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

Center for Tobacco Products,
(FDA No. FDA-2015-H-1456)

Complainant
v.

Leah Minimarket, Inc.
d/b/a Leah’s Mini Market,

Respondent.
Docket No. C-15-2276
Decision No. CR4179

Date: August 28, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Leah Minimarket d/b/a Leah’s Mini Market, at 15 Healey
Street, Springfield, Massachusetts 01151, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Leah’s Mini Market impermissibly sold cigarettes to minors, failed
to verify, by means of photo identification containing a date of birth, that the purchasers
were 18 years of age or older, and sold individual cigarettes, thereby violating the Federal
Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing
regulations, 21 C.F.R. pt. 1140. CTP seeks to impose a $2,000 civil money penalty
against Respondent Leah’s Mini Market.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on May 7, 2015, CTP served the
complaint on Respondent Leah’s Mini Market by United Parcel Service. In the
complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time in
which to file an answer. CTP warned Respondent that, if it failed to take one of these
actions within 30 days, the Administrative Law Judge could, pursuant to 21 C.F.R.
§ 17.11, issue an initial decision ordering it to pay the full amount of the proposed
penalty.

I. Procedural History

On May 14, 2015, Respondent timely filed an answer to the complaint. On May 19,
2015, I issued an Acknowledgment and Pre-Hearing Order establishing a deadline of
June 19, 2015 for both parties to serve requests for production of documents. CTP served
Respondent with a Request for Production of Documents on June 18, 2015. Respondent
failed to comply with the request.

On July 24, 2015, CTP filed a Motion to Compel Discovery and a Motion to Extend
Deadlines. On July 27, 2015, 1 granted CTP’s motions and ordered Respondent to
comply with CTP’s request for production of documents by August 24, 2015.
Respondent was warned that failure to comply with the order may result in sanctions,
including the issuance of an Initial Decision and Default Judgment finding Respondent
liable for the violations in the complaint.

On July 30, 2015, Respondent filed a notice indicated it is in discussion with CTP to
settle this matter. On August 3, 2015, Respondent completed an acknowledgment form,
in which, it admitted to the violations in the complaint and agreed to make sufficient
payment to settle the matter. Respondent was required to make payment to CTP by
August 7, 2015. As of today, Respondent has not made any payment to CTP.

On August 25, 2015, CTP filed a Motion to Impose Sanctions indicating that Respondent
has not produced any documents as requested and has failed to comply with my July 27,
2015 order. CTP has requested I strike the Respondent’s answer and issue a default
judgment against Respondent. Due to Respondent’s noncompliance, I am granting
CTP’s motion for sanctions and striking Respondent’s answer. 21 C.F.R. § 17.35 (c)(3).

Il. Default Decision

Striking Respondent’s answer leaves the complaint unanswered. Therefore, I am
required to issue an initial decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must determine whether the allegations in
the complaint establish violations of the Act. Pursuant to 21 C.F.R. § 17.11, lassume
that the facts alleged in the complaint (but not its conclusory statements) are true.
Specifically:

e At approximately 11:25 a.m. on June 25, 2014, at Respondent’s business
establishment, 15 Healey Street, Springfield, Massachusetts 01151, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Maverick Box 100s cigarettes to a person younger than 18 years of age. The
inspector also observed that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older;

e Ina warning letter dated July 31, 2014, CTP informed Respondent of the
inspector’s June 25, 2014 observations, and that such actions violate federal law,
21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that Respondent’s
failure to correct its violations could result in a civil money penalty or other
regulatory action;

e At approximately 3:31 p.m. on October 13, 2014, at Respondent’s business
establishment, 15 Healey Street, Springfield, Massachusetts 01151,
FDA-commissioned inspectors documented Respondent’s staff selling a package
of Newport Box 100s cigarettes to a person younger than 18 years of age. The
inspectors also documented that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older. Additionally, the inspectors observed that the minor received two
individual cigarettes instead of change during the sales transaction.

These facts establish Respondent Leah’s Mini Market’s liability under the Act. The Act
prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under

21 CFR. § 1140.14(a), no retailer may sell a tobacco product to any person younger than
18 years of age. Further, under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by
means of photographic identification containing a date of birth, that the purchaser was 18
years of age or older. Pursuant to under 21 C.F.R. § 1140.14(d), no retailer may sell or
distribute individual cigarettes.

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

For these reasons, I enter default judgment in the amount of $2,000 against Respondent
Leah Minimarket d/b/a Leah’s Mini Market. Pursuant to 21 C.F.R. § 17.11(b), this order
becomes final and binding upon both parties after 30 days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

MedTrac Solutions
(PTAN: 7120950001),

Petitioner,
v.
Centers for Medicare & Medicaid Services.

Docket No. C-15-899

Decision No. CR4176

Date: August 28, 2015

DECISION
The Centers for Medicare & Medicaid Services (CMS), through its administrative
contractor, Palmetto GBA National Supplier Clearinghouse (NSC), revoked the
enrollment of MedTrac Solutions (MedTrac or Petitioner) as a Medicare supplier of
durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) because
MedTrac was not accessible during posted hours of operation. MedTrac requested a
hearing to dispute the revocation. Based on the evidence in the record, I affirm CMS’s
determination to revoke MedTrac’s enrollment in the Medicare program.
I. Background
MedTrac was enrolled in the Medicare program as a DMEPOS supplier. In an October
16, 2014 initial determination, NSC revoked MedTrac’s Medicare billing privileges.
CMS Exhibit (Ex.) 1 at 1-2. NSC provided the following reason for its decision:
Recently, a representative of the NSC attempted to conduct a
visit on your facility on September 5, 2014 and September 17,

2014; however, the visits were unsuccessful because the
business was closed during posted hours of operation on both
attempts. Because we could not complete an inspection of
your facility, we could not verify your compliance with the
supplier standards. Based upon a review of the facts, we have
determined that your facility is not operational to furnish
Medicare covered items and services. Thus, you are
considered to be in violation of 42 CFR §§ 424.535(a)(5)(ii)
and all supplier standards as defined in 42 CFR 424.57(c).

CMS Ex. | at 2. NSC made the effective date for revocation retroactive to September 17,
2014, the date CMS determined MedTrac’s supplier location was not operational. CMS
Ex. | at 1.

In an October 22, 2014 letter, MedTrac requested reconsideration of the initial
determination. MedTrac indicated in its request that MedTrac’s office at 1801 North
Tryon Street, Suite B-111, Charlotte, North Carolina, has posted business hours from
10 a.m. to 4 p.m., Monday through Friday. MedTrac stated that a part-time
administrative assistant works from 10 a.m. to 2 p.m. and MedTrac’s Chief Executive
Officer is present for the remainder of the time. Because MedTrac is located near a
homeless shelter and MedTrac personnel have been threatened by homeless individuals,
MedTrac keeps its doors locked when the administrative assistant is alone at MedTrac’s
office location. MedTrac stated that it did not know that locking its doors would cause it
to be nonoperational. MedTrac indicated that it would resolve the situation by hiring
security. CMS Ex. 2.

In her November 25, 2014 reconsidered determination, the NSC hearing officer
concluded:

The fact remains that the site inspector was unable to
complete a site inspection for MedTrac Solutions in order to
verify compliance with the supplier standards because the
facility was closed during posted hours of operation, and not
accessible to the site inspector. This hearing officer
concludes the NSC made the correct determination based
upon the events at the time.

Pursuant to 42 CFR §§ 405.800, 424.57(e), 424.535(a)(1),
424 .535(a)(5)(ii) and 424.535(g), your Medicare supplier
number (7120950001) for [DMEPOS] issued by [NSC] is
revoked. The date of this effective revocation has been made
retroactive to September 17, 2014 which is the date [CMS]
determined your practice location was not operational.

Review of the case file and additional submitted
documentation for MedTrac Solutions does not verify
compliance with supplier standard 7, and the NSC is
deemed appropriate in their revocation based upon the
information on the record at the time.

CMS Ex. | at 6 (emphasis added).

On January 8, 2015,' MedTrac requested a hearing. I issued an Acknowledgement and
Pre-hearing Order (Order) on January 20, 2015. In response to my Order, on

February 24, 2015, CMS filed its brief and seven exhibits (CMS Exs. 1-7). On March 25,
2015, MedTrac requested a 60-day extension of time to file its exchange because its
counsel needed to leave town due to an emergency. CMS did not oppose the extension
request and I granted it. On June 1, 2015, MedTrac filed a brief (MedTrac Br.) and seven
exhibits (MedTrac Exs. 8-14).’ On June 9, 2015, CMS requested to file a reply brief and
objections by June 22, 2015. I granted the request and CMS filed its reply brief (CMS
Reply Br.) on June 22, 2015.

II. Evidentiary Rulings

MedTrac did not object to any of CMS’s exhibits and CMS did not object to MedTrac
Exs. 8-10, 12, and 14. See Order § 7. Therefore, I admit CMS Exs. 1-7 and MedTrac
Exs. 8-10, 12, and 14 into the record.

CMS objected to MedTrac’s Exs. 11 and 13, which are written direct testimony from two
witnesses. CMS argues that this testimony was not submitted in the form of a declaration
and not signed under penalty of perjury as required by Civil Remedies Division
Procedures (CRDP) § 19(b). CMS Reply Br. at 2-3. A review of those exhibits reveals
that the written direct testimony was not made as an affidavit under oath or as a
declaration under penalty of perjury. Further, MedTrac did not reply to CMS’s objection
or file corrected written direct testimony.

Provider and supplier revocation cases are adjudicated under the procedures in 42 C.F.R.
Part 498. 42 C.F.R. §§ 405.803(a), 424.545(a)(1). Under those procedures, witnesses
must “testify under oath or affirmation.” 42 C.F.R. § 498.62. By statute, individuals are
permitted to make declarations under penalty of perjury even if regulations require that
statements be made under oath. 28 U.S.C. § 1746. Consistent with these authorities, my
Order requires that “[a] witness statement must be submitted in the form of an affidavit

' MedTrac’s hearing request is dated December 17, 2014; however, MedTrac did not
electronically file the hearing request until January 8, 2015.

> MedTrac did not submit exhibits marked 1 through 7.
made under oath or as a written declaration.” Order § 8. Because MedTrac’s proposed
written direct testimony was not made under oath or under penalty of perjury, I sustain
CMS’s objection and exclude MedTrac Exs. 11 and 13.

III. Decision on the Record

I directed the parties to submit written direct testimony for each proposed witness. Order
§ 8. Ihave admitted the written direct testimony from two CMS witnesses (CMS Exs. 5,
7) and one MedTrac witness (MedTrac Ex. 14). I also advised the parties that an in-
person hearing would only be necessary if the opposing party requested an opportunity to
cross-examine a witness. Order § 9 (“I will assume that Petitioner does not wish to cross-
examine any proposed CMS witness if Petitioner’s brief fails to affirmatively state so.”);
CRDP § 16(b).

CMS stated that it did not believe that an in-person hearing was necessary in this case.
CMS Reply Br. at 4. MedTrac generally indicated that I should hold a hearing in this
case; however, MedTrac did not specifically state that it wanted to cross-examine one or
both of CMS’s witnesses. MedTrac Br. at 4. Because MedTrac did not request to cross-
examine either of CMS’s witnesses, I decide this case based on the written record. Order
99 10-11; CRDP § 19(b), (d).

IV. Issue

Whether CMS had a legitimate basis for revoking Petitioner’s Medicare billing privileges
for failing to be operational (42 C.F.R. § 424.535(a)(5)(ii)) and/or to be accessible during
posted hours of operation (42 C.F.R. § 424.57(c)(7)).

V. Jurisdiction

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

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

The Secretary of Health and Human Services (Secretary) has the authority to create
regulations that establish enrollment standards for providers and suppliers, and to create
supplier requirements for DMEPOS suppliers. 42 U.S.C. §§ 1395m(j)(1)(B)(ii),
1395cc(j). The Secretary promulgated a regulation that requires providers and suppliers
to be operational. 42 C.F.R. § 424.535(a)(5)(ii). To be “operational,” a provider or

5 My numbered findings of fact and conclusions of law are set forth in italics and bold in
the discussion captions of this decision.
supplier must be “open to the public for the purpose of providing health care related
services . . . and [be] properly staffed . . . to furnish these services.” 42 C.F.R. § 424.502
(emphasis added). The Secretary also promulgated regulations establishing DMEPOS
supplier standards, which a DMEPOS supplier must meet and maintain. 42 C.F.R.

§ 424.57(c). The supplier standards require a DMEPOS supplier to be “open to the
public a minimum of 30 hours per week” and the DMEPOS supplier must “post[] hours
of operation.” Id. § 424.57(c)(7)(i)(D), (c)(30). Most important for this case, the facility
must be “accessible and staffed during posted hours of operation.” Id.

§ 424.57(c)(7)(i)(C). CMS or its contractors may conduct inspections of a supplier’s
premises at any time to determine if a supplier is in compliance with Medicare enrollment
requirements or the supplier standards. See 42 C.F.R. §§ 424.57(c)(8), 424.510(d)(8),
424.515(c), 424.517(a), (a)(8).

1. On September 5, 2014, at 11:03 a.m. and September 17, 2014, at 3:08 p.m., site
inspectors from NSC were unable to gain entry into MedTrac’s office at 1801
North Tryon Street, Suite B-111, Charlotte, North Carolina, because the door
was locked and no one answered the door when the site inspectors knocked.

On September 5, 2014, at 11:03 a.m., NSC site inspector Carolina McRoy arrived at
MedTrac’s office located at 1801 North Tryon Street, Suite B-111, Charlotte, North
Carolina, to conduct a site inspection in order to determine whether MedTrac was in
compliance with regulatory requirements. CMS Ex. 4 at 1; CMS Ex. 5 §§ 2,3,5. Ms.
McRoy testified that MedTrac’s office was located inside a commercial building. Ms.
McRoy stated that MedTrac’s office had a single door with a window covered with a sign
and tinfoil so that she could not see into MedTrac’s office. The sign indicated MedTrac’s
office hours were from 10 a.m. to 6 p.m., Monday through Friday, and included an after-
hours emergency telephone number. CMS Ex.5 § 5. Ms. McRoy took date and time
stamped photographs of MedTrac’s office door. CMS Ex. 4 at 2-16.

In her report of the attempted site visit, Ms. McRoy stated: “Knocked the door several
times and nobody answer[ed]. Asked a neighboring business in suite b119 if they know
the supplier and he said no that he has not seen anybody at that suite.” CMS Ex. 4 at 1;
see also CMS Ex. 5 §§ 6-7. Ms. McRoy also indicated in the report that MedTrac: was
not open for business; did not appear to have employees or staff present; did not appear to
have signs of customer activity; and did not appear to be operational. Ms. McRoy
indicated that MedTrac had a sign with its business name. CMS Ex. 4 at 1. Although
Ms. McRoy marked on the report that there was inventory present, she testified that she
accidentally checked a “Y” instead of an “N” to the question on the report form asking if
she saw inventory. Ms. McRoy testified that she could not see into MedTrac’s office or
gain access to it, therefore, she was not able to see whether any inventory was present.
CMS Ex. 4 at 1; CMS Ex. 59 4.
On September 17, 2014, at 3:08 p.m., NSC site inspector Marlena Harris arrived at
MedTrac’s 1801 North Tryon Street office location to attempt a site inspection. CMS Ex.
6; CMS Ex. 7 §§ 2, 3,5. In her report of the attempted site visit, Ms. Harris stated:
“Arrived at facility, door was locked. Knocked on the door and there was no response.
Waited about 5 minutes no one arrived.” CMS Ex. 6 at 1; see also CMS Ex.79 6.

Ms. Harris made a number of observations about the outside of MedTrac’s office that are
consistent with Ms. McRoy’s observations summarized above, and Ms. Harris took date
and time stamped photographs of the outside of MedTrac’s office. CMS Ex. 6; CMS
Ex.795.

2. CMS had a legitimate basis to revoke Petitioner’s Medicare billing privileges
because Petitioner’s location was not operational, and was not accessible and
staffed during posted hours of operation.

MedTrac asserts that it needed to keep its door locked all of the time for safety and
security reasons. MedTrac’s Chief Executive Officer, Gary Smith, testified that the
property manager where MedTrac’s office is located suggested keeping MedTrac’s door
locked for security reasons. MedTrac Ex. 14§ 4. Mr. Smith also testified that he
established a policy of locking the office’s door because of the “proximity of the Men’s
Shelter of Charlotte and the high population of homeless individuals near the office . . . .”
MedTrac Ex. 14§ 3. MedTrac provided evidence that there is a homeless shelter not far
from the MedTrac office. MedTrac Exs. 8-10. Mr. Smith further testified that he was
working at MedTrac’s office on the afternoon of September 17, 2014, and that he did not
hear anyone knock at the door. CMS Ex. 14 9§ 3-4.

Although MedTrac appears to dispute that NSC’s inspectors actually appeared at
MedTrac’s office on the dates and times alleged by CMS, CMS provided significant
evidence, both testimonial and documentary, that NSC’s inspectors attempted site
inspections at MedTrac’s office on September 5 and 17, 2014, during MedTrac’s posted
hours of operation.* CMS Exs. 4-7. The pictures that the site inspectors took of
MedTrac’s door look the same as MedTrac’s own picture of its door, thus proving the
inspectors were present. CMS Ex. 4 at 4; CMS Ex. 6 at 3; MedTrac Ex. 12 at 1. The
inspectors’ time and date stamped pictures provide support that they appeared at
MedTrac’s office on the dates and times in their reports. CMS Exs. 4, 6.

To the extent that MedTrac asserts that its office was staffed during the attempted site
inspections and that the inspectors’ knocks were simply not heard, such a scenario
provides no defense to revocation when there are no alternative means of gaining entry to

* MedTrac asserts that its posted hours of operation were 10 a.m. to 4 p.m., instead of 10
a.m. to 6 p.m., as noted by the site inspectors. CMS Ex. 2. Because the attempted site
inspections both occurred after 10 a.m., but before 4 p.m., this issue does not need to be
resolved.
supplier’s office. Norpro Orthotics & Prosthetics, DAB No. 2577, at 6 (2014); Benson
Ejindu, DAB No. 2572, at 6 (2014). Whether it is the supplier standard requirement that
a DMEPOS supplier be accessible during posted hours of operation (42 C.F.R.

§ 424.57(c)(7)) or the requirement that a supplier be operational, i.e., “open to the public
for the purpose of providing health care related services” (42 C.F.R. §§ 424.502,

424 .535(a)(5)(ii)), MedTrac had two chances to answer the door for inspectors and, by
failing to do so, showed that it was not accessible or operational during posted hours or
operation.

V. Conclusion

For the reasons stated above, I affirm CMS’s revocation of MedTrac’s Medicare
enrollment and billing privileges.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Jorge Gomez,
Petitioner,
v.
Department of Health and Human Services.
Docket No. C-13-909
Decision No. CR4175

Date: August 28, 2015

DECISION

Dr. Jorge Gomez (Petitioner), an employee of the Department of Health and Human
Services (HHS), National Institutes of Health (NIH), requested a hearing to contest
HHS’s determination that Petitioner owes a debt to the United States Government. NIH
retroactively reclassified Petitioner from a Medical Officer position to a non-physician
health science researcher position because Petitioner does not have a permanent
certification by the Education Commission for Foreign Medical Graduates (ECFMG)
proving that his Mexican medical degree is equivalent to an American medical degree.
Although NIH’s reclassification did not affect Petitioner’s grade and salary, NIH
concluded that Petitioner was ineligible to receive a Physician Comparability Allowance
(PCA). Because NIH retroactively reclassified Petitioner to a non-physician position,
HHS’s payroll service charged Petitioner with an overpayment of $18,393.60 based on
the PCA paid to him from April 7, 2012, to November 3, 2012.

Because the Office of Personnel Management (OPM) has jurisdiction to hear and decide
appeals related to the reclassification of Petitioner’s position, I do not have jurisdiction to
decide that issue. There is no evidence in the record that Petitioner appealed his
reclassification to a non-physician position to OPM. As a result, in determining whether
a debt exists, I must accept NIH’s decision to reclassify Petitioner to a non-physician
2

position. Based on NIH’s decision to reclassify Petitioner, he was not eligible for the
PCA because he did not meet OPM’s degree requirements to be a government physician
from April 7, 2012, to November 3, 2012. Further, despite the fact that Petitioner and
NIH signed an agreement related to the PCA, I cannot enforce that agreement since an
agency may only pay the PCA to physicians and, based on NIH’s reclassification
decision, Petitioner does not meet the degree requirements to be a government physician.
Therefore, I conclude that Petitioner owes an $18,393.60 debt to the United States
Government.

I. Background

Petitioner has been an NIH employee since 1994. NIH originally hired Petitioner into a
601 series position (General Health Science) of the General Schedule. In 1995, Petitioner
applied for an NIH Medical Officer position in the 602 series. On April 2, 1995, NIH
officially reclassified Petitioner from the 601 series to the 602 series. Following this
change, Petitioner became eligible for and received an allowance under the Federal
Physicians Comparability Allowance Program. Petitioner began receiving a PCA in 1995
and received a PCA from that time until 2012, when he was reclassified to a non-
physician position. In 2012, NIH determined that Petitioner did not qualify as a Medical
Officer based on NIH’s interpretation of an OPM manual. As a result, in late 2012, NIH
ceased providing Petitioner with the PCA and, in early 2013, involuntary returned
Petitioner to a 601 series position, retroactive to 1995. Because of this action, HHS
determined that Petitioner owes a debt based on PCA amounts paid to him in 2012. HHS
Exhibit (Ex.) 1; Petitioner (P.) Ex. 1.

On June 6, 2013, Petitioner filed a Petition for Hearing in which he disputed the validity
of the debt. In particular, Petitioner argued that he had been properly placed in the 602
series position in 1995 and, consequently, was entitled to receive PCA payments.
Petitioner also indicated that NIH’s action occurred after he filed an equal employment
opportunity complaint. Petition for Hearing at 2. NIH forwarded the hearing petition to
the Departmental Appeals Board, Civil Remedies Division (CRD) on June 13,2013. The
CRD Director assigned this case to me and, on June 19, 2013, I issued a prehearing order
that set dates for the parties to submit briefs and evidence. In the prehearing order, I also
tentatively set an in-person hearing for July 23, 2013.

On June 28, 2013, Petitioner’s counsel requested that I delay this proceeding because
Petitioner has a case pending before the Equal Employment and Opportunity
Commission (EEOC) that includes his reclassification to a 601 series position.

See 45 C.F.R. § 33.4(a)(13). On July 1, 2013, HHS objected to Petitioner’s request for a
delay and filed its prehearing brief (HHS Br.) and exhibits (HHS Exs. 1-12). On July 3,
2013, I issued an order granting a temporary delay in these proceedings to take effect
3

when the parties completed the submission schedule I established in my prehearing order.
also cancelled the hearing set for July 23, 2013. Finally, I stated that I would consider
all the parties’ submissions before deciding whether to grant or deny Petitioner’s request
for a delay of these proceedings pending the outcome of the EEOC proceeding. On July
10 and 22, 2013, I granted two unopposed motions from Petitioner for extensions of time
to file his brief and exhibits. On July 24, 2013, Petitioner filed his prehearing brief

(P. Br.) and exhibits (P. Exs. 1-14). On July 31, 2013, HHS filed a reply brief (HHS
Reply Br). On August 6, 2013, I granted Petitioner’s request to delay this proceeding
under 45 C.F.R. § 33.6(d)(1), based on judicial economy. However, I ordered
Petitioner to file written status updates of his EEOC case with CRD every six months.

Since the time I authorized the delay in this proceeding, Petitioner has generally failed to
provide status updates on his EEOC case without prompting from CRD personnel.
Further, despite the passing of nearly two years, Petitioner still does not have a hearing
date scheduled with the EEOC. As a result, on June 23, 2015, I ordered the parties to
submit any objections they might have to me lifting the delay in this proceeding based on
the lack of progress in the EEOC proceeding.

Petitioner submitted a response to my order in which he argued that I should continue to
delay this case because briefing in the EEOC case is nearly complete and Petitioner
anticipates that a hearing will be scheduled in the near future. Petitioner also submitted
two additional proposed exhibits (P. Exs. 15-16).

In HHS’s response to my order (HHS Response), HHS urged me to reinstate this case and
render a decision. HHS argued that the scope of the present case is much narrower than
the EEOC case and that Petitioner has delayed the EEOC case. In a supplemental
response, HHS again argued for an end to the delay in this case and submitted a
declaration from its counsel in the EEOC case. Counsel declared that Petitioner failed to
timely submit to the EEOC Administrative Judge his brief in response to HHS’s motion
for a decision without a hearing. Declaration of Melissa Manson 9 7- 9.

On August 20, 2015, I issued an order terminating the delay in these proceeding. I
informed the parties I would issue a decision based on the written record within the time
remaining in this case. See 45 C.F.R. § 33.6(d)(1).

II. Decision on the Record

Petitioner did not object to any of HHS’s proposed exhibits.

HHS objected to P. Exs. 2 and 11. HHS argues that P. Ex. 2, which is written direct
testimony from a retired HHS official establishing that NIH’s Office of Human
4

Resources determined Petitioner’s medical degree from the University of Guadalajara,
Mexico, was equivalent to an American medical degree for purposes of appointing
Petitioner to be Medical Officer at NIH, is irrelevant because “HHS cannot be held to the
prior erroneous determination which misclassified Petitioner in the 602 Series, Medical
Officer position.” HHS Reply Br. at 9-10. I overrule HHS’s objection to P. Ex. 2. The
written direct testimony provides relevant background information to HHS’s original
classification decision regarding Petitioner and relates to the origin of the debt. See

45 CFR. § 33.6(d)(2)(i).

HHS argues that P. Ex. 11, which is an Education Evaluation and Immigration Service,
Inc. (EEIS) assessment that Petitioner’s medical degree from the University of
Guadalajara is equivalent to a medical degree conferred by an accredited university in the
United States, is irrelevant because an EEIS evaluation is not one of the two ways that
OPM uses to determine if a foreign medical degree is equivalent to an American degree.
HHS Reply Br. at 10. I overrule HHS’s objection to P. Ex. 11. Petitioner’s medical
degree is at the center of this case, and I will not exclude evidence about that degree.

Therefore, I admit HHS Exs. 1-12 and P. Exs. 1-16 into the record.

I directed each party to submit written direct testimony for all proposed witnesses.
Prehearing Order § 6. Further, if either party wanted to cross-examine any of the
opposing party’s proposed witnesses, then the party needed to affirmatively request to
cross-examine the witnesses. Prehearing Order § 7. Both parties submitted written direct
testimony (HHS Ex. 11; P. Exs. 1-2). HHS did not request to cross-examine Petitioner’s
witnesses. Petitioner only sought to cross-examine Ann Nucci, a human resource
supervisor, based on an unsigned affidavit purporting to be Ms. Nucci’s answers to
questions posed by an EEO investigator. HHS Ex. 2 at 71-79. Petitioner asserts that Ms.
Nucci’s affidavit and emails, which HHS submitted as exhibits, are contradictory.

The regulations governing these proceedings state that “[a]n employee who requests an
oral hearing shall be provided an oral hearing if the hearing official determines that the
matter cannot be resolved by review of documentary evidence alone because an issue of
credibility or veracity is involved.” 45 C.F.R. § 33.6(c)(2). Although the parties do not
agree on all facts related to the actions NIH has taken against Petitioner, as discussed
below, Petitioner’s disagreement with Ms. Nucci will not preclude me from resolving this
case. Therefore, I issue this decision based on the written record. 45 C.F.R. § 33.6(c)(3).
III. Issues!

Whether Petitioner owes a debt to the United State Government and, if so, what is the
amount of the debt.

IV. Jurisdiction

Ihave jurisdiction to decide this case. 5 U.S.C. § 5514(a)(2); 45 C.F.R. §§ 33.2
(definition of Hearing official), 33.3(c)(2), 33.6, 33.7.

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

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

45 C.F.R. § 33.3(a). Before HHS offsets the debt, the employee has the right to petition
for a hearing before an Administrative Law Judge (or another individual who is not under
the supervision or control of the Secretary of Health and Human Services) in order to
dispute the existence of the debt, the amount of the debt, and/or the payment schedule the
agency establishes. 5 U.S.C. § 5514(a)(2); 45 C.F.R. §§ 33.3(c)(2), 33.7. An employee
who petitions for a hearing is not precluded from also seeking waiver of the debt.
45 CFR. § 33.1(c)(3); see also 5 U.S.C. § 5584.

1. NIH determined that Petitioner had been erroneously placed in a Medical
Officer position in 1995 and, as a result, retroactively reclassified Petitioner to a
non-physician position.

NIH first hired Petitioner into a 601 series non-physician position in 1994. In 1995,
Petitioner applied for a 602 series Medical Officer position. P. Ex. | at 1-2. While
Petitioner was a candidate for the Medical Officer position, he disclosed that his medical
degree was from a Mexican university and provided documentation related to that degree.
P. Ex. | at 3; P. Ex. 2 at 1. NIH human resources personnel reviewed these documents

' Although Petitioner asserts that NIH’s decision to retroactively reclassify him to a non-
physician position, which resulted in the alleged debt in this case, was made in violation
of equal employment opportunity laws, this decision does not address those arguments.
The EEOC Administrative Judge adjudicating Petitioner’s claims of discrimination/
reprisal has jurisdiction over those issues and nothing in this decision is intended to affect
the EEOC proceeding.

> My numbered findings of fact and conclusions of law appear in bold and italics.
6

and confirmed that Petitioner received his degree from a school that is equivalent to
accredited medical schools in the United States. P. Ex. 2 at 1. In April 1995, NIH placed
Petitioner in a Medical Officer position and entered into an agreement to provide him
with a PCA. P. Ex. | at 1; P. Ex. 2 at 2.

Petitioner continued employment with NIH as a Medical Officer with a PCA until 2012.
The term of his last PCA agreement was from November 2010 to November 2012.

P. Ex. 13. In May 2012, Petitioner applied for an NIH supervisory Medical Officer
position through OPM’s USAJOBS website. P. Ex. | at 3; P. Ex. 16 at 1. In the
application for that job, Petitioner informed USAJOBS that he did not have an American
or Canadian medical degree or an ECFMG certification for his foreign medical degree.
HHS Ex. 4 at 1. In June 2012, USAJOBS informed Petitioner that he was not eligible for
the supervisory Medical Officer position. P. Ex. 1 at 3. In September 2012, Petitioner’s
supervisor began to question whether he should approve a new PCA agreement with
Petitioner. P. Ex. 7 at 7-8; P. Ex. 8 at 5; P. Ex. 16 at 1.

In September 2012, NIH started to reconsider whether Petitioner met the requirements to
be a Medical Officer. P. Ex. 9 at 6-7; P. Ex. 10 at 4-6; P. Ex. 16 at 1-2. NIH focused on
Petitioner’s foreign medical degree and a lack of ECFMG certification as the reasons that
Petitioner did not meet OPM’s degree requirement to hold a Medical Officer position.
HHS Ex. 2 at 2,4, 6,8, 10-12,49. By the end of September 2012, NIH began to
conclude that Petitioner was erroneously placed in a Medical Officer position; it resolved
this problem by “reclassify[ing] his position outside the 602 series and eliminat[ing] his
eligibility for PCA.” HHS Ex. 2 at 48.

By October 26, 2012, it appears that NIH decided that Petitioner would have to be
reclassified from a 602 series Medical Officer to a 601 series non-physician position
based on his foreign medical degree that was not ECFMG certified. HHS Ex. 2 at 14.
OPM’s standards and qualifications make a medical degree a requirement for the Medical
Officer position. As stated in an OPM handbook, “the degree of Doctor of Medicine or
Doctor of Osteopathy is a fundamental requirement” for the Medical Officer series. HHS
Ex. 5 at 18. Further, as stated in OPM’s Qualification Standards Operating Manual, one
of the requirements for the Medical Officer series is that the applicant must possess a:

Doctor of Medicine or Doctor of Osteopathy from a school in
the United States or Canada approved by a recognized
accrediting body in the year of the applicant’s graduation. [A
Doctor of Medicine or equivalent degree from a foreign
medical school that provided education and medical
knowledge substantially equivalent to accredited schools in
7

the United States may be demonstrated by permanent
certification by the Educational Commission for Foreign
Medical Graduates (ECFMG) ... .

HHS Ex. 3 at 56.

By email dated November 8, 2012, NIH informed Petitioner that due to his lack of
ECFMG certification, NIH had erroneously placed him in a Medical Officer position in
1995 and that Petitioner was not only ineligible for the PCA, but that NIH was
reclassifying Petitioner to a 601 series non-physician position, retroactive to 1995. HHS
Ex. 2 at 16-17; P. Ex. 16 at 2. Following this notification, Petitioner internally disputed
the action NIH intended to take. HHS Ex. 2 at 18-19, 31-32, 46, 51-53, 56; P. Ex. 16 at
2-3. On January 27, 2013, NIH issued a formal Notification of Personnel Action
reclassifying Petitioner from a 602 series position to a 601 series position, effective April
2, 1995. HHS Ex. 1 at 1; HHS Ex. 2 at 84; P. Ex. 1 at 2; HHS Br. at 5. There is no
indication in the record that Petitioner appealed this reclassification of his position to
OPM.

2. Because there is no indication that Petitioner appealed NIH’s retroactive
reclassification determination to OPM, I must accept NIH’s determination that
Petitioner was not eligible to serve in a Medical Officer position and,
consequently, Petitioner was not eligible to receive a PCA.

HHS asserts that Petitioner owes a debt to the United States Government based on
erroneous PCA payments made to Petitioner. Congress established the PCA to recruit
and retain highly qualified government physicians. In order for a physician to receive a
PCA, the physician has to agree to serve as a physician with his employing agency for a
specified period of time. 5 U.S.C. § 5948(a). Although only physicians may receive the
PCA, neither the statute establishing the PCA nor the regulations implementing that
statute specify the requirements to be a physician with the government. See 5 U.S.C.

§ 5948; 5 C.F.R. §§ 595.101-595.107.

In the present case, NIH placed Petitioner in a Medical Officer position and entered into
PCA agreements with him every two years until 2012. However, in 2012, NIH
interpreted OPM’s qualification standards for Medical Officers to mandate an ECFMG
certification and NIH determined that Petitioner never had an ECFMG certification to
prove that his foreign medical degree was equivalent to an American medical degree.
Therefore, NIH considered its previous decision to allow Petitioner to hold a Medical
Officer position to be erroneous. As a result, NIH issued a determination reclassifying
Petitioner into a non-physician researcher position. However, this determination was
subject to OPM appeal.
OPM has broad authority over classification? of positions in the executive branch of the
federal government. OPM may:

(1) ascertain currently the facts as to the duties,
responsibilities, and qualification requirements of a position;

(2) place in an appropriate class and grade a newly created
position or a position coming initially under this chapter;

(3) decide whether a position is in its appropriate class and
grade; and

(4) change a position from one class or grade to another class
or grade when the facts warrant.

S USC. § 5112(a)(1)-(4).

Despite OPM’s overall authority over classification issues, each federal agency must first
classify the positions within that agency in conformance with OPM’s published standards
and, “[w]hen facts warrant, an agency may change a position which it has placed in a
class or grade . . . from that class or grade to another class or grade.” 5 U.S.C. § 5107;
see also 5 C.F.R. § 511.701(a)(“A classification action is a determination to establish or
change the title, series, grade or pay system of a position based on application of
published position classification standards or guides.”). An employee may, at any time,
appeal to OPM an agency’s determination as to “[t]he appropriate occupational series . . .
of the employee’s official position.” 5 C.F.R. §§ 511.603(a)(1), 511.604(a), 511.605(a);
see also 5 U.S.C. § 5112(b). When OPM renders a decision on appeal, that decision is
inal and not subject to further review. 5 C.F.R. § 511.612.

Both HHS and Petitioner have provided extensive arguments and evidence to show that
Petitioner either has been or has not been properly reclassified into a non-physician
position based on NIH’s interpretation of OPM’s requirements for Medical Officers.
HHS Br. at 6-9, 12-13; HHS Response at 2 (“This Tribunal’s evaluation of the issue is
limited only to whether there is a proper legal basis for reclassifying Petitioner from a
602 Series to a 601 Series and whether there is a proper legal basis for removing and
discontinuing Petitioner’s PCA.”); HHS Exs. 2-8; P. Br. at 13-16; P. Exs. 5-11, 14, 16.
However, I do not have jurisdiction to decide this issue because Congress vested OPM

> “Classification means the analysis and identification of a position and placing it in a
class under the position-classification plan established by OPM [under applicable law].”
5 C.F.R. § 511.101(c) (emphasis in original).
9

with the authority to hear appeals of agencies’ classification decisions. See Caporale v.
Nat'l Aeronautics & Space Admin., 4 M.S.P.R. 161, 162 (1980) (Merit Systems
Protection Board upholding the dismissal of a case because “classification appeals are
properly filed with the agency involved or with the Office of Personnel Management.

5 C.F.R. § 511.604.”). My jurisdiction is limited to determining whether a debt exists.

5 U.S.C. § 5514(a)(4). I cannot assume the review authority conferred on another agency
by statute.

There is no evidence in the record that Petitioner appealed NIH’s decision to OPM and
received a favorable decision. In the absence of an OPM decision on Petitioner’s
reclassification, the NIH decision, which is authorized under statute and regulation, is the
official government decision on this issue. Therefore, when determining whether a debt
exists in this case, I must accept that Petitioner was retroactively reclassified to a non-
physician position because he did not possess the required certification to be a physician
with the federal government.

Petitioner also argues that despite NIH’s reclassification, he still performed services
under PCA agreements that NIH entered into with him. P. Br. at 12. Petitioner avers:
“Since [Petitioner] was employed as a government physician and was qualified for such
employment, had a valid agreement to receive a PCA, and performed the anticipated
duties during the period of coverage, receipt of the PCA did not constitute an
overpayment to the petitioner or result in a debt to the government.” P. Br. at 17.
Although I am sympathetic to Petitioner’s argument that he fully performed under the
PCA agreement, NIH’s retroactive reclassification of Petitioner to a non-physician
position precludes Petitioner from having received the PCA in 2012. A PCA is only
available for individuals who occupy certain “Government physician” positions in the
federal government. 5 U.S.C. § 5948(a), (g)(1); 5 C.F.R. § 595.101-104. According to
the NIH reclassification decision, Petitioner was ineligible to serve in any of those
“Government physician” positions. Therefore, applying that decision to this case, I
cannot conclude that Petitioner ought to have received the PCA when he was not eligible
to serve as a Medical Officer.

3. Petitioner is indebted to the United States Government in the amount of
$18,393.60

In a May 4, 2013 notice, HHS payroll services, the Defense Finance and Accounting
Service (DFAS), informed Petitioner that the gross amount of money he owed was
$18,393.60. HHS Ex. 10. HHS calculated this amount based on a PCA payment of
$1,149.60 made each pay period for 16 pay periods from April 7, 2012, to November 3,
2012. HHS Ex. 9. Although NIH retroactively reclassified Petitioner from 1995
forward, HHS only sought the return of $18,393.60 because DFAS’s computer system
10

only retains certain payment information for a year and, based on the date NIH informed
DFAS of the reclassification, DFAS could only generate an overpayment based on
limited data. HHS Ex. 11 at 2-3. Petitioner does not dispute the amount of debt sought
in the DFAS notice. P. Br. at 18. Therefore, I conclude that the amount of debt
Petitioner owes is $18,393.60.

4. Petitioner’s hearing petition was not baseless or filed with the intent to delay
collection of the debt.

The procedural regulations in this case state that a decision must “include a determination
whether the employee’s petition for hearing was baseless and resulted from an intent to
delay creditor agency collection activity.” 45 C.F.R. § 33.6(d)(2)(ii). Although I decide
this case in favor of HHS, I do so with misgiving. It is clear that NIH hired Petitioner
into a Medical Officer position in 1995 and authorized him to receive a PCA after NIH
determined that the medical school Petitioner attended was equivalent to an accredited
American medical school. P. Ex. 2. NIH’s evaluation may have been correct. See P. Ex.
11; P. Ex. 16 at 6-10. Further, there is no evidence that Petitioner ever attempted to
mislead NIH. To the extent that Petitioner appears to have failed to appeal NIH’s
reclassification decision to OPM, the record indicates that NIH may not have provided
Petitioner with information about his appeal rights. HHS Ex. 2 at 51-54. Finally, while I
reject Petitioner’s argument that he was entitled to receive the PCA due to his
performance under the PCA agreement, I do not find Petitioner’s argument to be
frivolous or made in bad faith. Therefore, I conclude that Petitioner’s hearing petition
was not baseless and that there is no evidence that Petitioner filed the petition with the
intent to delay collection of his debt.*

VI. Terms of repayment

The procedural regulations in this case indicate that a decision should address “[t]he
terms of any repayment schedule, if applicable.” 45 C.F.R. § 33.6(d)(2)(iii). Although it
is true that an individual may request a hearing to address the terms of repayment when
there is no written agreement, 5 U.S.C. § 5514(a)(2)(D), Petitioner did not raise this as an
issue in this case. Therefore, I conclude that I do not need to address this matter.

* Tn 2012, NIH officials made it clear in intra-agency emails that NIH erred in deciding
to move Petitioner to the Medical Officer position and pay him a PCA; those officials
also thought waiver of the PCA overpayment would be appropriate. HHS Ex. 2 at 47-49.
Given these emails, I am surprised that this case has not been resolved through a waiver
of overpayment under 5 U.S.C. § 5584.
11

VII. Conclusion

Petitioner is indebted to the United States Government in the amount of $18,393.60.
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
Robert Muscio, M.D.,

(OI File No. 2-10-40680-9),
Petitioner,

v.

The Inspector General.

Docket No. C-15-1868
Decision No. CR4163

Date: August 26, 2015

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Robert
Muscio, M.D., from participating in Medicare and all other federally funded health care
programs for a minimum of five years. The exclusion is mandated by section 1128(a)(3)
of the Social Security Act (Act). The period of exclusion is mandated by section
1128(c)(3)(B) of the Act.

I. Background

Petitioner requested a hearing to challenge the I.G.’s exclusion determination. The I.G.
filed a brief supporting the determination and exhibits that are identified as I.G. Ex. | —
1G. Ex. 8. Petitioner filed a brief in opposition and exhibits that are identified as P. Ex. 1
—P.Ex.6. The I.G. filed a reply brief. I receive the parties’ exhibits into the record of
this case although I note that in large measure Petitioner’s exhibits duplicate those
offered by the I.G.
Petitioner also requested to present in-person testimony from himself and another
witness. The I.G. opposed Petitioner’s request. Below, I explain why I deny Petitioner’s
request.

II. Issue, Findings of Fact and Conclusions of Law
A. Issue

The issue in this case is whether an exclusion of at least five years is mandated by
sections 1128(a)(3) and 1128(c)(3)(B) of the Act.

B. Findings of Fact and Conclusions of Law
Section 1128(a)(3) of the Act mandates the exclusion of any individual who:

has been convicted for an offense which occurred after . . . [August 21,
1996], under Federal or State law, in connection with the delivery of a
health care item or service or with respect to any act or omission in a health
care program . . . operated by or financed in whole or in part by any
Federal, State, or local government agency, of a criminal offense consisting
of a felony relating to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct.

The necessary elements of a section 1128(a)(3) offense are as follows:
e An individual must be convicted of a felony that occurred after August 21, 1996;

e The offense must have been committed in connection with the delivery of a health
care item or service; or

e It must have been committed with respect to any act or omission in a health care
program that is operated by or financed in whole or in part by a federal, State, or
local government agency;

e The offense must relate to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct.

Petitioner contends that this section applies only to individuals who are convicted of
crimes that were committed with respect to an act or omission of a federal, State, or
locally operated health care program. According to him, crimes that involve only private
monies are not within the reach of the section.
I disagree. Section 1128(a)(3) is written in the disjunctive. It applies to crimes
committed in connection with the delivery of any health care item or service, even those
items or services that are limited only to the private sector. It also applies to crimes
committed against federal, State-run, or locally run health care programs. There is
nothing in the language of section 1128(a)(3) that suggests that it applies only to those
individuals convicted of crimes that are committed against government-run programs.
Nor is there language in the section that suggests that a crime must involve public funds
in order to fall within the section’s reach.

Here, the undisputed facts establish that Petitioner was convicted of a felony occurring
after August 21, 1996, consisting of embezzlement committed in connection with the
delivery of health care items or services. That is all that is necessary to establish that he
was convicted of an offense falling within the reach of section 1128(a)(3).

On February 19, 2014, Petitioner was charged in a federal court in the State of New
Jersey with a single count of felony mail fraud. I.G. Ex. 4. He was charged with having
embezzled more than $1.1 million from an entity, the Center for Advanced Surgery &
Pain Management, L.L.C. (CASPM). Id. at 1 — 3. Petitioner was a part owner and
medical director of CASPM. Id. Specifically, he was charged with unlawfully
converting monies to his own use by fraudulently writing, signing, and causing the
mailing of more than 105 checks drawn on CASPM’s bank account. Id. at 2. Petitioner
pled guilty to the charge. I.G. Ex. 7; 1.G. Ex. 8 at 1.

Petitioner argues that his crime was not committed in connection with the delivery of a
health care item or service. He asserts that:

Although CASPM is a health care entity, . . . [Petitioner] did not act ina
manner that affected CASPM’s provision or delivery of health care
services, its patient relationships or the manner in which CASPM or its
owners/employees performed their job functions. . . [Petitioner’s] offense in
no way impacted medical providers’ independent decision making or
CASPM’s participation in government agency programs. . . .

Petitioner’s Brief at 6.

Any of the possible consequences cited by Petitioner might be sufficient to establish that
a crime was committed in connection with the delivery of a health care item or service.
However, those consequences do not comprise the complete range of circumstances or
consequences of a crime that establish the requisite connection.

The necessary connection exists in this case because Petitioner stole monies that were the
product of the delivery of health care items or services by CASPM and its employees.
Those monies would not have been within Petitioner’s grasp but for the fact that they
constituted revenues earned from the delivery of health care items or services. That is all
the connection that is needed in order to bring Petitioner’s embezzlement within the reach
of section 1128(a)(3).

Petitioner also argues that, if an exclusion is imposed against Petitioner, it must be
imposed pursuant to the permissive exclusion requirements of section 1128(b)(1) of the
Act and not section 1128(a)(3). In Petitioner’s view, crimes that are not “program
related” do not fall within the reach of the mandatory exclusion provisions of the Act.
Petitioner’s Brief at 6-7. Moreover, according to Petitioner, there is a separate section
of the Act, section 1128(b)(1), which applies to non-program related fraud convictions,
and this section is a permissive and not a mandatory exclusion section. Thus, according
to Petitioner, if he is to be excluded, it should be under the more liberal permissive
exclusion provisions of section 1128(b)(1) and not the mandatory exclusion provisions of
section 1128(a)(3).

I find no basis in the Act for this assertion. Section 1128(a)(3) is clear on its face. It
plainly applies to the crime committed by Petitioner and of which he was convicted.
There is no language in the section that states that a crime must be “program related” in
order to fall within its purview. Furthermore, Petitioner misreads section 1128(b)(1).
That section applies only to misdemeanor convictions. It has nothing to do with the
crime of which Petitioner is convicted, which is a felony falling within the mandatory
exclusion requirement.

As I noted in the introduction to this decision, Petitioner seeks to offer the testimony of
himself and another individual. Petitioner asserts that his testimony is necessary to
explain the details of his relationship with CASPM, the flow of monies within that entity,
CASPM’s “distribution practices,” and how the flow of monies related to the delivery of
health care items or services. He asserts that his testimony will prove that his
embezzlement bore no relationship to the delivery of healthcare items or services.

I find Petitioner’s proffered testimony to be irrelevant. The undisputed facts are that
Petitioner embezzled more than a million dollars from CASPM and that these monies
consisted in part or entirely of revenues generated from providing health care items or
services. Nothing that Petitioner proffers detracts from or materially changes these facts
and the facts are sufficient to establish that his conviction falls within the reach of section
1128(a)(3) of the Act.

Petitioner also seeks to call as a witness an assistant United States Attorney. Petitioner
argues that this individual’s testimony would explain cooperation that Petitioner provided
to federal officials. That testimony is irrelevant because the I.G. opted to exclude
Petitioner for a minimum exclusion period. Cooperation, which might serve to mitigate
an exclusion that is for more than the minimum period, is not relevant where the
exclusion is for the statutory minimum.
I note also that the pre-hearing order that I issued in this case on May 29, 2015, explicitly
directed the parties to reduce any proposed witness testimony to writing made under oath.
Petitioner did not comply with that direction nor did he explain his failure to do so. I
would exclude his proposed witness’ testimony, even if it were potentially relevant, based
on Petitioner’s failure to comply with my pre-hearing order.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Donald Dolce, M.D.,
(PTAN: 372461YKXA),
(NPI: 1053572925),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-2116
Decision No. CR4150

Date: August 21, 2015

DECISION

I decide that the effective date of enrollment in the Medicare program of Petitioner,
Donald Dolce, M.D., is August 6, 2014, the date that he first began providing services at
a new practice location, and a date after which he filed an application for reassignment of
benefits that was ultimately approved with Novitas Solutions, Inc., a Medicare contractor
authorized by the Centers for Medicare & Medicaid Services (CMS) to review and
approve supplier enrollment applications. I decide additionally, that Novitas and CMS
determined incorrectly that Petitioner’s effective enrollment date was September 22,
2014.

I. Background

Petitioner, a physician, filed a hearing request to challenge the September 22, 2014
effective participation date determination. CMS moved for summary judgment and
submitted 10 exhibits in support of its motion, which are identified as CMS Ex. | —
CMS Ex. 10. Petitioner opposed the motion and, in doing so, renewed his request that he
be assigned an earlier effective participation date than that determined by the contractor
and CMS. He filed exhibits, which are identified as P. Ex. A — P. Ex. F, in support of his
contentions and arguments.

The exhibits filed by the parties identify a disputed issue of material fact, that being the
date when Petitioner filed his application for reassignment of benefits. CMS contends
that Petitioner filed this application on September 22, 2014. Petitioner asserts that he, in
fact, filed it on June 6, 2014. Both parties offered affidavits to support their respective
positions. CMS Ex. 6; P. Ex. E; P. Ex. F. The fact dispute precludes entry of summary
judgment. However, neither party requested to cross-examine the opposing party’s
witness or witnesses. Given that, this case is ripe for decision as a case in which the
parties request that a fact dispute be resolved based on their written exchanges. I decide
this case on that basis. I receive into the record CMS Ex. | — CMS Ex. 10 and P. Ex. A—
P. Ex. F.

II. Issue, Findings of Fact and Conclusions of Law
A. Issue

The issue is Petitioner’s effective date of participation in Medicare.
B. Findings of Fact and Conclusions of Law

The effective date of a physician’s participation in the Medicare program is governed by
42 C.F.R. § 424.520(d). This regulation provides that the effective date of a physician’s
participation is the later of the following: the date when the physician files an application
that is subsequently approved by a Medicare contractor; or, the date when the physician
first begins providing services at a new practice location.’

In this case the determinative question is: when did Petitioner file an application that was
subsequently approved by Novitas? CMS argues that this date is September 22, 2014,
because that is the date when Petitioner filed an application that Novitas received,
processed, and approved. Petitioner contends that he filed an application on June 6,
2014, and that Novitas lost this application. Petitioner argues that he should not be
penalized for an omission or error by the contractor that was entirely beyond Petitioner’s
ability to control.

To support his contention Petitioner produced a copy of an application for participation
dated June 5, 2014, which he contends was mailed to Novitas on June 6. P. Ex. A. He

' Although Petitioner contends that he filed his application on June 6, he acknowledges
that he did not begin providing services until August 6, 2014. Therefore, the earliest
effective date to which Petitioner would be entitled is August 6, 2014.
has also offered the affidavits of two members of his employer’s staff, in which the
affiants aver that they mailed Petitioner’s application to Novitas on June 6, 2014. P. Ex.
E; P. Ex. F. In one of these affidavits Dulce Rodriguez avers that on June 6 she
simultaneously mailed two applications to Novitas, consisting of Petitioner’s application
and one for another physician. Novitas received the other physician’s application on June
10, 2014, and processed that application. P. Ex. F at 1-2.

CMS produced the affidavit of Shelley Kuhn, an employee of Novitas. CMS Ex. 6. She
avers that Novitas searched its databases and it “determined that . . . [Petitioner] did not
submit any enrollment or reassignment applications prior to September 22, 2014.” CMS
Ex. 6 at 2.

I find Petitioner’s assertion that he sent an enrollment application to Novitas on June 6,
2014, to be credible. It is buttressed by the testimony of two witnesses and by a hard
copy of the actual application. There is no evidence that would lead me to believe that
Petitioner is being less than honest about the application date.

Moreover, the weight of the evidence supports my conclusion that Novitas actually
received Petitioner’s application on June 10 or thereabouts. Regulations governing
hearings in cases involving CMS presume that documents that are mailed are received
five days from their mailing date absent proof to the contrary. 42 C.F.R. § 498.22(b)(3).
I see no reason why that presumption should not apply equally to documents that a
prospective enrollee mails to a Medicare contractor. Where a prospective supplier mails
an application to the contractor the presumption is that the contractor receives it.

Evidence offered by CMS does not persuade me that Novitas did not receive timely
Petitioner’s June 6 application. Ms. Kuhn avers only that the contractor searched its
database and was unable to find a record of the June 6 application. That may be, but that
result would be entirely consistent with the contractor mishandling and/or misplacing the
application after receiving it. If the contractor lost the application then, of course, it
would have no record of it in its database.

The June 6 and September 22 applications are identical in all respects. I therefore
conclude that the application that Novitas “subsequently approved,” within the meaning
of 42 C.F.R. § 424.520(d), was the June 6 application. Petitioner began providing
services at his new practice location on August 6. Petitioner’s effective participation date
is August 6, 2014.

/s/
Steve T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

James H. Peak, M.D.,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-1747
Decision No. CR4139

Date: August 19, 2015

DECISION

Petitioner, James H. Peak, M.D., was a child psychiatrist who was convicted of felony
possession of child pornography. The Centers for Medicare and Medicaid Services
(CMS) subsequently denied his Medicare enrollment application, finding that he had
been convicted of a felony that was detrimental to the best interests of the Medicare
program and its beneficiaries. Petitioner appeals, and CMS moves for summary
judgment.

For the reasons explained below, I find that no material facts are in dispute and that CMS
is entitled to judgment as a matter of law. I therefore grant CMS’s motion.

Background

By letter dated December 15, 2014, the Medicare contractor, Noridian Healthcare
Solutions, advised Petitioner that his application to enroll in the Medicare program was
denied. The contractor took this action pursuant to 42 C.F.R. § 424.530(a)(3) because, on
December 7, 2011, Petitioner Peak was convicted in U.S. District Court of felony
possession of child pornography. CMS Ex. 11.
Petitioner requested reconsideration. In a reconsidered determination, dated March 6,
2015, the contractor upheld the denial. CMS Ex. 13. Petitioner timely appealed, and that
appeal is now before me.

CMS moves for summary judgment and has filed a supporting brief (CMS Br.) as well as
fourteen proposed exhibits (CMS Exs. 1-14). Petitioner filed a brief and response to
CMS’s motion (P. Br.). He agrees that no material facts are in dispute, but argues that
CMS is not entitled to judgment as a matter of law.’ P. Br. at 3.

Discussion

CMS is entitled to summary judgment because the undisputed evidence
establishes that Petitioner was convicted of possessing child pornography, a
felony offense detrimental to the best interests of the Medicare program and
its beneficiaries.”

Statute and regulations. CMS, acting on behalf of the Secretary of Health and Human
Services, may deny a supplier’s Medicare enrollment if, within the preceding ten years,
the supplier was convicted of a federal or state felony offense that CMS “has determined
to be detrimental to the best interests of the [Medicare] program and its beneficiaries.”
42 CFR. § 424.530(a)(3); see Social Security Act (Act) §§ 1842(h)(8) (authorizing the
Secretary to refuse to enter into an agreement with a physician who has been convicted of
a felony offense that the Secretary determines is “detrimental to the best interests of the
program or program beneficiaries”) and 1866(b)(2)(D) (authorizing the Secretary to
refuse to enter into an agreement after she ascertains that the practitioner was convicted
of a felony that she “determines is detrimental to the best interests of the program or
program beneficiaries”).

In deciding whether an offense is detrimental to the program and its beneficiaries, CMS
considers its severity. 42 C.F.R. § 424.530(a)(3). Offenses for which enrollment may be
denied include felony crimes against persons, such as “murder, rape, or assault, and other
similar crimes for which the individual has been convicted, including guilty pleas and
adjudicated pretrial diversions.” 42 C.F.R. § 424.530(a)(3)(i)(A).

Summary judgment. Summary judgment is appropriate if the case presents no genuine
issue of material fact and the moving party is entitled to judgment as a matter of law.
Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010); see CMS Br. at 1, 6.

' Tn any event, neither party proposes any witnesses, so a hearing would serve no
purpose.

> T make this one finding of fact/conclusion of law.
Here, the parties agree that no material facts are in dispute. P. Br. at 3; CMS Br. at 11.
On August 15, 2011, Petitioner Peak pled guilty in federal district court for the District of
Montana to one count of felony possession of child pornography, in violation of 18
U.S.C. § 2252(A)(5)(b). CMS Exs. 1,2, 4. He admitted that he “knowingly possessed
movies containing . . . images of child pornography” that had been shipped in interstate
or foreign commerce or produced with materials shipped or transported in interstate or
foreign commerce. CMS Ex. 2 at 3. The pornography included computer disks and other
material that he knew contained “visual depictions of minors engaged in sexually explicit
conduct.” He also knew that minors were sexually exploited in order to produce those
images. CMS Ex. 2 at 4.

On December 8, 2011, the district court entered its judgment of conviction and sentenced
Petitioner Peak to one year and a day in prison. CMS Ex. 7.

In an order dated May 18, 2012, the Board of Medical Examiners for the State of
Montana noted that Petitioner Peak had been convicted of possessing child pornography
and concluded that his conduct amounted to unprofessional conduct. The Board
suspended indefinitely his license to practice medicine. Among other conditions, the
Board stated that he would not be eligible to reactivate his license for at least two years.
CMS Ex. 8 at 39-42. Thereafter, Petitioner Peak asked the licensing board to reconsider
its May 18, 2012 order. In an amended final order, dated June 9, 2014, the Board issued
Petitioner Peak a lifetime probationary license to which it attached multiple conditions,
including that he practice only under a “supervised clinical preceptorship,”* that he
subject himself to lifetime supervision by the Montana Professional Assistance Program,
and that he disclose to each of his patients his status as a sex offender and his
probationary license. CMS Ex. 8 at 22-28. However, the amended final order also
provided that, after 18 months, the probationary license could be modified to a “full and
unrestricted” license. CMS Ex. 8 at 26.

Petitioner argues that his crime does not fall within the category of cases for which denial
of enrollment is justified. P. Br. at 3-4. The regulation lists offenses deemed detrimental
to the best interest of the Medicare program or its beneficiaries, which fall into one of
four categories: 1) serious crimes against persons; 2) financial offenses; 3) offenses that
put the Medicare program at risk; and 4) felonies listed in section 1128 of the Social
Security Act.) 42 CFR. § 424.530(a)(3)(i)(A)-(D). In Petitioner’s view, possession of
child pornography does not fall into any of these four categories. He points out that:

> Generally, a “‘preceptorship” involves a period of hands-on training between a
student/novice and an experienced professional.

* Section 1128 provides that individuals and entities be excluded from program
participation if convicted of various crimes, including program-related crimes and crimes
related to patient abuse, controlled substances, and health care fraud.
e Of all the federal child pornography offenses, it is the least serious;

e He pled guilty to exactly what he did, rather than to some reduced charge;

e His conduct was not “hands on”;

e He turned himself in and provided a full and complete confession;

e The images he possessed were not as graphic as some; and

e He did not possess gross amounts of pornography compared with other cases.

P. Br. at 4-8. He also points out that the Departmental Appeals Board has never
addressed the issue of whether possession of child pornography is an offense detrimental
to the best interests of the Medicare program and its beneficiaries, and cites
recommendations from his therapist, patients, and colleagues attesting to his
trustworthiness and character. P. Br. at 8-11.

I note first that CMS has broad authority to determine which felonies are detrimental to
the best interests of the program and its beneficiaries and that the categories of cases
listed in the regulation were not intended to be exhaustive. “It would be impossible to
identify .. . every felony offense that could result in a denial.” 79 Fed. Reg. 72500,
72511 (Dec. 5, 2014).

Moreover, possession of child pornography may not be the worst in the depressing
panoply of crimes against children, but it is a serious crime against persons. Petitioner
concedes that the crime is not victimless. P. Br. at 8. I agree with the Fifth Circuit Court
of Appeals and with CMS: the possessor of child pornography perpetuates the abuse
initiated by the producer, invades the privacy of the child depicted, and provides an
economic motive for creating more child pornography. United States v. Norris, 159 F.3d
926, 929-30 (Sth Cir. 1998); CMS Br. at 8-9, citing Molly Smolen, Redressing
Transgression: In Defense of the Federal Sentencing Guidelines for Child Pornography
Possession, 18 Berkeley J. Crim. L. 36, 41-42 (2013) (“possessing child pornography . . .
creates a palpable and profound harm to its victims”; “the images of child pornography
eternally memorialize scenes of horrific sexual abuse”; and “by purchasing the images,
the child pornography possessor is creating a market for the abusive images.”).

As a child psychiatrist, Petitioner must have been aware of the harm he was inflicting on
children.
No doubt others have possessed even greater quantities of pornography, but 105 images
and 57 movies is not a negligible amount. CMS Ex. 5 at 5.

I find irrelevant the absence of Departmental Appeals Board decisions addressing this
specific felony. Nor do the good opinions of his colleagues and patients alter the fact that
Petitioner Peak was convicted of a serious crime against children.

The state licensing board’s actions in granting Petitioner Peak a lifetime probationary
license with severe restrictions attached do not move me either. In fact, I am deeply
concerned that, after only 18 months with a probationary license, Petitioner’s license
could become full and unrestricted. Even if I agreed that the closely monitored holder of
a probationary medical license is unlikely to engage in conduct detrimental to the best
interests of the Medicare program and its beneficiaries, the same could not be said for a
convicted felon holding an unrestricted license. A child psychiatrist convicted of
feloniously possessing child pornography such as Petitioner Peak threatens the program
and its beneficiaries, and CMS has justifiably denied his enrollment.

Conclusion

Because the undisputed evidence establishes that Petitioner Peak was, within the last ten
years, convicted of a felony offense detrimental to the best interests of the Medicare
program and its beneficiaries, CMS is entitled to judgment as a matter of law. I therefore
grant CMS’s motion for summary judgment.

/s/
Carolyn Cozad Hughes
Administrative Law Judge