistent with the findings and conclusions in this
Order of Remand (if CMS has not reinstated billing privilege); and

Submit, with a request that I issue a decision, any argument it may want to make
concerning CMS’s authority to revoke Petitioner and the effective date of the
revocation.

It is further ordered that Petitioner may:

1.

File a reply to any submission CMS makes in response to this order within 20
days of receiving CMS’s submission; and

Include with its reply any argument Petitioner may want to make with regard to
CMS’s authority to revoke Petitioner and the effective date of such revocation;
Petitioner may make these arguments in its reply even if CMS does not address its
revocation authority or the effective date for the revocation in its submission. '*

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge

‘4 Tn filing any reply, Petitioner should understand that I do not have jurisdiction to
review CMS’s decision to refuse to reinstate billing privileges based on a CAP.

See 42 C.F.R. § 405.809 (CAP decisions are not initial determinations subject to appeal
under 42 C.F.R. Part 498); Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395, at
9-10 (2011); DMS Imaging, Inc., DAB No. 2313, at 7-10 (2010).


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

The Inspector General of the Social Security Administration,
Petitioner,
v.
Mohamed Benzabeh,
Respondent
Docket No. C-14-586
Ruling No. 2014-35

Date: July 10, 2014

RULING

On January 15, 2014, Respondent Mohamed Benzabeh filed a request for an
administrative law judge (ALJ) hearing to challenge a September 10, 2013 determination
by the Inspector General of the Social Security Administration (SSA IG) to impose a
$10,000 civil money penalty (CMP) against him.

SSA moves to dismiss Respondent Benzabeh’s hearing request. SSA argues that
Respondent’s hearing request is untimely filed and that Respondent Benzabeh has not
shown good cause for late filing.’ For the reasons discussed below, I grant SSA’s
motion.

' In the alternative, the SSA IG argues that Respondent Benzabeh’s hearing request does
not raise an issue that is subject to ALJ review. I do not reach this issue because I find
that Respondent Benzabeh has not demonstrated good cause for extending his time to
request a hearing. However, if I were to reach this issue, I would find that Respondent
Benzabeh’s hearing request does not raise a reviewable issue. It does not identify the
specific issues or findings of fact and conclusions of law with which Respondent
Discussion

In a letter dated September 10, 2013 (notice letter), the SSA IG advised Respondent
Benzabeh that he proposed imposing a penalty-only CMP of $10,000. The IG asserts that
he made three attempts to mail the notice letter to Respondent but that Respondent would
not claim the notice letter. The IG asserts further that on October 31, 2013, an SSA IG
special agent personally hand-delivered the notice letter to Respondent Benzabeh. SSA
IG Brief (Br.) at 4-5; SSA IG Exhibit (Ex.) 2.’ On January 1, 2014, the SSA IG notified
Respondent Benzabeh that, because Respondent Benzabeh had not filed a hearing
request, the IG would impose the $10,000 CMP. SSA IG Ex. 3.

Respondent Benzabeh does not dispute that: 1) he refused to claim the notice letter when
it was sent to him via the U.S. mail; 2) he received the notice letter following personal
service by an SSA IG special agent on October 31, 2013; 3) the notice letter informed
him of his right to appeal within 60 days of the date he received it; and 4) by regulation,
he had until no later than December 30, 2013 to file his hearing request.’ P. Hearing
Request; SSA IG Br. at 3-5; see 20 C.F.R. § 498.202(c)(2). Instead, in his January 15,
2014 hearing request, he wrote:

I am sending this request to you to have an opportunity to file an appeal
late. I was misled by my attorney as to the steps to take. I am pleading to
have a good cause for filing this appeal late be accepted. Upon receiving
correspondence dated September 10, 2013 I immediately took the papers to
my attorney. She made me think she was taking care of this matter. Upon
receiving the correspondence dated January 1, 2014[,] I contacted my
attorney and she stated that she had tried to contact a Joscelyn on numerous
occasions (my file I picked up from her has 11/17, 12/2, and 1/14 twice)
and was unable to speak with her. She told me she would not be able to
help me, so I picked up my file from her on January 14. I would greatly
appreciate an opportunity to find a competent attorney to represent me in
this matter.

Benzabeh disagrees; it does not state the basis for his contention that the specific issues
or findings and conclusions are incorrect. 20 C.F.R. § 498.202(d).

> The SSA IG filed four attachments to his brief. I refer to them as SSA IG Exs. 1
through 4.

> In error, the IG asserts that Respondent’s hearing request was due no later than
December 10, 2013. In fact, it was due no later than December 30, 2013. In any event,
Respondent’s hearing request, which is dated January 15, 2014, is untimely.
I held a pre-hearing conference on March 27, 2014. Respondent Benzabeh stated that he
wanted to retain counsel, but had been having trouble doing so. I told him that I could
not assist him in finding counsel and that the government would not pay for his counsel.
I told him he was entitled to representation and that if he retained counsel, his counsel
was to enter a notice of appearance. I set a briefing schedule on the IG’s request to
dismiss and warned the parties that failing to comply with my Order could lead to
sanctions, including dismissal of Respondent Benzabeh’s hearing request. March 27,
2014 Order; Social Security Act § 1128A(c)(4) (42 U.S.C. § 1320a-7a(c)(4)); see also 20
C.F.R. § 498.214(a)(1). The SSA IG timely filed a motion to dismiss and supporting
arguments. Respondent Benzabeh failed to respond.

On May 21, 2014, I issued an Order to Show Cause requiring Respondent to explain why
I should not dismiss the case for his failing to comply with my March 27, 2014 Order or
otherwise defend the case. I also directed him to respond to the IG’s motion to dismiss.
He did neither. Instead, he asked for still more time to find an attorney.

Thus, Respondent did not comply with my May 21, 2014 Order to Show Cause or my
March 27, 2014 Order. Respondent has had ample time to find an attorney or to present
his own case. *

Iam required to dismiss an untimely hearing request, unless the respondent shows good
cause for untimely filing. 20 C.F.R. § 498.202(f)(1). The regulations do not define good
cause, but leave that determination to my discretion. See, e.g., Taos Living Ctr., DAB
No. 2203 at 12 (2009) (holding that the ALJ “has discretion to extend the period . . . to
file... if... the ALJ finds ‘good cause’ for the late filing”). In other types of cases,
however, the SSA has, by regulation, defined good cause as circumstances beyond a
party’s ability to control.” 20 C.F.R. §§ 404.911, .933(c); 416.1411, .1433(c). I find it
reasonable to apply that definition here. The regulations have been subject to notice-and-
comment rulemaking and have been applied in a wide variety of cases. See, e.g., Raj
Ahluwalia, M.D., ALJ Ruling No. 2013-11 at 2-3 (2013) (and cases cited therein).

* Although I could have dismissed Respondent’s case for failure to comply with my
orders (see Social Security Act, section 1128A(c)(4) (42 U.S.C. § 1320a-7a(c)(4)), I do
not do so here because I find for the IG on the merits of his motion to dismiss.

> The regulations list factors for the ALJ to consider: 1) the circumstances that kept the
affected party from making the request on time; 2) whether any SSA action misled him;
3) whether the affected party understood the requirements for filing; and 4) whether the
affected party had any physical, mental, educational, or linguistic limitation that
prevented him from filing a timely request or from understanding or knowing about the
need to file a timely request for review. 20 C.F.R. §§ 404.911; 416.1411.
Reliance on such a long-accepted (and perhaps the only plainly-articulated) standard
could hardly be considered an abuse of discretion.

Here, the SSA IG explained in the notice letter that Respondent Benzabeh had 60 days in
which to request a hearing. He understood this and forwarded the notice letter to his
attorney. His only argument is that his attorney failed to act. Respondent does not
explain why his attorney did not file a hearing request, other than to assert, without any
documentary or testamentary support, that she tried to contact SSA° and that she could
not otherwise help him. I do not find this argument to constitute good cause to extend
Respondent Benzabeh’s time to file his hearing request. An attorney’s failure to file a
timely hearing request is not a circumstance beyond a party’s ability to control justifying
an extension of time to file. Karen Kay Parham, App. Div. Dkt. No. A-07-109 (August
14, 2007) (finding that counsel’s failure to represent effectively respondent was
“avoidable human error” and did not constitute good cause); see, e.g., NBM Healthcare,
Inc., DAB No. 2477 (2012) (finding that counsels’ claims that they “did not have time” to
focus on ALJ notice do not constitute good cause). I therefore find that Respondent
Benzabeh has not demonstrated good cause for extending the deadline for filing his
admittedly out of time hearing request. Accordingly, this case is dismissed.

Regulations governing these procedures afford no further appeal rights for the dismissal
of a hearing request. See 20 C.F.R. § 498.221 (providing hearing rights only for an initial
decision); see also Guidelines — Appellate Review of Decisions of Administrative Law
Judges in Social Security Administration Cases to Which Procedures in 20 C.F.R. Part
498 Apply at http://www.hhs.gov/dab/divisions/appellate/guidelines/ssa.html.

/s/
Carolyn Cozad Hughes
Administrative Law Judge

® Respondent Benzabeh states in his hearing request that his attorney tried to reach SSA
on several occasions during the 60-day period. Whether or not his counsel tried to
contact SSA during this time, and whether or not SSA personnel failed to respond is
immaterial to my decision. The regulatory requirement is clear that a hearing request has
to be filed, in writing, within 60 days of a respondent’s receipt of the notice letter. 20
C.F.R. § 498.202(c).


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

AMEN PALC LLC
d/b/a City Food Mart,

Respondent.

Docket No. C-14-1164
FDA Docket No. FDA-2014-H-0664

Decision No. CR3299

Date: July 18, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, AMEN PALC LLC d/b/a City Food Mart, that alleges facts and legal
authority sufficient to justify the imposition of a civil money penalty of $2,000.
Respondent did not answer the Complaint, nor did Respondent request an extension of
time within which to file an answer. Therefore, I enter a default judgment against
Respondent and assess a civil money penalty of $2,000.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold cigarettes to
minors, failed to verify that cigarette purchasers were 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, Cigarettes and Smokeless
Tobacco, 21 C.F.R. pt. 1140 (2012). CTP seeks a civil money penalty of $2,000.
On May 29, 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 proposed penalty, file an
answer, or request an extension of time within which to file an answer. CTP warned
Respondent that if it failed to take one of these actions within 30 days, an Administrative
Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision ordering
Respondent to pay the full amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation, nor has it
requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to “assume the
facts alleged in the [C]omplaint to be true” and, if those facts establish liability under the
Act, issue a default judgment and impose a civil money penalty. Accordingly, I must
determine whether the allegations in the Complaint establish violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns City Food Mart, an establishment that sells tobacco products
and is located at 442 Burnside Avenue, East Hartford, Connecticut 06108.
Complaint 3.

e During an inspection of Respondent’s establishment on June 26, 2013, at
approximately 10:44 AM, an FDA-commissioned inspector observed that “a
person younger than 18 years of age was able to purchase a package of Newport
Box 100s cigarettes . . . [.]” The inspector also observed that “the minor’s
identification was not verified before the sale....” Complaint 410.

¢ On October 10, 2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from June 26, 2013. The letter explained that the
observations constituted violations of regulations found at 21 C.F.R. § 1140.14(a)
and (b)(1), and that the named violations were not necessarily intended to be an
exhaustive list of all violations at the establishment. The Warning Letter went on
to state that if Respondent failed to correct the violations, regulatory action by the
FDA or a civil money penalty action could occur and that Respondent is
responsible for complying with the law. Complaint § 10.

e Amin UI Islam responded to the Warning Letter in an October 28, 2013 letter. Mr.
Islam “requested time to correct the violation and stated the violation would be
addressed with the employee.” Complaint § 11.

e During a subsequent inspection of Respondent’s establishment on December 26,
2013, at approximately 10:44 AM, FDA-commissioned inspectors documented
that “a person younger than 18 years of age was able to purchase two individual
cigarettes .. . [.]” The inspectors also documented that “the minor’s identification
was not verified before the sale... .” Complaint ¥ 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387¢(a)(7)(B); 21 C.F.R § 1140.1(b). The
Secretary issued the regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21
U.S.C. § 387(a); 21 U.S.C. § 387£(d)(1); 75 Fed. Reg. 13,229 (Mar. 10, 2010). The
regulations prohibit the sale of cigarettes to any person younger than 18 years of age. 21
C.F.R. § 1140.14(a). The regulations also require retailers to verify, by means of photo
identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1). Finally, the regulations
prohibit retailers from breaking or otherwise opening a cigarette package in order to sell
individual cigarettes. 21 C.F.R. § 1140.14(d).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on June 26,
2013, and December 26, 2013. On those same dates, Respondent also violated the
requirement that retailers verify, by means of photo identification containing a
purchaser’s date of birth, that no cigarette purchasers are younger than 18 years of age.

21 C.F.R. § 1140.14(b)(1). Lastly, Respondent violated the prohibition against breaking
or otherwise opening a cigarette package in order to sell individual cigarettes, 21 C.F.R. §
1140.14(d), on December 26, 2013, when it sold individual cigarettes. Therefore,
Respondent’s actions constitute violations of law that merit a civil money penalty.

CTP has requested a fine of $2,000, which is a permissible fine under the regulations. 21
C.F.R. § 17.2. Therefore, I find that a civil money penalty of $2,000 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

Pradeep Srivastava, M.D.
(NPI: 1043307671)
(PTAN 001050 and 735005P50),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-727
Decision No. CR3297

Date: July 16, 2014

DECISION

Novitas Solutions, Inc. (Novitas), an administrative contractor acting on behalf of the
Centers for Medicare & Medicaid Services (CMS), denied the application of Petitioner,
Pradeep Srivastava, to enroll as a supplier in the Medicare program based on Petitioner’s
felony conviction for income tax evasion and filing a false income tax return within 10
years of the date of his application. Petitioner requested a hearing before an
administrative law judge to dispute the denial. For the reasons stated below, I affirm
Novitas’ determination.

I. Background and Procedural History

On October 8, 2009, Petitioner was found guilty of federal income tax evasion and filing
a false tax return. CMS Ex. 6, at 7. CMS revoked Petitioner’s Medicare enrollment as of
that date and imposed a three-year reenrollment bar. CMS Ex. 6, at 2. On January 27,
2010, the United States District Court for the District of Maryland (District Court) issued
a Judgment in Criminal Case indicating that Petitioner was found guilty of three counts of
felony income tax evasion and filing a false tax return in violation of 26 U.S.C. §§ 7201
and 7206(1), and sentenced Petitioner to be incarcerated. CMS Ex. 6, at 10-11.

Petitioner submitted an application, Form CMS 855-I, to enroll in the Medicare program
dated March 28, 2013, along with the following supporting documentation: Completion
of Integrity Agreement letter dated April 3, 2013; Consent Order from the District of
Columbia Board of Medicine reinstating Petitioner’s medical license dated March 14,
2013; and the District Court’s Amended January 27, 2010 Judgment. CMS Ex. 9.
Subsequently, on May 21, 2013, Petitioner submitted Forms CMS 855-I and CMS 855-R,
with attachments. CMS Ex. 8.

On May 31, 2013, Novitas issued an initial determination letter denying Petitioner’s
enrollment application based on a failure to meet enrollment requirements (42 C.F.R.

§ 424.530(a)(1)). The letter also stated: “Deny. Based on the felony conviction.” CMS
Ex. 7, at 1. The letter informed Petitioner that he could either submit a corrective action
plan (CAP) within 30 days from the date of the letter or he could exercise his right to
request reconsideration within 60 days from the date of the letter. CMS Ex. 7, at 1-2.

On June 17, 2013, Petitioner filed a timely request for reconsideration. CMS Ex. 6. On
July 2, 2013, Novitas informed Petitioner that additional information was required to
complete processing of his enrollment application. CMS Ex. 5. Petitioner submitted the
additional information on July 18, 2013. CMS Ex. 4.

Novitas issued another initial determination letter dated August 14, 2013. CMS Ex. 3.
Novitas denied Petitioner’s enrollment based on 42 C.F.R. § 424.530(a)(3), because he
ad been convicted of a felony within 10 years preceding enrollment, which CMS
determined to be detrimental to the best interests of the Medicare program. CMS Ex. 3.
The letter informed Petitioner that he could either submit a CAP within 30 days from the
date of the letter or he could exercise his right to request reconsideration within 60 days
from the date of the letter. Petitioner submitted a CAP dated September 7, 2013. CMS
Ex. 2. Petitioner also included documentation of his restitution payments, individual
counseling, recertification in cardiovascular disease and Continuing Medical Education
(CME).

By letter dated December 7, 2013, Novitas issued its reconsideration decision in response
to Petitioner’s previously submitted CAP and Request for Reconsideration. CMS Exs. 1,
2, 6. Novitas’ reconsidered decision upheld the denial of Petitioner’s enrollment
application based on Petitioner’s felony conviction in 2010. CMS Ex. 1. The letter
notified Petitioner that he may request final review by an administrative law judge. CMS
Ex. 1.

On February 12, 2014, Petitioner filed a timely request for a hearing (RFH). In response
to my February 27, 2014 Acknowledgment and Pre-Hearing Order (Order), CMS filed a
Pre-Hearing Brief and Motion for Summary Judgment (CMS Br.) and nine exhibits
(CMS Exs. 1-9). Petitioner submitted a brief in opposition to CMS’s Motion for
Summary Judgment and a Cross Motion for Summary Judgment (P. Br.) and did not file
any exhibits.

II. Decision on the Record
In the absence of an objection, I admit CMS Exs. 1-9 into the record.

My Order advised the parties that they must submit written direct testimony for each
proposed witness and that an in-person hearing would only be necessary if the opposing
party requested an opportunity to cross-examine a witness. Order §j 8-10; Vandalia
Park, DAB No. 1940 (2004); Pacific Regency Arvin, DAB No. 1823, at 8 (2002)
(holding that the use of written direct testimony for witnesses is permissible so long as
the opposing party has the opportunity to cross-examine those witnesses).' Neither party
submitted written direct testimony for any proposed witnesses. Consequently, there are
no witnesses to cross-examine. Therefore, I issue a decision on the record. Order § 11.

III. Issue
Whether CMS had a legitimate basis for denying Petitioner’s enrollment under 42 C.F.R.

§ 424.530(a)(3) based on Petitioner’s felony conviction of income tax evasion and filing
a false income tax return.

' Decisions of the Departmental Appeals Board (DAB) cited in this decision are
accessible on the website for the Department of Health and Human Services (HHS) at:
http://www.hhs.gov/dab/decisions/index.html.

> The record indicates that CMS revoked Petitioner’s enrollment as a supplier in the
Medicare program, and established a three-year reenrollment bar and an effective date of
October 8, 2009. CMS Ex. 6, at 2. However, the reconsidered determination against
which Petitioner filed the request for hearing in this case only involves the denial of
Petitioner’s application for enrollment in the Medicare program following the completion
of the reenrollment bar. CMS Ex. 1. Petitioner has the right to a hearing for matters
covered in a reconsidered determination. See Denise Hardy, DAB No. 2464, at 4-5
(2012); Hiva Vakil, DAB No. 2460, at 4-5 (2012); see also Better Health Ambulance,
DAB No. 2475, at 4 (2012). Therefore, the revocation of Petitioner’s Medicare
enrollment is not an issue in this case.
IV. Jurisdiction

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

V. Findings of Fact, Conclusions of Law, and Analysis®

Petitioner is a physician and, therefore, a supplier for purposes of the Medicare program.
See 42 U.S.C. § 1395x(d); 42 C.F.R. §§ 400.202 (definition of Supplier), 410.20(b)(1).
In order to participate in the Medicare program as a supplier, individuals must meet
certain criteria to enroll and receive billing privileges. 42 C.F.R. §§ 424.505, 424.510.
CMS may deny enrollment for any of the reasons stated 42 C.F.R. § 424.530.

I. Petitioner was convicted of felony income tax evasion and filing a
false income tax return less than four years before he filed
applications to enroll in the Medicare program.

The record shows and Petitioner does not dispute that Petitioner was convicted of felony
income tax evasion and filing a false income tax return on January 27, 2010. CMS Ex. 6
at 10; P. Br. at 1. Petitioner’s application for enrollment was received by Novitas on
March 28, 2013 and resubmitted on May 21, 2013. CMS Exs. 8, 9. Therefore, I find that
Petitioner was convicted of felony income tax evasion and filing a false income tax return
within 10 years of his application for enrollment.

2. Novitas had a legitimate basis for denying Petitioner’s enrollment in
the Medicare program under 42 C.F.R. § 424.530(a)(3(i)(B), because
Petitioner was convicted of felony income tax evasion and filing a
false income tax return, which are offenses per se detrimental to the
interests of the Medicare program and its beneficiaries, and the
conviction took place within ten years of Petitioner’s application for
enrollment.

The pertinent regulatory provision provides the following basis for the denial of an
enrollment application:

(3) Felonies. If within the 10 years preceding enrollment or
revalidation of enrollment, the provider, supplier, or any
owner of the provider or supplier, was convicted of a Federal
or State felony offense that CMS has determined to be
detrimental to the best interests of the program and its

> My findings of fact and conclusions of law are set forth in italics and bold font.
beneficiaries. CMS considers the severity of the underlying
offense.

(i) Offenses include—

oe

(B) Financial crimes, such as extortion, embezzlement,
income tax evasion, insurance fraud, and other similar crimes
for which the individual was convicted, including guilty pleas
and adjudicated pretrial diversions.

42 CFR. § 424.530(a)(3)(i)(B).

Petitioner does not dispute that he was convicted for the felony of income tax evasion.
The criminal offense of “income tax evasion” is one of the enumerated felonies under

42 C.F.R. § 424.530(a)(3)(i)(B). Therefore a conviction of this crime is per se considered
detrimental to the best interests of the program. See Letantia Bussell, DAB No. 2196, at
9, (2008).

Petitioner does not appear to dispute this; however, Petitioner argues that CMS already
revoked his Medicare enrollment and barred him from reenrollment for the maximum
period of time permitted under 42 C.F.R. § 424.535(c). Because revocation was effective
in October 2009, Petitioner asserts that he has completed the three-year reenrollment bar,
which provides that a reenrollment bar after a revocation cannot be more than three years.

The regulation that Petitioner relies on, taken in isolation, supports Petitioner’s
contention. “After a... supplier... has had [his] billing privileges revoked, [he] is
barred from participating in the Medicare program from the effective date of the
revocation until the end of the re-enrollment bar. The re-enrollment bar is . . . not greater
than 3 years....” 42 C.F.R. § 424.535(c). Although Petitioner is no longer subject to a
reenrollment bar, he still is not enrolled. This is because he is required to complete and

submit “a new applicable enrollment application and applicable documentation, as a new

. supplier, for validation by CMS.” 42 C.F.R. § 424.535(d)(1) (emphasis added).

Ifa supplier submits an enrollment application, CMS must consider whether the supplier
meets the requirements for enrollment. The regulations provide seven reasons why CMS

* Although the Letantia Bussell decision involved a physician whose Medicare
enrollment was revoked under 42 C.F.R. § 424.535(a)(3)(i)(B) based on a conviction for
income tax evasion (DAB No. 2196 at 6), the decision is relevant in this case because
section 424.535(a)(3)(i)(B) is identical to section 424.530(a)(3)(i)(B).
may deny enrollment, including a conviction of a felony that is detrimental to the best
interests of the Medicare program and its beneficiaries within ten years of the enrollment
application. See 42 C.F.R. § 424.530(a)(3). CMS has the authority to deny Petitioner’s
enrollment because, as discussed above, Petitioner’s conviction is a basis for denying
enrollment.°

Petitioner also argues that he fulfilled all the conditions of an Integrity Agreement,°
participated in counseling, took CME courses, was recertified in cardiology and regained
his license to practice medicine. However, I cannot consider these issues because CMS
properly denied enrollment, and I have no authority to review CMS discretionary
decision to take an action authorized by law. Letantia Bussell, DAB No. 2196, at 12-13.

III. Conclusion

For the reasons explained above, I affirm CMS’s determination to deny Petitioner’s
enrollment as a supplier in the Medicare program.

/s/
Scott Anderson
Administrative Law Judge

> Although Petitioner’s belief that he should only be subject to a three-year reenrollment
bar appears reasonable, considered in context, it is incorrect. If Petitioner was right, then
suppliers enrolled in the Medicare program prior to a conviction could only be precluded
from participation in the program for three years while individuals with the same
conviction who seek enrollment for the first time would be subject to denial of enrollment
for ten years. There is no reason to believe that HHS intended to treat these two groups
in such a disparate way.

® The record reflects that the HHS Office of the Inspector General sent Petitioner a letter
on April 3, 2013, stating that Petitioner completed the five-year term of an Integrity

Agreement that had commenced on July 24, 2007. CMS Ex. 9, at 31. Because Petitioner
was not found guilty of the felonies that are the basis for the denial of his enrollment until
October 2009, the Integrity Agreement appears to have no connection to the present case.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Emporium Newsstand Inc. d/b/a Emporium News,
Respondent.

Docket No. C-14-1105
FDA Docket No. FDA-2014-H-0615

Decision No. CR3293

Date: July 14, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

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

The Complaint alleges the following facts. Respondent owns an establishment that sells
tobacco products and is located at 444 North Main Street, East Longmeadow,
Massachusetts 01028. Complaint § 3. CTP documented violations during two
inspections of the establishment. Complaint J 9. During one of the inspections, an FDA-
commissioned inspector observed that:
2
[A] person younger than 18 years of age was able to purchase a package of
Marlboro cigarettes on October 28, 2012, at approximately 11:05 AM ET;
and . . . the minor's identification was not verified before the sale, as
detailed above, on October 28, 2012, at approximately 11:05 AM ET.

Complaint § 10.

On November 29, 2012, CTP issued a warning letter to Respondent specifying the
violations that the inspector observed. The letter warned Respondent that if it failed to
correct the violations, civil money penalties could be imposed on it and that it was
Respondent’s responsibility to ensure compliance with the law. Complaint § 10.

Though United Parcel Service records indicate that a “Decide” received the warning
letter on November 30, 2012, CTP did not receive a response to the warning letter
Complaint § 11.

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

[A] person younger than 18 years of age was able to purchase a package of
Marlboro cigarettes on September 25, 2013, at approximately 12:48 PM;
and . . . the minor’s identification was not verified before the sale, as
detailed above, on September 25, 2013, at approximately 12:48 PM.

Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on May 19, 2014, via United Parcel Service. CTP charged Respondent with
violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21 C.F.R.

§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth). Complaint
4 1, 10. CTP asked the CRD to impose a $500 civil money penalty based on three
alleged violations of the regulations in a 24-month period. Complaint § 13.

The Complaint provided detailed instructions related to filing an answer and requesting
an extension of time to file an answer. Complaint J 14-18, 20-22. The Complaint stated
that failure to file an answer could result in the imposition of a civil money penalty
against Respondent. Complaint § 19. Further, after CTP filed the Complaint, CRD sent
Respondent an Initial Order informing Respondent of the requirement to file an answer to
avoid a default judgment. CRD sent a form answer along with the Initial Order that
Respondent could fill out and file with CRD. Respondent neither filed an answer nor
3

requested an extension of time within the 30-day time period prescribed in 21 C.F.R.
§ 17.9.

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

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

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

violations alleged; or

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

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

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

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

It is so ordered.

/s/
Joseph Grow
Administrative Law Judge