Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

The Inspector General of the Social Security Administration,
v.
Carolyn Cole,
Respondent.
Docket No. C-12-1154
Decision No. CR3150

Date: March 12, 2014

DECISION

The Inspector General (I.G.) of the Social Security Administration (SSA) notified
Respondent, Carolyn Cole, that he proposed to impose a civil monetary penalty and
assessment on her because she withheld disclosure of her alleged common law marriage
from SSA while she received Social Security widow’s insurance benefits (WIB).
Respondent disputed the I.G.’s allegations and filed a request for hearing. Because I find
that Respondent was not common law married by February 1, 2005, I conclude
Respondent did not withhold disclosure of a material fact related to her WIB. Therefore,
I deny the I.G.’s proposal to impose a penalty and assessment on Respondent.

I. Background and Procedural History

Respondent married James Keith Cole in March 1964. September 12, 2013 Hearing
Transcript (Tr.) 61; SSA Exhibit (Ex.) 1, at 1. She was married to him until he passed
away on September 20, 1999. Tr. 62; SSA Ex. 2.

On December 17, 2004, Respondent filed an application for WIB (first WIB application)
based on Mr. Cole’s Social Security record. Respondent indicated on the application that
she was last married to Mr. Cole. By signing the application, Respondent agreed to

promptly notify SSA if she remarried and indicated that all of the statements made on the
application were true. SSA Ex. 3, at 19-21. SSA approved Respondent for WIB. SSA
Ex. 3, at 67.

On March 17, 2011, Respondent filed an application for WIB (second WIB application)
based on a common law marriage between her and Alex John Moore; the application
indicated that the marriage commenced on July 10, 2003. SSA Ex. 3, 16-18. On April
18, 2011, SSA approved Respondent’s WIB application and started to pay Respondent
benefits based on Mr. Moore’s Social Security record rather than Mr. Cole’s record. SSA
Ex. 3, at 64.

In June 2011, Brian Cooper, the SSA claims representative (CR) who took Respondent’s
second WIB claim, made a “Fraud or similar fault determination or referral” asserting
that Respondent’s common law marriage in 2003 precluded Respondent from receiving
WIB on Mr. Cole’s record. SSA Ex. 3, at 67-68. Specifically, CR Cooper indicated that
Respondent misrepresented on her first WIB application that she was not married when
she was common law married to Mr. Moore and, because the common law marriage
occurred before Respondent turned 60, Respondent should not have received any benefits
on Mr. Cole’s record. SSA Ex. 3, at 67-68. CR Cooper’s referral resulted in an LG.
investigation.

The LG. special agent’s investigation primarily consisted of obtaining Respondent’s
second WIB application with supporting documents and SSA computer records, and
conducting an interview with Respondent. SSA Ex. 3. In February 2012, the I.G.
initiated contact with Respondent as part of the civil monetary penalty (CMP) process
and Respondent, through counsel, responded. SSA Exs. 5-7. On July 19, 2012, the I.G.
sent a notice to Respondent proposing to impose a CMP on Respondent of $51,000 and
an assessment in lieu of damages of $96,482. SSA Ex. 8. The CMP notice accused
Respondent of falsely stating in her first WIB application that she was not married when
she was married to Mr. Moore and that Respondent failed to subsequently report her
marriage to Mr. Moore while receiving WIB benefits on Mr. Cole’s Social Security
record. SSA Ex. 8, at 1. Although the I.G. acknowledged that Respondent’s alleged

false statement in the first WIB application was no longer actionable because it was
outside the statute of limitations, the 1.G. concluded that an appropriate CMP was $1,000
per monthly benefit payment from December 2006 through February 2011 because
Respondent failed to report her common law marriage during that time. SSA Exs. 8, at 2;
10, at 2-3. Further, the I.G.’s proposed assessment was calculated as one and a half times
that of the $64,282 Respondent received in WIB benefits from December 2006 to
February 2011. SSA Exs. 8, at 2; 10, at 3.

In response to the July 19, 2012 CMP notice, Respondent, though counsel, filed a request
for hearing before an administrative law judge and an “Answer.” SSA Ex. 9.
Respondent’s Answer stated that Respondent was common law married in August 2009
to Mr. Cole, but that Respondent mistakenly indicated on the second WIB application

that July 10, 2003, was the date of the common law marriage; Respondent asserted that
July 10, 2003, is the date Respondent initially met Mr. Moore. SSA Ex. 9, at 3.

On September 5, 2012, I held a prehearing conference with the parties’ counsel and
summarized the substance of that conference in my September 5, 2012 Order Scheduling
Submissions of Briefs and Documents. On March 14, 2013, I issued an order directing the
parties to submit the written direct testimony for all of their proposed witnesses with the
exception of Respondent, who, because she was called as a witness for both parties, would
provide direct testimony in person. See 20 C.F.R. § 498.216(b). Both parties submitted
written direct testimony for its witnesses. I held a hearing in this case on September 12,
2013, in which I heard testimony from Respondent and Lora Upshaw, Respondent’s
daughter. I admitted the parties’ proposed exhibits into the record either before or during the
hearing (SSA Exs. 1-12 and R. Exs. 1-5). Following the hearing, the parties submitted post
hearing briefs and replies to those briefs. This matter is now ready for decision. 20 C.F.R.
§ 498.220(c).

II. Issue

Whether Respondent withheld disclosure of a material fact for use in determining a
continuing right to or amount of Social Security benefits or payments, which Respondent
knew or should have known was material for such use and that such withholding was
misleading. 42 U.S.C. § 1320a-8(a)(1)(C).

Ill. Jurisdiction

Individuals against whom the I.G. proposes to impose a CMP have a right to a formal
hearing on the record before the CMP is imposed. 42 U.S.C. § 1320a-8(b)(2).
Respondent filed a timely request for an administrative law judge hearing. 20 C.F.R.

§ 498.202. Departmental Appeals Board administrative law judges adjudicate SSA CMP
cases. See 20 C.F.R. § 498.201 (definition of ALJ). Therefore, I have jurisdiction to
decide this case.

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

SSA administers the Social Security Act’s old age and survivors insurance benefit
payments. Widows who meet certain criteria may receive WIB. 42 U.S.C. § 402(e).
Except for widows who seek disability benefits, a widow must not have remarried before
the age of 60 in order to be eligible for WIB. 20 C.F.R. § 404.335(e). The law of the
state in which the widow’s deceased husband maintained a permanent home when he

' My findings of fact and conclusions of law are set forth in italics and bold font.
died determines whether the widow was married for Social Security purposes. 20 C.F.R.
§§ 404.303 (definition of permanent home), 404.344-45.

The present case involves two WIB applications Respondent filed with SSA based on the
records of Messrs. Cole and Moore. The issue as to whether Respondent is liable for a
CMP and/or assessment turns on whether Respondent and Mr. Moore were common law
married under Kansas law and, if so, from what date was the common law marriage
effective. There is no dispute that Respondent never informed SSA of a common law
marriage until she filed her second WIB application in 2011. Tr. 57. It is also clear from
the record that SSA placed Respondent on notice when filing the first WIB application
that she needed to disclose any marriage occurring before or after she applied for WIB.
SSA Ex. 3, at 20. Therefore, if Respondent was common law married before she turned
60 years old on February 1, 2005, then she might be liable under 42 U.S.C. § 1320a-
8(a)(1)(C) for withholding a material fact related to the determination of Respondent’s
continued entitlement to WIB on Mr. Cole’s account. However, if Respondent was never
common law married, or was common law married after February 1, 2005, then
Respondent is not liable for a CMP or assessment because Respondent either had no
obligation to report a non-marriage or Respondent’s common law marriage was no longer
a material fact in the determination of her continued right to benefits. See 20 C.F.R.

§ 404.335(e)(1) (marriages after 60 years of age do not affect entitlement to WIB).

In order for me to decide whether a common law marriage between Respondent and Mr.
Moore existed on February 1, 2005, or earlier, I must determine whether the courts where
Mr. Moore was domiciled at the time of his death would have considered Respondent to
be “validly married.” 42 U.S.C. § 416(h)(1)(A)(@); Cf Keen v. Keen, 201 U.S. 319, 321
(1906) (“the question [as to] what facts constitute a common-law marriage is purely a
local one”). There is no dispute that at the time of his death, Mr. Moore had his
permanent residence in Kansas. SSA Ex. 4. Therefore, I must apply Kansas case
precedent to determine whether a Kansas court would have considered Respondent
common law married to Mr. Moore. See e.g., Social Security Ruling (SSR) 88-14
(performing analysis using relevant state court cases to determine whether an individual
was common law married).

The LG. has the burden of proving by a preponderance of the evidence that a common
law marriage existed on or before February 1, 2005. 20 C.F.R. § 498.215(b); see also
Driscoll v. Driscoll, 552 P.2d 629, 632 (Kan. 1976) (“The burden of proving a common
law or consensual marriage rests upon the party asserting it.”); Cf; SSR 87-5c (applying
state law to conclude that SSA had the burden of overcoming a state law presumption in a
case involving the validity of a second marriage).

> SSRs represent binding interpretations and precedent that the Commissioner of Social
Security has adopted. 20 C.F.R. § 402.35(b)(1). SSRs may be found on the internet at:
http://ssa.gov/OP_Home/rulings/rulings.html.
It is important to note the issues that are not part of my consideration as to whether
Respondent is liable for a CMP and/or assessment. Although the LG. asserts that
Respondent falsely stated in her first WIB application filed in 2004 that she was not
remarried, this allegation is barred by a six-year statute of limitations. 42 U.S.C.

§ 1320a-8(b)(1). Further, the I.G. did not base its proposed CMP and assessment on
Respondent’s second WIB application. Therefore, any question as to the truthfulness of
the information in that application cannot serve to uphold a CMP and/or assessment in
this case.

A, Respondent was not common law married to Alex John Moore on or before
February 1, 2005.

“The validity of common-law marriages has long been recognized in [Kansas]. The basic
elements essential in establishing the existence of such marriage relationship are: (1)
capacity of the parties to marry, (2) a present marriage agreement, and (3) a holding out
of each other as husband and wife to the public.” Sullivan v. Sullivan, 413 P.2d 988, 992
(Kan. 1966). “Generally, the existence of such a marriage is a fact to be proved as other
facts are.” Driscoll, 552 P.2d at 632.

As fully explained below, I find based on the evidence of record that Respondent and Mr.
Moore were not common law married before February 1, 2005, under the applicable
standard provided in Kansas case law.

I. Respondent and Alex John Moore had the capacity to marry prior to
February 1, 2005.

In the state of Kansas,

Capacity to marry relates to whether or not a legal
impediment exists to entering into a marriage contract.
Accordingly, the term “capacity to marry” involves such
diverse matters as mental or physical capacity, the absence of
a spouse, whether a marriage would be incestuous, and the
party being of sufficient age to marry.

Estate of Hendrickson, 805 P.2d 20, 21 (Kan. 1991).

The evidence of record indicates that after September 20, 1999, neither Mr. Cole nor
Respondent had any impediment to marry. Mr. Cole’s previous marriages appear to have
ended in divorce, the latest of which ended on January 1, 1999. Respondent’s only
marriage ended on September 20, 1999, when Mr. Cole passed away. Further, it is clear
that both Respondent and Mr. Moore were old enough to marry. SSA Exs. 3, at 19; 4, at
1. Neither party has alleged that there was a lack of capacity to marry; therefore, I find
that Respondent and Mr. Cole had the capacity to marry from September 21, 1999
through February 1, 2005.

2. Respondent and Alex John Moore did not have a present marriage
agreement prior to February 1, 2005.

In Kansas, the “law . . . is very clear that an indispensable constituent of a common-law
marriage is the existence of a present marriage agreement. ... However, the present
marriage agreement need not be in any particular form.” Estate of Keimig, 528 P.2d
1228, 1230 (Kan. 1974) (internal citations and quotations omitted).

The evidence of record is insufficient to support a finding that Respondent and Mr.
Moore had a present marriage agreement before February 1, 2005. Respondent testified
that she was going to marry Mr. Moore after Mr. Moore recovered from his illness, which
did not happen. Tr. 115-116; SSA Ex. 3, at 10. In fact, Respondent informed SSA of this
in her second WIB application. SSA Ex. 3, at 25. This testimony is also corroborated by
the following statement in a May 26, 2011 letter that Lora Upshaw sent to SSA in support
of Respondent’s second WIB application:

I know [Mr. Moore] loved [Respondent] and had asked her
twice to marry him, but she wanted to wait until he was well,
unfortunately that did not happen.” [Mr. Moore] considered
her [h]is spouse, introduced her as his wife, even bought her
cards stating “My Wife.” I mentioned to [Mr. Moore] once
about her not being his wife after reading such a card and he
stated she might as well be, I love her like she is.

SSA Ex. 3, at 41. Consistent with Ms. Upshaw’s view that Mr. Moore and Respondent
were not married, Respondent testified unequivocally that she did not consider herself
married to Mr. Moore until she spoke with an SSA representative who stated that
Respondent was common law married to Mr. Moore. Tr. 15. Respondent also testified
that she did not know that the state considered her married to Mr. Moore until after Mr.
Moore passed away. Tr. 20. Significantly, Respondent stated: “In my heart and mind
I’ve never felt that we were married. We were just living together.” Tr. 21. When asked
specifically if she was married to Mr. Cole at the time she filed her first WIB application,
Respondent answered in the negative. Tr. 64. Again, Respondent’s testimony is
consistent with Ms. Upshaw’s testimony. Tr. 127, 131.

Although Respondent stated that she lived with Mr. Moore, she clarified that they did not
share a single residence until 2007. Respondent testified that Mr. Moore and Respondent
met on July 10, 2003, and did not live together at all for several months. Tr. 64, 66-67.
Even though they often would stay overnight at the same place from 2003-2007, they
each had their own homes; Mr. Moore paid a mortgage on his house and Respondent
paid rent for her house. Tr. 67. Although Respondent indicated on the second WIB
application that Mr. Moore and Respondent lived together starting in 2003, she testified
that by living together she really meant that they stayed at each other’s houses for periods
of time, shifting back and forth. Tr. 33-34; SSA Ex. 3, at 10, 76. It was not until 2007
that Mr. Moore purchased a new house in Pomona, Kansas, that would serve as their joint
residence. Tr. 35, 67-68. Ms. Upshaw’s testimony agrees with Respondent’s that Mr.
Moore and Respondent did not begin living together until they moved to the house in
Pomona. Tr. 124-125. However, even after they moved into the house in Pamona,
Respondent still did not think of her relationship with Mr. Moore to be husband and wife.

A review of the rest of the record supports Respondent’s testimony detailed above. It
was not until October 20, 2009, that Mr. Moore added Respondent’s name to the deed of
the house in which they lived. Significantly, Mr. Moore is twice described in the deed as
“a single person.” SSA Ex. 3, at 60-61. In 2008 Respondent and Mr. Moore opened a
joint bank account for the purpose of paying bills at the house they now shared; however,
it was not until 2009 that Mr. Moore added Respondent to his personal bank account, and
Respondent and Mr. Moore always filed separate individual tax returns. Tr. 36-37, 93;
R. Ex. 2. It is undisputed and clear from the record that Respondent kept Mr. Cole’s
surname and did not take Mr. Moore’s name.

The evidence of record supports a conclusion that, under Kansas case law, Respondent
and Mr. Moore did not have a present marital agreement. Respondent did not use Mr.
Moore’s surname, filed income taxes individually and in her own name, and Respondent
only had a plan to marry Mr. Moore in the future when his health improved. Anguiano v.
Larry’s Electrical Contracting, L.L.C., 241 P.2d 175, 178-179 (Kan. Ct. App. 2010); see
Sullivan, 413 P.2d at 992 (upholding a trial court determination that a present agreement
to marry was not proven because the individuals only planned to marry sometime in the
future). While it is true that Respondent and Mr. Moore lived together for years, such
evidence by itself does not compel a finding of a present agreement to marry. Estate of
Keimig, 528 P.2d at 1231.

The LG. has primarily relied on Respondent’s second WIB application to prove the
existence of a common law marriage between Respondent and Mr. Moore. Other than
Respondent’s own statements in the second WIB application, which will be addressed
below, Respondent submitted statements from other individuals and copies of cards and
letters sent from Mr. Moore to Respondent. SSA Ex. 3. However, as evaluated below,
these statements provide insufficient evidence that a present agreement existed between
Respondent and Mr. Moore before February 1, 2005.

Mr. Moore’s cousin, Sharon Loftus-Myers, signed a SSA Form-753 on March 21, 2011,
in which she answered the following question in the affirmative: “In your opinion, did
(do) they maintain a home and live together as husband and wife?” SSA Ex. 3, at 29.
She indicated that Respondent and Mr. Moore lived at various addresses from winter
2003 to February 2011. SSA Ex. 3, at 29. In response to the question why Ms. Loftus-
Myers considered Respondent and Mr. Moore to be married, she stated that they “were
jointly noted on the Deed of the property they purchased in Pomona and also on the
[titles of two cars purchased after November 2009.” The reason she gave as to why they
held joint property was that Mr. Moore wanted to protect Respondent after he died. SSA
Ex. 3, at 30. Ms. Loftus-Myers also wrote a March 12, 2011 letter addressed to “To
Whom It May Concern” in which she recounted that Mr. Moore introduced her to
Respondent in July 2003, and that Mr. Moore held an auction in October 2009 to sell
many of his possessions “so that [Respondent] would have sufficient funds to continue
living at their joint property in Pomona for at least a couple more years subsequent to his
death.” SSA Ex. 3, at 38.

Beyond her opinion that Respondent and Mr. Moore lived as husband and wife from
winter 2003 until February 2011, Ms. Loftus-Myers’ statement provides limited support
to determine that a common law marriage existed before February 1, 2005. Although
Ms. Loftus-Myers considered them to be husband and wife, she admitted that she never
heard them refer to each other as husband and wife. Further, when explaining why she
believed they were married, she cited a deed for property with both of their names,
conveyed on October 20, 2009 (SSA Ex. 3, at 60-61) and titles to cars purchased in 2009,
dates much too late to provide support for a common law marriage by February 1, 2005.
SSA Ex. 3, at 30. Further, Ms. Loftus-Myers recounted Mr. Moore’s reason for adding
Respondent to the deed and car titles and it was not because they were married, but
simply to financially protect Respondent. Ms. Loftus-Myers also attributed financial
considerations related to their “joint property in Pomona,” as to the reason Mr. Moore
held an auction in 2009.

Respondent’s sister, Bonnie Kildew, signed a SSA Form-753 on March 23, 2011, in
which she answered the following question in the affirmative: “In your opinion, did (do)
they maintain a home and live together as husband and wife?” SSA Ex. 3, at 32. She
indicated that Respondent and Mr. Moore lived together as husband and wife from
December 2003 until February 2011. SSA Ex. 3, at 32. In response to the question why
Ms. Kildew considered Respondent and Mr. Moore to be married, she stated in total that
they “both lived in the same house together, when they were introduced to others it was
this is my wife or husband.” SSA Ex. 3, at 31.

With the exception of Ms. Kildew providing dates between which Respondent and Mr.
Moore lived together, Ms. Kildew’s statements lack exactness with regard to time. In
testimony presented in this case, Ms. Kildew clarified that the first time she heard that
Respondent and Mr. Moore hold themselves out as married was following a dinner party
in 2009 that Respondent and Mr. Moore held. R. Ex. 5, at 1. Because Ms. Kildew was
not present for the party, the first time she heard Mr. Moore refer to Respondent as his
wife was in 2010 when Respondent and Mr. Moore visited Ms. Kildew in Wisconsin. R.
Ex. 5, at 1. Further, Ms. Kildew testified that “[a]t no time before my conversation with
[Respondent] after this dinner party did I ever hear, either directly or indirectly,
[Respondent] or Mr. Moore hold themselves out to be ‘married’ to the other.” R. Ex. 5,
at 1. It is important to note that the I.G. called Ms. Kildew to be cross-examined, but
later withdrew this request. Therefore, Ms. Kildew’s testimony is uncontested and her
March 2011 statement does not support a determination that Respondent and Mr. Moore
were common law married before February 1, 2005.

Mr. Moore’s cousin, John L. Zimmerman, signed a SSA Form-753 on March 25, 2011, in
which he answered the following question in the affirmative: “In your opinion, did (do)
they maintain a home and live together as husband and wife?” SSA Ex. 3, at 34. He
indicated that Respondent and Mr. Moore lived together as husband and wife from 2003
until 2011. SSA Ex. 3, at 32. In response to the question why Mr. Zimmerman
considered Respondent and Mr. Moore to be married, he ambiguously stated in total that
“{ajll activities and planning were done as Husband and Wife.” SSA Ex. 3, at 33.
Although Mr. Zimmerman indicated that he considered them husband and wife, he
admitted that he never heard Respondent and Mr. Moore actually refer to each other as
husband and wife. SSA Ex. 3, at 34. Therefore, aside from further confirming that
Respondent and Mr. Moore commenced living together in 2003, Mr. Zimmerman’s
statement does not support a determination that Respondent and Mr. Moore were
common law married before February 1, 2005.

Marrel and Charlotte Macy signed a letter, addressed to “To Whom it May Concern,” on
March 4, 2011, in which these individuals stated that they knew Respondent and Mr.
Moore for the preceding eight years through an organization called “the Power of the
Past.” SSA Ex. 3, at 35. The letter states that Respondent and Mr. Moore “were together
as a couple at all the meetings and other activities they attended” and that “[w]e never
thought of [Respondent and Mr. Moore] as singles but always as a couple.” SSA Ex. 3,
at 35. This letter only indicates that Respondent and Mr. Moore attended an organization
together and that they were perceived as “a couple.” This letter provides no direct
evidence to establish a common law marriage commencing before February 1, 2005. In
fact, the lack of a statement that Respondent and Mr. Moore held themselves out as a
married couple detracts from the conclusion that Respondent and Mr. Moore were
common law married during the relevant period.

Richard and Mary Mullins signed a letter, addressed to “To Whom it May Concern,” on
March 4, 2011, in which these individuals stated that they knew Respondent and Mr.
Moore for the preceding nine years and that “[t]hey were two of our best friends.” SSA
Ex. 3, at 36. The Mullins indicated that they knew Respondent and Mr. Moore lived
together for eight years. Interestingly, the Mullins stated that Respondent and Mr. Moore
“could not have loved each other any more if they had been married.” SSA Ex. 3, at 36.
In addition to confirming that Respondent and Mr. Moore started to live together in 2003,
this letter detracts from the conclusion that a common law marriage existed because the
Mullins clearly did not believe that Respondent and Mr. Moore were actually married.

10

Barbara Dougan signed a letter, addressed to “To Whom it May Concern,” on March 6,
2011, in which she stated that Mr. Moore introduced her to Respondent in 2003 and that
Respondent and Mr. Moore “lived together as partners for more than a 7 year period.”
SSA Ex. 3, at 37. Ms. Dougan ended her letter by stating the following: “They were a
beautiful couple who truly loved each other and lived as if they were a married couple.”
SSA Ex. 3, at 37. Once again, this letter confirms that Respondent and Mr. Moore
commenced living together in 2003; however, Ms. Dougan made it clear that she did not
think they were actually married because Respondent and Mr. Moore only loved and
lived with each other “as if they were a married couple.”

Sylvia Starkey signed a letter, addressed to “To Whom it May Concern,” on March 13,
2011, in which she stated that she knew Mr. Moore and Respondent since late 1995 or
early 1996. Ms. Starkey reports in the letter that “they lived together as a couple from, to
the best of my knowledge, 2003 until [Mr. Moore] died.” SSA Ex. 3, at 39. This letter
confirms that Respondent and Mr. Moore started living together in 2003, but only
identifies them as living as a couple, and not a married couple. Therefore, this letter does
not support a finding of a common law marriage.

Bobby and Donna Saile signed a letter, addressed to “To Whom it May Concern,” on
March 15, 2011, in which these individuals stated that Respondent and Mr. Moore “have
been together for eight years” and “purchased a small place in Pomona, Ks. about two
years ago.” SSA Ex. 3, at 40. This statement indicates that Respondent and Mr. Moore
ave been together since 2003 and owned property together in 2009; however, it does not
directly show that they were common law married.

To the extent that many of the individuals above indicated that, in their opinion,
Respondent and Mr. Moore lived together as a husband and wife, such evidence, by
itself, only leads to the conclusion that Respondent and Mr. Moore cohabitated under
Kansas law. Marriage of Sedbrook, 827 P.2d 1222, 1227 (Kan. Ct. App. 1992) quoting
Biltgen v. Biltgen, 250 P. 265 (1926). Further, “[t]he general reputation of the parties
with respect to being married or single does not prove or disprove the marriage
agreement itself.” Freeman’s Estate, 231 P.2d 261, 263 (Kan. 1951). Therefore, the
statements summarized above do not prove that a present marriage agreement existed
between Respondent and Mr. Moore before February 1, 2005.

Finally, the record includes several undated cards from Mr. Moore to Respondent
indicating his affection for her. SSA Ex. 3, at 42-57. Only two of these actually address
Respondent as his wife. SSA Ex. 3, at 42-45. However, at least one of these two cards is
from February 1, 2011, and the other is no older than 2007. See Tr. 18-19, 125-126.
Therefore, these cards do not have a bearing on my determination regarding the existence
of a present marriage agreement before February 1, 2005.

11

Based on the evidence of record, I find that Respondent and Mr. Moore did not have a
present agreement to be married before February 1, 2005.

3. Respondent and Alex John Moore did not hold themselves out to the
public as husband and wife prior to February 1, 2005.

The third element in the Kansas Supreme Court’s test to determine whether a common
law marriage was created is whether the parties held themselves out to the public as being
usband and wife. The evidence of record does not reveal that a preponderance of the
evidence supports a finding that Respondent or Mr. Moore held themselves out as

usband and wife before February 1, 2005.

In September 2009, Mr. Moore appears to have indicated that Respondent was his
“SPOUSE” for emergency contact purposes for a hospital. R. Ex. 1. In October 2009,
Mr. Moore appears to have told a physician that he was married. SSA Ex. 3, at 59.
Based on the dates of these documents, they do not prove that Mr. Moore and
Respondent publicly held themselves out as husband and wife before February 1, 2005.

The record is very clear that Mr. Moore referred to Respondent as his wife during a
dinner party that they held in August 2009 at their house. Mr. Moore said that he and his
wife (i.e., Respondent) thanked the guests for coming to the party. Tr. 88. Although
Respondent did not publicly correct Mr. Moore’s statement (Tr. 88), Respondent
answered in the negative when two woman guests at the party inquired if Respondent had
married Mr. Moore. Tr. 21.

Mr. Moore’s statement at the August 2009 dinner party seems to be the first time that
either Mr. Moore or Respondent ever publicly stated they were married. Donna
Eichenberger testified that she was present at the August 2009 party and heard Mr.
Moore make “the announcement to the crowd that they were now married.” R. Ex. 1.
However, Ms. Eichenberger also testified that “[a]t no time before August 2009 did I ever

ear, either directly or indirectly, Ms. Cole or Mr. Moore hold themselves out to be
‘married’ to the other.” R. Ex. 1. Bonnie Kildew testified that she was not present at the
August 2009 party, but learned of Mr. Moore’s statement from Respondent herself. R.
Ex. 5, at 1. Further, Ms. Kildew testified that “Mr. Moore introduced Ms. Cole as his
wife” during an October 2010 visit with Ms. Kildew. R. Ex. 5, at 1. Finally, Ms. Kildew
testified that at no time before October 2010 did she ever hear Mr. Moore refer to
Respondent as his wife, and at no time before hearing of the August 2009 party did she
directly or indirectly hear Respondent or Mr. Moore hold themselves out as being
married. R. Ex. 5, at 1-2. Ms. Upshaw testified that she knew Mr. Moore considered
imself married to Respondent, but does not appear to have known this until 2010 or
2011. Tr. 132.

12

Based on the evidence in the record, I find that Respondent and Mr. Moore did not
publically hold themselves out as married before February 1, 2005.

B. Respondent did not violate 42 U.S.C. § 1320a-8(a)(1)(©C) because she did not
withhold from SSA a material fact for use in determining her continuing
eligibility for WIB on James Keith Cole’s Social Security record.

The I.G. proposed to impose a CMP and assessment against Respondent for withholding
from disclosure her common law marriage to Mr. Moore from 2006 to 2011. 42 U.S.C.
§ 1320a-8(a)(1)(C). The specific basis for the proposed CMP and assessment required
the I.G. to prove that Respondent withheld a material fact from SSA (i.e., a common law
marriage) that would have been used in determining Respondent’s continued right to
receive WIB from Mr. Cole’s Social Security record.

In order for a fact to be “material” for purposes of 42 U.S.C. § 1320a-8(a)(1)(C), that fact
must be “one which the Commissioner of Social Security may consider in evaluating
whether an applicant is entitled to benefits under subchapter II of this chapter or
subchapter VIII of this chapter, or eligible for benefits or payments under subchapter XVI
of this chapter.” 42 U.S.C. § 1320a-8(a)(2).

In the present case, an alleged common law marriage between Respondent and Mr.
Moore would have had to have occurred before Respondent turned 60 years in order for it
to have been a material fact in determining whether Respondent should continue to be
entitled to WIB on Mr. Cole’s Social Security record. After Respondent turned 60 years
of age, remarriage was irrelevant for both the issues of entitlement to WIB and to the
amount of WIB payments Respondent would receive. 20 C.F.R. § 404.335(e); SSR 80-
60; see also 42 U.S.C. § 402(e)(3); SSR 87-7c. As indicated above, the record in this
case does not support a finding that Respondent and Mr. Moore were common law
married by February 1, 2005, which was Respondent’s sixtieth birthday. Therefore, I
conclude that Respondent did not violate 42 U.S.C. § 1320a-8(a)(1)(C) because she did
not withhold a material fact (i.e., a common law marriage) from SSA.

C. Respondent testified credibly in this case.

The L.G. posits that Respondent has provided significantly conflicting statements and
testimony concerning the existence and effective date of a common law marriage to Mr.
Moore; therefore, Respondent is not to be believed. However, based on the record in this
matter, it is clear that a combination of events have resulted in tremendous confusion
about Respondent’s relationship to Mr. Moore.

SSA officials throughout this case have not appreciated the complex nature of
determining a common law marriage. As detailed below, an SSA representative provided
incorrect information to Respondent and another failed to meaningfully assess whether
13

Respondent was common law married. The SSA special agent who investigated this
matter failed to adduce any evidence of the alleged common law marriage, save for the
documents Respondent submitted with the second WIB application and computer records
from SSA. Finally, I.G. counsel in this case did not cite one Kansas case to support the
contention that Respondent was in fact common law married to Mr. Moore. It is not
surprising that Respondent, an individual who is not a lawyer, would be confused by the
events leading to her second WIB application.

After Mr. Moore passed away, Respondent went to a funeral home with her daughter and
two of Mr. Moore’s children to make necessary plans for Mr. Moore’s remains. Tr. 75-
76. Respondent never told the funeral home that she was Mr. Moore’s wife. Tr. 75-76,
111-112. However, after the visit, Respondent noted that the death certificate indicated
that Respondent was Mr. Moore’s wife. SSA Ex. 4, at 1. She contacted the funeral home
and was told that the funeral home had been in contact with a government official who
decided, apparently based on the fact Respondent and Mr. Moore owned a house
together, that Respondent and Mr. Moore were married. Tr. 22, 76-77, 112.

Possibly based on the information in the death certificate, Respondent received a letter
from SSA indicating that it would pay her a death benefit due to Mr. Moore’s passing.
Tr. 77. Respondent called a telephone number on the letter and spoke to an SSA
representative named Elizabeth Cook and informed her that Respondent should not
receive the death benefit. Tr. 77. Ms. Cook asked respondent how long Respondent and
Mr. Moore were together and, after hearing that it had been eight years, opined that
Respondent had been common law married to Mr. Moore. Tr. 77-78. Ms. Cook set up
an appointment for Respondent with the Lawrence, Kansas SSA District Office so that
Respondent could file a WIB claim; Ms. Cook stated that if Respondent did not qualify
for benefits, the district office would let her know, but that “it won’t hurt to try.” Tr. 57,
78. SSA deposited the death benefit in Respondent’s account. Tr. 78. Respondent
testified that absent the statement from Ms. Cook, Respondent did not think she was
common law married to Mr. Moore. Tr. 25.

Respondent went to the appointment at Lawrence, Kansas SSA District Office and met
with CR Cooper on March 17, 2011. CR Cooper assisted Respondent with the second
WIB application in which it indicates that Respondent has been common law married
since July 10, 2003. Tr. 78-79; SSA Ex. 3, at 17. However, also on March 17, 2011,
Respondent made a handwritten statement on a Form SSA-795 in which she stated that
“Alex Moore and I have been together since July 10, 2003”; significantly, she did not
indicate she was married on that date. SSA Ex. 3, at 22. Respondent also indicated that
she and Mr. Moore had been together, not married, from July 2003 when an SSA special
agent later interviewed her as part of his investigation. SSA Ex. 3, at 76. On a Form
SSA-754-F4, Respondent provided incorrect information in response to a variety of
specific questions on that form. SSA Ex. 3, at 24. However, it is significant that CR
Cooper’s testimony fails to indicate that he did anything more than simply take a claim
14

application. He did not state that he attempted to help determine if Respondent had been
common law married or to inform her of the significant problem that a second WIB
application would cause her given her entitlement to WIB based on the first application.
SSA Ex. 12. CR Cooper’s limited interaction with Respondent during the appointment to
apply for WIB is corroborated by Respondent. Tr. 78-79.

Respondent submitted some supporting documentation, which Ms. Upshaw transmitted
to CR Cooper by fax. Significantly, in that May 26, 2011 letter, Ms. Upshaw made it
clear that Respondent “was told by someone in your office that she would qualify for
[Mr. Moore’s] [Social Security] benefits as they were common law married.” SSA Ex. 3,
at 41. Then Ms. Upshaw informed CR Cooper that Respondent planned to marry when
Mr. Moore was better, but this did not happened. SSA Ex. 3, at 41. Respondent had
actually informed SSA of this in her second WIB application. SSA Ex. 3, at 25. Further,
as evaluated above in detail, CR Cooper was provided with unconvincing statements of
multiple individuals to support the claim of a common law marriage. SSA Ex. 3, at 28-
40. Despite this, CR Cooper not only approved Respondent’s second WIB application,’
but made a fraud determination or referral based on Respondent’s alleged common law
marriage that commenced on July 10, 2003. SSA Ex. 3, at 67-68. Given how important
the existence and effective date of the alleged common law marriage was and the poor
evidence of a common law marriage that was submitted, CR Cooper needed to more fully
develop Respondent’s claim of an alleged common law marriage.*

Following CR Cooper’s fraud referral, SSA’s special agent conducted a cursory inquiry
into Respondent’s alleged common law marriage. This investigation was primarily
limited to a review of the second WIB application and SSA computer records, a criminal
background check, and an interview with Respondent. SSA Ex. 3, at 1-15.

Respondent testified at the hearing that she met Mr. Moore on July 10, 2003, and did not
marry him on that date. She said she made a number of mistakes on the second WIB
application, most of them dealing with setting a date for a common law marriage on July
10, 2003. I believe that Respondent has been truthful while testifying in this proceeding.
She was not evasive. Sometimes she was confused, which is understandable given the
complex nature of this case. Her explanation of the situation that is the subject of this

> In an unrelated case, SSA failed to properly determine whether a claimant was common
law married under Kansas law. See Anguiano, 241 P.2d at 177, 179.

4 Generally, in order to determine that a claimant for WIB was common law married,
SSA’s “[p]referred evidence” is a statement from the surviving alleged spouse and two of
the deceased alleged spouse’s blood relatives. See 20 C.F.R. § 404.726(b)(2). However,
SSA CRs need to “develop” evidence of a common law marriage when there is lack of
clarity in the documents submitted with the claim. See SSA Program Operations Manual
System § GN00305.065(C) available at https://secure.ssa.gov/poms.nsf/Inx/0200305065.
15

proceeding has been generally consistent with the oral statement that she gave SSA’s
special agent. SSA Ex. 3, at 10-11. When using her own words, Respondent indicates
that she has been together with Mr. Moore since July 2003, and not married since then.
SSA Ex. Ex. 3, at 22, 76. As she and Ms. Upshaw testified, Respondent was under
significant emotional strain when she made the second WIB application, due not only to
Mr. Moore’s death, but the death of Respondent’s mother approximately a week later.

Tr. at 73-74, 134-135. Respondent testified that given her state, she should not have filed
the second WIB application on her own. Tr. at 79.

The L.G. raises Respondent’s inability to explain why she hand wrote the date of July 17,
2002, on a card from Mr. Moore if she Respondent did not know Mr. Moore until July
10, 2003. Tr. 19-20; SSA Ex. 3, at 53. This card represents one document in a record
that otherwise does not provide evidence that Respondent and Mr. Moore knew each
other in 2002. Further, the date notation is not original to the card because Respondent,
and not Mr. Moore, wrote the date. Tr. 19-20. Respondent provided a detailed account
of her first meeting with Mr. Moore on July 10, 2003. Tr. 65. Ms. Upshaw was able to
corroborate that they met in 2003 because she is the person who introduced Respondent
and Mr. Moore. Tr. 124. Therefore, I conclude that this issue does not significantly
undermine Respondent’s credibility.

Respondent has never been arrested or convicted of a crime and has not been otherwise
investigated by another government agency. Tr. 95-96; SSA Ex. 3, at 2. She has not
previously committed a prior offense regarding Social Security programs. SSA Ex. 8, at
2. Respondent is not an attorney and does not understand the law related to common law
marriage. Tr. 66. SSA told Respondent she was common law married and that she
should submit the second WIB application. SSA then failed to properly investigate the
claim, ultimately resulting in this case. Based on my observation of Respondent during
her testimony and a review of the record as a whole, I determine that Respondent is
generally credible.

V. Conclusion

In his decision, an administrative law judge may affirm, deny, increase, or reduce the
penalties or assessments proposed by the I.G. 20 C.F.R. §c 498.220(b). Based on the
foregoing, Respondent has not violated 42 U.S.C. § 1320a-8(a)(1)(C). Therefore, the
1.G.’s proposed CMP and assessment are DENIED.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

H & S Food Store, Inc.
d/b/a Krauszer’s Food Store,

Respondent.

Docket No. C-14-460
FDA Docket No. FDA-2013-H-1678

Decision No. CR3147
Date: March 7, 2014
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, H & S Food Store, Inc. d/b/a Krauszer’s Food
Store, alleging facts and legal authority sufficient to justify the imposition of a
civil money penalty of $500. Respondent did not timely answer the Complaint,
nor did Respondent request an extension of time within which to file an answer.
Therefore, I enter a default judgment against Respondent and order that
Respondent pay a civil money penalty in the amount of $500.

CTP began this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent’s staff unlawfully
sold cigarettes to minors on two occasions and, during both transactions,
Respondent’s staff failed to verify that the cigarette purchasers were of a sufficient
age, thereby violating the Federal Food, Drug, and Cosmetic Act (Act) and its
implementing regulations, found at 21 C.F.R. Part 1140. CTP seeks a civil money
penalty of $500.

On January 15, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days Respondent should
pay the penalty, file an answer, or request an extension of time within which to file
an answer. CTP warned Respondent that if it failed to take one of these actions
within 30 days an Administrative Law Judge could, pursuant to 21 C.F.R.

§ 17.11, issue an initial decision by default ordering Respondent to pay the full
amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation, nor
has it requested an extension. Therefore, pursuant to 21 C.F.R. § 17.11(a), lam
required to issue an initial decision by default if the Complaint is sufficient to
justify a penalty. Accordingly, I must determine whether the allegations in the
Complaint establish violations of the Act.

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

e Respondent owns Krauszer’s Food Store, an establishment that sells
tobacco products and is located at 10 Jones Hill Road, West Haven,
Connecticut 06516. Complaint § 3.

e On March 12, 2013, an FDA-commissioned inspector observed that “‘a
person younger than 18 years of age was able to purchase a package of
Maverick Box cigarettes . . . at approximately 1:02 PM [ ] and... the
minor’s identification was not verified before the sale... .”. Complaint
q 10.

e On April 4, 2013, CTP issued a Warning Letter to Respondent explaining
that the inspector’s March 12, 2013 observations constituted violations of
regulations found at 21 C.F.R. § 1140.14(a) and (b)(1). In addition to
describing the violations, the letter advised Respondent that the FDA may
initiate a civil money penalty action or take other regulatory action against
Respondent if it failed to correct the violations. The letter also stated that it
was Respondent’s responsibility to comply with the law. Complaint § 10.

e Although United Parcel Service Records indicate a “Dillan” signed for the
Warning Letter, FDA never received a response. Complaint § 11.
e¢ On July 2, 2013, during another inspection of Respondent’s establishment,

FDA-commissioned inspectors documented that “a pe
years of age was able to purchase a package of Fortun:

rson younger than 18
a cigarettes .. . at

approximately 10:17 AM[.]” The inspectors also documented that “the

minor’s identification was not verified before the sale

These facts establish that Respondent is liable under the Act.
misbranding of a tobacco product. 21 U.S.C. § 331(k). A to

....” Complaint { 1.

The Act prohibits
bacco product is

misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). Under

21 C.F.R. § 1140.14(a), no retailer may sell cigarettes to any
18 years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer
of photo identification containing the bearer’s date of birth, t
purchasers are younger than 18 years of age.

person younger than
must verify, by means
at no cigarette

Here, Respondent violated 21 C.F.R. § 1140.14(a) and (b)(1), on March 12, 2013,
and again on July 2, 2013, when its staff sold cigarettes to minors and failed to

verify that the cigarette purchasers were 18 years of age or 0

der by checking

photographic identification. Respondent’s actions and omissions on two separate
occasions at the same retail outlet constitute violations of law that warrant a civil
money penalty. Accordingly, I find that a civil money penalty of $500 is

permissible under 21 C.F.R. § 17.2.

/s/

Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Princeton Place,
(CCN: 32-5045),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-1003
Decision No. CR3146

Date: March 7, 2014

DECISION

Petitioner, Princeton Place, challenged the determination of the Centers for Medicare &
Medicaid Services (CMS) to impose two per-instance civil money penalties of $6,000
and $4,500, plus a denial of payment for new admissions beginning March 7, 2013 and
continuing through March 20, 2013. I sustain the imposition of the $4,500 civil money
penalty as well as the denial of payment for new admissions. | find that the
preponderance of the evidence does not support imposition of the $6,000 civil money
penalty and I do not sustain it.

I. Background

Petitioner is a skilled nursing facility located in Albuquerque, New Mexico. It
participates in the Medicare program and its participation is governed by regulations at
42 C.F.R. Parts 483 and 488. Petitioner was surveyed on behalf of CMS on December
19, 2012 and on March 20, 2013 (December and March surveys). Petitioner was found
noncompliant with Medicare participation requirements at both of these surveys. CMS
premised its remedy determinations on the surveys’ noncompliance findings.

Petitioner requested a hearing. The case originally was assigned to another
administrative law judge and then was transferred to me. The parties filed pre-hearing
exchanges consisting of briefs and exhibits including the written direct testimony of
proposed witnesses. Then, they informed me that they had agreed to waive an in-person
hearing. I allowed the parties to file final briefs. CMS filed a final brief and Petitioner
did not. CMS offered 24 proposed exhibits that are identified as CMS Ex. 1 —- CMS Ex.
24. Petitioner offered 10 proposed exhibits that are identified as P. Ex. | — P. Ex. 10. I
receive these exhibits into the record.

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

The issues in this case are whether Petitioner failed to comply substantially with
Medicare participation requirements and whether CMS’s remedy determinations are
reasonable.

B. Findings of Fact and Conclusions of Law

CMS’s determinations to impose per-instance civil money penalties against Petitioner are
based on findings that Petitioner failed to comply substantially with two Medicare
participation requirements. Specifically:

¢ CMS premises the $6,000 per-instance penalty on findings made at the December
survey that Petitioner failed to comply substantially with the requirements of 42
C.F.R. § 483.25. This regulation, sometimes referred to as the “quality of care”
regulation is a lengthy regulation with numerous subparts. CMS, in alleging
noncompliance, relies on the broadly worded introductory paragraph of the
regulation, which states that a skilled nursing facility must provide each of its
residents with the necessary care and services “to attain or maintain the highest
practicable physical, mental, and psychosocial well-being, in accordance with the
[resident’s] comprehensive assessment and plan of care.”

¢ CMS bases the $4,500 per-instance civil money penalty on findings made at the
March survey that Petitioner failed to comply substantially with the requirements
of 42 C.F.R. § 483.25(h)(1) and (2). These subsections direct a skilled nursing
facility to ensure that its resident environment remains as free of accident hazards
as is possible and that each resident receive adequate supervision and assistance
devices to prevent accidents.

There were additional findings made at the December survey that Petitioner failed to
comply substantially with additional regulations governing infection control and quality
assurance (42 C.F.R. §§ 483.65 and 483.75(0)(1)). These noncompliance findings are not
the basis for either of the per-instance civil money penalties that CMS determined to
impose. Arguably, they might have some relevance to CMS’s imposition of another
remedy, a denial of payment for new admissions that began on March 7, 2013 and that
ran until March 20, 2013. It is unclear, however, whether the denial of payment is in fact
predicated on these findings or is based on noncompliance findings that were made at the
March survey. However, and as I discuss below, the findings of noncompliance made at
the March survey are ample bases for the remedy even if the noncompliance findings of
the December survey had never been made.

The gravamen of CMS’s allegations of noncompliance with 42 C.F.R. § 483.25 is that
Petitioner failed to communicate with a resident’s physician about significant changes in
the resident’s medical condition. The resident, identified in the report of the December
survey as Resident # 1, suffered from a number of debilitating conditions. The resident
was in a persistent vegetative state and was completely dependent on facility staff for all
activities of daily living. CMS Ex. 6 at 6-34. CMS asserts, without challenge by
Petitioner, that the resident had a care plan that directed facility staff to notify the
resident’s physician and family of any significant changes in the resident’s condition.
CMS contends primarily that Petitioner contravened the resident’s plan of care because it
failed to notify the resident’s treating physician of a significant medical development that
occurred over a period that began on December 1, 2012 and continued through December
2, 2012 when the resident was transferred to a hospital.! CMS contends that on
December | the resident’s power of attorney (POA) discovered that the resident’s
scrotum was swollen and demanded that the resident be transferred to a hospital. CMS
Ex. 8 at 1-2. However, according to CMS, the resident was not transferred until the
following day, December 2, 2012. Jd. Upon transfer it was discovered that the resident
suffered from a potentially deadly infection, Fournier’s Gangrene. The resident was
transferred from the hospital to hospice care and he expired a few days later.

Es

CMS doesn’t assert specifically that there was a failure by facility staff to diagnose
properly the resident’s gangrene. Rather, its focus is upon the alleged failure of the staff
to consult with the resident’s physician about the POA’s allegations and the staff’s own
findings of swelling that indicated an underlying infection. Thus, according to CMS:
“the facility failed to provide the care and services to protect Resident # 1 from
significant harm by not recognizing the significance of the changes in his condition and

' CMS does not allege specifically that Petitioner contravened the requirements of 42
C.F.R. § 483.10(b)(11), which requires a facility to consult immediately with a resident’s
treating physician about any significant change in a resident’s condition. The
consultation requirement of this regulation is stronger than the care plan’s injunction that
a physician be notified of a significant change of condition. A facility may not adopt a
plan that imposes on it a lesser duty than the regulatory standard. For that reason I
evaluate CMS’s allegations using the “consult” standard stated in the regulation.
communicating to his physician those signs and symptoms.” CMS’s closing brief at 3,
citing CMS Ex. 23 at 2. CMS argues that this alleged failure by Petitioner must be
considered against a background of other alleged failures to consult with the resident’s
treating physician. According to CMS, Petitioner failed to communicate with the
resident’s physician over a period extending from October until December 2012 about
problems exhibited by the resident including a urinary tract infection and a respiratory
infection. Id.

I find these allegations to be unsupported by the record. CMS’s allegations
notwithstanding, the record establishes a pattern of frequent communications between
Petitioner’s staff and Resident # 1’s physician or the physician’s assistant. That is true
generally for the period between October and December 2012 but it is also true with
respect to the resident’s scrotal infection in early December 2012.

This resident was an extremely ill and debilitated individual who was plagued with
numerous and chronic problems. The resident’s problems included a chronic respiratory
infection and recurring urinary tract infections. His baseline condition was extremely
poor and, thus, he would have appeared extremely ill at all times. That said, there were
numerous occasions where the staff brought changes in the resident’s condition to the
attention of the resident’s physician or his assistant and it is obvious from the follow-up
care that was ordered for the resident that the communications were more than mere
notification.

For example, on November 7, 2012, the resident ran an elevated temperature and was
reported to have lung sounds with crackles. The staff clearly discussed this development
with the resident’s physician because the staff received orders from the physician for a
urinalysis as well as a prescription for an antibiotic to be administered to the resident. P.
Ex. 1 at 61. Tests results were reported to the physician’s assistant later that day and
orders were issued concerning medication and insulin administration. Jd. at 62. New
physician’s medication orders were issued on November 22, 2012 along with another
order for urinalysis. P. Ex. 1 at 67. The results were reported to the physician’s assistant
on November 23, 2012. Jd.at 68.

There is nothing in the record to suggest that the physician, through his assistant, was not
being kept fully apprised of the resident’s condition on December 1 and 2, 2012. To the
contrary, the evidence supports the conclusion that there were frequent discussions
between staff and the resident’s physician or physician’s assistant about the resident’s
deteriorating condition during this period. On December 1, 2012, Petitioner’s staff
observed Resident # 1’s scrotum to be edematous. The staff notified the physician’s
assistant and discussed the resident’s condition with her. P. Ex. 1 at 69. The POA
requested that the resident be transferred to a hospital on that date. The physician’s
assistant declined the request, advising the POA and facility staff that she wanted to see
the resident personally before ordering a transfer. Jd. On the following day, December 2,

2012, the staff discussed the resident’s condition with the physician’s assistant five
separate times. P. Ex. | at 69-71. Physician’s orders were given for urinalysis, and use
of a nebulizer, among other things.

It is clear that the physician’s assistant and the resident’s POA disagreed about whether
the resident should be referred immediately to a hospital. But, whether the physician’s
assistant’s judgment was correct is not at issue here. What is at issue is whether
Petitioner’s staff discharged its obligations by consulting with the resident’s physician or
the physician’s assistant about what was obviously a significant change in the resident’s
condition, his scrotal edema. The record clearly supports the conclusion that the staff did
what it was obligated to do.

I find that Petitioner failed to comply substantially with the requirements of 42 C.F.R.

§ 483.25(h)(1) and (2). The evidence establishes that Petitioner failed to assure that one
of its fire exit doors was locked and properly secured with an alarm system. Surveyors
inspecting the door and the corridor found that they were able to open it freely without an
alarm sounding. They found that the corridor leading to the building’s exit was blocked
by medical equipment and furniture.

The door in question and the corridor were a principal means of emergency egress from
the facility for more than 60 residents and more than 20 of these residents were
cognitively impaired. Petitioner’s failure adequately to maintain the door and the
corridor on which it opened put these residents at risk in the event of a fire or other
emergency that would have required them to leave the premises. Petitioner’s failures also
heightened the risk that a resident could wander into the corridor on the other side of the
fire exit door undetected and encounter potentially hazardous circumstances. It is
undisputed that the corridor outside of the fire door led to two flights of descending stairs
as well as to the obstructed corridor that led to the building’s exit. CMS Ex. 17 at 1 — 4;
CMS Ex. 18 at 1 — 4; CMS Ex. 19 at 1 — 6; CMS Ex. 21, at 2—3. Surveyors inspecting
the door and the corridor found that they were able to open it freely without an alarm
sounding. They found that the corridor leading to the building’s exit was blocked by
medical equipment and furniture.

Petitioner attempts to explain these facts but it does not deny them. It admits that the fire
exit door was defective. Petitioner’s pre-hearing brief at 28; Petitioner’s revised pre-
hearing brief at 23. It asserts that the problem was mitigated in some way by the fact that
the surveyors failed immediately to report the problem to facility management.
According to Petitioner: “The fact that the survey team did not inform the facility for
approximately four hours of the potential situation with the door, raises the question of
how much of an immediate problem the door presented.” Petitioner’s pre-hearing brief
at 29; Petitioner’s revised pre-hearing brief at 23-24. This is no defense. The burden did
not fall on the surveyors to identify the problem and bring it to the facility’s attention.
And, if the surveyors delayed in raising the issue with facility management that does not

derogate one iota from the risk that it presented. The risk stands apart from the
surveyors’ actions after they identified the risk.

Petitioner argues that the objects in the exit corridor left the exit doorway only “slightly
obstructed.” Petitioner’s pre-hearing brief at 29; Petitioner’s revised pre-hearing brief at
24. Additionally, it contends that the equipment could be moved easily. Jd. But, what
might be a “slight” obstruction for an able bodied individual looms as a potentially
insurmountable hazard for someone who is debilitated and/or demented. I find
Petitioner’s argument here to be without merit.

Petitioner has not specifically challenged the dollar amount of the per-instance civil
money penalty, $4,500, except to assert that it was unjustified because there was
allegedly no immediate jeopardy caused by the deficiency on which the penalty is based.
However, a finding of immediate jeopardy is not a prerequisite to a per-instance civil
money penalty such as the one that CMS determined to impose against Petitioner. 42
C.F.R. § 488.408(e)(1)(iv). The penalty that CMS determined to impose against
Petitioner is, in fact, extremely reasonable given the hazards presented by the defective
exit door and the blocked corridor. As I have stated, a demented and debilitated resident
could have wandered through that door and gotten lost, without facility management
being aware of the resident’s whereabouts, in a corridor that contained hazardous and
dangerous objects.

The additional remedy that is at issue in this case is a denial of payment for new
admissions. CMS elected to begin implementation of the denial of payment on March 7,
2013 and to end it on March 20, 2013. CMS does not specify exactly which deficiencies,
those identified at the December survey or those identified at the March survey, are the
basis for the remedy. However, the deficiencies that were identified at the March survey
— the failure to protect the facility’s residents against the hazards caused by a defective
exit door and a partially blocked exit corridor — are certainly sufficient grounds to justify
the remedy. For that reason, I find it unnecessary to rule on the findings of
noncompliance that were made at the December survey that are in addition to CMS’s
allegations concerning the care that was given to Resident # 1.
It is reasonable to infer that the problems with the exit door and the blocked corridor
began prior to March 20, 2013. There was, for example, an accretion of broken
equipment and furniture in the exit corridor that clearly was not put there overnight but
that had been there for some time. For this reason, it is reasonable to conclude that the
hazards identified by the surveyors had been there for days or weeks at the least. A
denial of payment for new admissions based solely on the presence of these hazards and
commencing on March 7, 2013 is therefore reasonable.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Christina Ortega,
(OI File No. H-12-42078-9),
Petitioner,
v.

The Inspector General.
Docket No. C-13-1103
Decision No. CR3145

Date: March 6, 2014

DECISION

Petitioner, Christina Ortega, was a hospital administrator, working in Florida, who
became embroiled in her employer’s Medicaid racketeering scheme. She pled guilty in
Florida State Court to four misdemeanor counts of obstructing justice. Based on her
conviction, the Inspector General (I.G.) initially excluded her for three years from
participation in the Medicare, Medicaid, and all federal health care programs, as
authorized by section 1128(b)(2) of the Social Security Act (Act). The I.G. subsequently
amended its exclusion, and now excludes her for five years, pursuant to section
1128(a)(1) of the Act. Petitioner has appealed.

For the reasons discussed below, I find that the I.G. is authorized to exclude Petitioner
under section 1128(a)(1), and that the statute mandates a minimum five-year exclusion.

Background

Petitioner Ortega worked as hospital administrator at Trinity Community Hospital, which
was part of HC Healthcare, Inc. I.G. Exhibit (Ex.) 8 at 7. She, along with other HC
Healthcare employees and its officers, were charged with multiple felony counts of
racketeering and conspiracy to defraud Florida-funded healthcare programs, including
Medicaid and the Rural Hospital Capital Improvements Grants Program. I.G. Ex. 2; see
1G. Ex. 8. On July 21, 2011, she pled guilty to four misdemeanor counts of obstructing
justice. I.G. Ex. 3.

In a letter dated May 31, 2013, the LG. notified Petitioner that she was excluded from
participation in Medicare, Medicaid, and all federal health care programs for a period of
three years, because she had been convicted of a criminal offense “in connection with the
interference with or obstruction of an investigation into a criminal offense... .” I.G. Ex.
1. The letter explained that section 1128(b)(2) of the Act authorizes the exclusion. I.G.
Ex. 1. Petitioner requested review.

While these proceedings were pending, the I.G. asked leave to file an amended exclusion
notice, changing the basis for the exclusion from section 1128(b)(2), which is permissive,
to section 1128(a)(1), which is mandatory, and extending the length of the exclusion to
five years, also mandatory. The I.G. pointed out, correctly, that, under section
1128(a)(1), he must impose a mandatory exclusion, if he finds a basis for one. Petitioner
did not object, and I granted the I.G.’s motion and set a briefing schedule for
supplemental briefs.

The I.G. submitted its supplemental brief, but Petitioner did not. In orders dated
December 18, 2013 and January 13, 2014, I directed Petitioner to show cause why her
request for hearing should not be dismissed for abandonment, and, if she had not
abandoned her appeal, I directed her to file her written arguments and exhibits. Petitioner
has not responded to the I.G.’s supplemental brief. The parties agree that an in-person
hearing is not necessary. I.G. Br. at 5; P. Br. at 4. I therefore close the record and issue
this decision based on the parties’ written submissions.

Each party submitted an initial brief addressing the section 1128(b)(2) exclusion. (LG.
Br.; P. Br.). The 1.G. submitted a supplemental brief addressing the section 1128(a)(1)
exclusion. (I.G. Supp. Br.). The I.G. submitted nine exhibits (IG. Exs. 1-9). In the
absence of an objection, I admit into evidence I.G. Exs. 1-9.

Issue

The sole issue before me is whether the I.G. has a basis for excluding Petitioner from
program participation. Because an exclusion under section 1128(a)(1) must be for a
minimum period of five years, the reasonableness of the length of the exclusion is not an
issue. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2).
Discussion

Petitioner must be excluded for five years because she was
convicted of a criminal offense related to the delivery of an
item or service under the Medicare or a state health
program, within the meaning of section 1128(a)(1) of the
Social Security Act.'

In its supplemental notice letter, which is dated October 21, 2013, the I.G. advised
Petitioner that, because she had been convicted of a criminal offense related to the
delivery of an item or service under the Medicare or a state health care program, the LG.
was excluding her from participation in Medicare, Medicaid, and all federal health care
programs for a period of five years. I.G. Ex. 7.

Section 1128(a)(1) of the Act requires that the Secretary of Health and Human Services
exclude an individual who has been convicted under federal or state law of a criminal
offense related to the delivery of an item or service under Medicare or a state health care
program.’ 42 C.F.R. § 1001.101.

Petitioner admits that she was convicted of a criminal offense within the meaning of
section 1128(a)(1), but argues that her crimes were not related to the delivery of an item
or service under the Medicaid program. Petitioner points out that she pled guilty to
misdemeanors under FLA. STAT section 843.02 (2012). That section makes it a crime to
“resist, obstruct, or oppose” any officer who is executing a legal process or legal duty.
According to Petitioner, section 843.02, “on its face,” does not constitute interference
with or obstruction of an investigation into any criminal offense described in 42 C.F.R.
§§ 1001.101 or 1001.201. P. Br. at 2.

In determining whether a conviction is program-related within the meaning of section
1128(a)(1), I may look beyond the language of the statute under which Petitioner was
convicted. An offense is related to the delivery of an item or service under Medicare or a
state health care program if there is “a nexus or common-sense connection” between the
conduct giving rise to the offense and the delivery of the item or service. Lyle Kai, R.Ph.,
DAB No. 1979 (2005); Berton Siegel, D.O., DAB No. 1467 (1994). It is well-settled that
the I.G. may rely on extrinsic evidence to explain the circumstances underlying a
conviction. The regulations specifically provide that evidence of “crimes, wrongs, or acts
other than those at issue in the instant case is admissible to show motive, opportunity,
intent, knowledge, preparation, identity, lack of mistake, or existence of a scheme.”

' T make this one finding of fact/conclusion of law.

> The term “state health care program” includes a state’s Medicaid program. Act
§ 1128(h)(1); 42 C.F.R. § 1320a-7(h)(1).
42 C.F.R. § 1005.17(g); see Narendra M. Patal, MD, DAB No. 1736 (2000); Tanya A.
Chuoke, RN, DAB No. 1721 (2000); Bruce Lindberg, DAB No. 1280 (1991).

Here, I need not look far to find the necessary connection between Petitioner’s crimes
and the Medicaid program. First, by her own admission, she was prosecuted by the
Office of the Attorney General, who acted as special prosecutor for the Medicaid Fraud
Control Unit. P. Br. at 2. Second, as the criminal complaint makes clear, the criminal
enterprise that underlay her conviction stemmed from a scheme to defraud the state
Medicaid program. I.G. Ex. 2. Indeed, three of the four counts charged were for
Medicaid fraud. 1.G. Ex. 3 at 1. The plea agreement characterizes her crimes as “lesser
included” offenses. Finally, she agreed to pay $10,000 in restitution to the state’s
Medicaid Fraud Control Unit. I.G. Ex. 3 at 2, 4; I.G. Ex. 4. I consider these factors
sufficient to establish the necessary connection.

Petitioner was therefore convicted of a crime related to the delivery of an item under the
Medicaid program, and is subject to a minimum five-year exclusion. Act
§ 1128(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2).

Petitioner also complains that the prosecution, although acting on behalf of the Medicaid
Fraud Control Unit, failed to warn her that, based on her guilty plea, she would be subject
to an exclusion. P. Br. at 3. She also claims that she had an exemplary career until she
went to work for HC Healthcare, that she was employed there for just three months
before charges were brought, and that she presents “no propensity for future abuse.” P.
Br. at 4. These are not bases for overturning a mandatory exclusion.

Because the I.G. has imposed an exclusion of five years, the length of the exclusion is not
reviewable. 42 C.F.R. § 1001.2007(a)(2).

Conclusion

The L.G. properly excluded Petitioner from participation in Medicare, Medicaid and other
federal health care programs, and the statute mandates a five-year minimum period of
exclusion.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

M. Dwight Evans,
Petitioner,
v.
Social Security Administration.
Docket No. C-14-552
Decision No. CR3143

Date: March 5, 2014

DECISION

The Social Security Administration (SSA) determined that Petitioner, an administrative
law judge employed by SSA, received an overpayment of his salary. Petitioner filed a
Notice of Disagreement, Request for Waiver and Request for Oral Hearing. For the
reasons stated below, I conclude that Petitioner owes a debt of $2,637.71 to the United
States Government.

I. Background

Ina letter dated August 13, 2013, SSA informed Petitioner, that “[t]he processing of an
amended time and attendance record or a personnel action has shown that you previously
received employee pay that was higher than it should have been” and indicated that
Petitioner needed to repay this alleged overpayment. Accompanying the letter were
various notices including Petitioner’s right to a hearing to dispute the existence and basis
of the alleged debt and right to seek waiver of the debt. SSA Exhibit (Ex.) 3.

Because the August 13, 2013 letter was sent to an address where Petitioner was not
residing, Petitioner did not receive the letter. SSA resent the letter, which Petitioner
received on November 6, 2013. See Notice of Disagreement, Request for Waiver and
2

Request for Oral Hearing at 1. In response, Petitioner filed with SSA a Notice of
Disagreement, Request for Waiver and Request for Oral Hearing dated November 25,
2013. Under the terms of an interagency agreement, on January 13, 2014, the Director of
SSA’s Division of Reimbursable and Administrative Collections forwarded this matter to
the Departmental Appeals Board, Civil Remedies Division for adjudication by an
administrative law judge. See Portia L. Pierce, DAB CR2049 at 5 (2009).! The Director
of the Civil Remedies Division assigned this case to me and on January 16, 2014, I issued
an Acknowledgment and Prehearing Order (Order) establishing a schedule for the parties
to submit their prehearing exchanges.”

On January 29, 2014, SSA mailed a brief (SSA Br.), three exhibits (SSA Exs. 1-3), anda
list of proposed witnesses. SSA’s brief included a motion to dismiss. Also on January
29, 2014, Petitioner mailed two exhibits (P. Exs. 1-2). I have not received any further
filings from the parties.

IL. Ruling

SSA filed a motion to dismiss this matter. SSA “concedes that Petitioner should not be
bound by the initial deadline [in the August 13, 2013 letter concerning Petitioner’s
alleged debt] to request a hearing.” SSA Br. at 4. However, SSA asserts that Petitioner
received the notice on November 6, 2013, and failed to file a request for hearing within
15 days (i.e., by November 21, 2013) because his hearing request is dated November 26,
2013. SSA, therefore, urges me to dismiss the request for hearing as untimely. SSA Br.
at 3-4.

SSA’s August 13, 2013 letter stated that Petitioner’s request for hearing had to be
postmarked within 15 days of the date on the letter. SSA Ex. 3, at 9. This statement
accurately reflects the regulations; however, the regulations recognize that this provision
is only applicable unless “otherwise provided by statute or regulation.” 45 C.F.R.

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

> A decision in this case must be issued “not later than sixty days after the filing of the
petition requesting the hearing.” 5 U.S.C. § 5514(a)(2); see also 45 C.F.R. § 30.15(0)
(1995). In the present matter, Petitioner’s hearing request is dated November 25, 2013;
however, there is no indication when SSA received it. SSA did not forward the hearing
request to the Civil Remedies Division until January 13, 2014. The Order I issued
established an expedited prehearing schedule and I issue this decision less than 60 days
after the Civil Remedies Division received the hearing request.
3

§ 30.15(1) (1995). The statute authorizing these proceedings requires that an employee be
provided a hearing if he files the request for hearing within 15 days of receiving a notice
concerning an alleged debt. 5 U.S.C. § 5514(a)(2). Therefore, the regulatory provision
requiring that a request for hearing be postmarked by the fifteenth day after the date on
the notice concerning the debt conflicts with the statute (unless the notice is delivered on
the same day as it is dated), and as indicated in the regulation itself, this provision is not
operative because it conflicts with the statute.

SSA provided incorrect notice that Petitioner only had fifteen days from date of the
August 13, 2013 letter to file a request for hearing. Because SSA did not send a newly
dated letter to Petitioner after its first attempt failed, SSA’s notice of the date on which
the hearing request was due was not provided to him. See 5 U.S.C. § 5514(a)(2)(A);
45 C.F.R. § 30.15(j)(4) (1995). Petitioner, upon receiving the letter dated August 13,
2013, immediately knew that he could not timely file a request for hearing. Further, in
his hearing request, Petitioner raised the issue of non-receipt of the August 13, 2013
letter, until November 6, 2013, based on mailing to an incorrect address.

Under the regulations, the Commissioner

may grant an extension or excuse a delay if the debtor shows
good cause for the late filing of a request for a hearing. A
reasonable extension will be granted only if the debtor shows
that the delay was caused by circumstances beyond the
debtor’s control or because the debtor did not receive notice,
and was not otherwise aware of the time limit.

45 CFR. § 30.15(1) (1995).

It is clear from the facts in this matter that Petitioner had good cause to receive a
reasonable extension in the filing deadline. Petitioner did not receive the August 13,
2013 letter because SSA sent it to an address where Petitioner would not receive it, and
the August 13, 2013 letter provided confusing and inaccurate information about when the
request for hearing was due. While 5 U.S.C. § 5514(a)(2) requires that an employee be
given a hearing if he files a hearing request within 15 days of receiving the notice of the
debt, that statute does not preclude an agency from accepting a hearing request that is
filed later than 15 days. The regulations reflect this interpretation because they expressly
allow the Commissioner to permit a late filing.

Because SSA sent Petitioner’s hearing request to the Civil Remedies Division for
adjudication, I conclude that SSA accepted Petitioner’s hearing request, filed 19 days
after receipt of the August 13, 2013 letter, as being reasonably delayed. If SSA had not
4

made such a determination, it would not have forwarded the hearing request. SSA would
have dismissed the request. In the alternative, if I, rather than SSA, have the authority to
consider whether Petitioner met his burden for showing good cause exists for Petitioner’s
late filing of the hearing request, I conclude Petitioner made such a showing and that his

late filing is excused. Therefore, I deny SSA’s motion to dismiss.

III. Decision on the Record

Neither party objected to any of the proposed exhibits. Therefore, I admit SSA Exs. 1-3
and P. Exs. 1-2 into the record.

I directed each party to submit written direct testimony for all proposed witnesses. Order
47. Further, if the opposing party wanted to cross-examine any of the proposed
witnesses, then the opposing party needed to affirmatively request to cross-examine the
witnesses. Order § 8. Neither party submitted written direct testimony for any witnesses.
The regulations state that a “hearing will normally be a review of the record, unless ...a
decision cannot be made without resolving an issue of credibility or veracity... .”

45 C.F.R. § 30.15(n)(1). I conclude that an in-person hearing is not necessary and I issue
this decision based on a review of the entire written record. Order § 10. Consequently, I
cancel the hearing scheduled for March 3, 2014, in this case. Order § 9.

IV. Issues*

1. Whether Petitioner owes a debt to the United State Government based on
receiving a salary overpayment.

2. If Petitioner owes a debt, what amount does Petitioner owe.

3 SSA forwarded Petitioner’s Notice of Disagreement, Request for Waiver and Request
for Oral Hearing to the Departmental Appeals Board, Civil Remedies Division. Although
Petitioner combined his request for hearing under 5 U.S.C. § 5514 and his request for
waiver under 5 U.S.C. § 5584 in one document, those requests are “distinct, but not
mutually exclusive methods of seeking relief from the agency’s intended action” to
collect a debt from a federal employee. Petra A. Illig, M.D., DAB CR2559, at 2 (2012).
Because SSA forwarded Petitioner’s combined request, I asked SSA counsel to clarify
whether SSA had referred the waiver request for my consideration under 45 C.F.R.

§ 30.15(n)(3)(v) (1995). Order § 4. SSA counsel responded that the Commissioner of
Social Security would determine the waiver issue. SSA Br. at 3. Consequently, I have
no jurisdiction to decide Petitioner’s waiver request. See Alfred H. Varga, DAB CR342,
at 1-3 (1994).
5

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

If SSA determines that an SSA employee is indebted to the United States, SSA may
offset the debt from that employee’s salary. 5 U.S.C. § 5514(a)(1); 20 C.F.R.

§ 422.310(a). Before SSA offsets the debt, the employee has the right to request a
hearing before an administrative law judge (or another individual who is not under the
supervision or control of the Commissioner of Social Security) in order to dispute the
existence of the debt, the amount of the debt, and/or the payment schedule established by
the agency. 5 U.S.C. § 5514(a)(2); 20 C.F.R. § 422.310(c)(6). The 1995 version of

45 C.F.R. pt. 30 applies to SSA employee salary overpayment cases. See Kelly S.
Jennings, DAB CR1991, at 6 (2009); 71 Fed. Reg. 38,066, 38,067 (July 5, 2006).

1. From September 26, 2010 (pay period 21) through April 23, 2013 (pay period 9),
Petitioner’s official duty station was at SSA’s Fort Myers, Florida Hearing
Office and SSA paid Petitioner at a rate of $21,600 in locality pay per year
during that time period.

Before and during part of 2010, Petitioner was assigned to SSA’s Fort Lauderdale,
Florida, Hearing Office as an administrative law judge.” SSA Ex. 2, at 1. In a September
15, 2010 Notice of Personnel Action, SSA informed Petitioner that his reassignment from
the Fort Lauderdale Hearing Office to SSA’s Fort Myers, Florida, Hearing Office would
be effective September 26, 2010. However, in box 39 on the September 15, 2010 Notice
of Personnel Action, SSA indicated that Petitioner’s duty station was Fort Lauderdale.
Further, box 20B of the Notice of Personnel Action indicated that the locality pay
adjustment for Fort Myers was $21,600, which was the same amount as shown for Fort
Lauderdale in box 12B. SSA Ex. 2, at 1.

+ My numbered findings of fact and conclusions of law appear in bold and italics.

> Agencies “may appoint as many administrative law judges as are necessary for
proceedings required to be conducted in accordance with [the Administrative Procedure
Act].” 5 U.S.C. § 3105. Administrative law judges are paid on a special pay scale that is
different than the General Schedule for federal employees. See 5 U.S.C. § 5372. An
administrative law judge is comparable to a trial judge, and the Administrative Procedure
Act ensures that an administrative law judge “exercises his independent judgment on the
evidence before him, free from pressures by parties or other officials within the agency.”
Butz v. Economou, 438 U.S. 478, 513-14 (1978).
6

On November 21, 2011, and again in December 3, 2012, SSA approved Petitioner’s
requests for six-month details to the Fort Lauderdale Hearing Office in 2012 and 2013.
P. Exs. 1; 2.

On May 2, 2013, SSA issued a Notice of Personnel Action that retroactively corrected
Petitioner’s duty station (box 39) to Fort Myers, Florida, and Petitioner’s locality
adjustment to $20,348 per year (box 20B).° The effective date for these corrections was
September 26, 2010. SSA Ex. 2, at 3.

Petitioner does not dispute these facts. Therefore, I find that between September 26,
2010 and April 23, 2013, Petitioner’s official duty station was SSA’s Fort Myers Hearing
Office and that Petitioner was paid a locality pay adjustment during that time of $21,600
per year.

2. Petitioner is indebted to the United States Government in the amount of
$2,637.71.

Generally, for most Federal employees, “[c]omparability payments shall be payable
within each locality determined to have a pay disparity greater than 5 percent.” 5 U.S.C.
§ 5304(a)(1). If the President so directs, comparability payments may be made to
administrative law judges. 5 U.S.C. § 5304(h)(1)(A), (h)(2); see also 5 C.F.R.

§ 930.205(a)(2). Comparability payments are called “locality payments” or “locality
rates of pay” in Office of Personnel Management (OPM) regulations. See 5 C.F.R.

§§ 531.601, 531.603(a).

OPM regulations designate Fort Lauderdale as a locality pay area. 5 C.F.R.

§ 531.603(b)(19). Fort Myers, as an area not specifically designated as locality pay area,
receives the locality for “Rest of U.S.” 5 C.F.R. § 531.603(b)(34). From 2010 through
2013, the annual locality pay adjustment for Fort Lauderdale was $21,600. SSA Ex. 1;
OPM 2013 Locality Rates of Pay Administrative Law Judges available at
https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2013/executive-
senior-level/alj_loc.pdf (stating that “RATES FROZEN AT 2013 LEVELS”).

The annual locality pay for the “Rest of the U.S.” during that time-period was $20,348
per year. Id.

® Also on May 2, 2013, SSA issued a Notice of Personnel Action that purported to
correct Petitioner’s duty station from Fort Lauderdale to Fort Ogden, Florida. SSA Ex. 2,
at 2. SSA concedes that it erroneously issued this Notice of Personnel Action. SSA Br.
at 3n.1.
7

In the present matter, SSA asserts that Petitioner received a salary overpayment from pay
period 21 in 2010 through pay period 9 in 2013.’ SSA argues that Petitioner’s annual
salary while assigned to the Fort Myers Hearing Office was supposed to be $164,048,
rather than the $165,300 SSA paid to him, and that overpayment was the result of paying
Petitioner the Fort Lauderdale locality pay while Petitioner was stationed in Fort Myers.
SSA Br. 4-5.

It does not appear that Petitioner contests this argument. However, Petitioner appears to
take the position that his two six-month details to the Fort Lauderdale Hearing Office
might entitle him to the locality pay for Fort Lauderdale during his details.

Although such an argument appears reasonable, OPM regulations do not support it. The
locality pay is primarily determined by the location of the employee’s “official worksite.
5 C.F.R. §§ 531.603(a), 531.604(b)(1). “[T]he official worksite is the location of an
employee's position of record where the employee regularly performs his or her duties.”
5 C.F.R. § 531.605(a)(1). However, “[i]f the employee's work involves recurring travel
or the employee's work location varies on a recurring basis, the official worksite is the
location where the work activities of the employee's position of record are based, as
determined by the employing agency, subject to the requirement that the official worksite
must be in a locality pay area in which the employee regularly performs work.” 5 C.F.R.
§ 531.605(a)(2). This provision does not seem to include details, but even if it did, the
regulation indicates that it is the agency, and not me, who has discretion to make this
determination. It appears that SSA already rejected the theory that Petitioner’s lengthy
details to Fort Lauderdale warranted a change in the official duty station designation for
locality pay purposes. See Ex. 7 attached to the Notice of Disagreement, Request for
Waiver and Request for Oral Hearing.

SSA’s calculation of the total gross adjustment as $3,216.00 with a net amount Petitioner
needed to pay SSA, “[l]ess [a]pplicable [r]ecoverables,” is $2,637.71 . SSA Ex. 3, at 11-
12. Petitioner has not directly disputed the calculation or submitted any exhibits to show
that the calculation of the “applicable recoverables” is incorrect. Therefore, I conclude
Petitioner is indebted to the U.S. Government in the amount of $2,637.71.

7 SSA stated that Petitioner’s salary overpayment went until pay period 39 in 2013.
Based on a review of the record in this case, I believe SSA meant that the overpayment
extended to pay period 9 in 2013.
V. Conclusion

Petitioner is indebted to the U.S. Government in the amount of $2,637.71. This decision
is the final agency decision. 5 U.S.C. § 5514(a)(2).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Cumberland Farms, Inc.
d/b/a Cumberland Farms #23,

Respondent.

Docket No. C-14-437
FDA Docket No. FDA-2013-H-1647

Decision No. CR3142

Date: March 5, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (“CTP”) filed an Administrative Complaint
(“Complaint”) against Respondent, Cumberland Farms, Inc. d/b/a Cumberland
Farms #23, 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 impermissibly sold
cigarettes to minors and failed to verify that a cigarette purchaser was of sufficient
age, thereby violating the Federal Food, Drug, and Cosmetic Act (“Act”) and its
implementing regulations, found at 21 C.F.R. Part 1140. CTP seeks a civil money
penalty of $500.

On January 14, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days Respondent should
pay the penalty, file an answer, or request an extension of time within which to file
an answer. CTP warned Respondent that if it failed to take one of these actions
within 30 days an Administrative Law Judge could, pursuant to 21 C.F.R.

§ 17.11, issue an initial decision by default ordering Respondent to pay the full
amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation, nor
has it requested an extension. Therefore, pursuant to 21 C.F.R. § 17.11(a), lam
required to issue an initial decision by default if the Complaint is sufficient to
justify a penalty. Accordingly, I must determine whether the allegations in the
Complaint establish violations of the Act.

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

e Respondent owns Cumberland Farms #23, an establishment that sells
tobacco products and is located at 76 City Hall Avenue, Gardner,
Massachusetts 01440. Complaint 4 3.

e On May 22, 2013, during an inspection of Respondent’s establishment, an
FDA-commissioned inspector observed that “a person younger than 18
years of age was able to purchase a package of Newport Non-Menthol Box
cigarettes . . . at approximately 4:22 PM.” Complaint § 10.

¢ On June 6, 2013, CTP issued a Warning Letter to Cumberland Farms #23
explaining that the inspector’s May 22, 2013 observation constituted a
violation of a regulation found at 21 C.F.R. § 1140.14(a). In addition to
describing the violation, the letter advised Respondent that the FDA may
initiate a civil money penalty action or take other regulatory action against
Respondent if it failed to correct the violation. The letter also stated that it
was Respondent’s responsibility to comply with the law. Complaint § 10.

¢ On June 21, 2013, Michael Fleming, Respondent’s Corporate Counsel,
responded in writing to the Warning Letter on Respondent’s behalf. “Mr.
Fleming stated that the establishment trains all employees on its tobacco
sales policy, and provides them with various training and reference
materials that reinforce this policy. Mr. Fleming also stated that the
establishment would try to identify the employee who sold the tobacco
product to the minor to enforce the establishment’s tobacco policy.”
Complaint § 11.

e On August 7, 2013, during a subsequent inspection of Respondent’s
establishment, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase a package of Newport
Box cigarettes . . . at approximately 1:33 PM[,] and... [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 sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). Under

21 C.F.R. § 1140.14(a), retailers may not sell cigarettes to any person younger
than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer must verify, by
means of photo identification containing the bearer’s date of birth, that no
cigarette purchasers are younger than 18 years of age.

Here, Respondent violated 21 C.F.R. § 1140.14(a) by selling cigarettes to minors
on May 22, 2013, and August 7, 2013. Respondent also violated 21 C.F.R.

§ 1140.14(b)(1) on August 7, 2013, when its staff did not verify, by checking a
cigarette purchaser’s photographic identification, that a cigarette purchaser was 18
years of age or older. Respondent’s actions and omissions on multiple occasions
at the same retail outlet constitute violations of law that warrant a civil money
penalty. Accordingly, I find that a civil money penalty of $500 is permissible
under 21 C.F.R. § 17.2.

/s/
Steven T. Kessel
Administrative Law Judge