Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2015-H-0317)

Complainant
v.

Unin Discount, Inc. / Hayat Abdirahman
d/b/a Central Station,

Respondent,
Docket No. C-15-1141
Decision No. CR3752

Date: April 2, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Unin Discount, Inc. / Hayat Abdirahman d/b/a Central Station,
at 806 South Central Avenue, New Albany, Mississippi 38652, and by filing a copy of
the complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Central Station impermissibly sold cigarettes to
minors, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.

§ 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose
a $250 civil money penalty against Respondent Central Station.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on February 4, 2015, CTP served the
complaint on Respondent Central Station by United Parcel Service. In the complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent should pay
the penalty, file an answer, or request an extension of time in which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30 days, the
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering it to pay the full amount of the proposed penalty.

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

At approximately 5:46 p.m. on April 7, 2014, at Respondent’s business
establishment, 806 South Central Avenue, New Albany, Mississippi 38652, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Winston Red 100’s Box cigarettes to a person younger than 18 years of age. The
inspector also observed that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older;

In a warning letter dated June 5, 2014, CTP informed Respondent of the
inspector’s observations of April 7, 2014, 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;

At approximately 4:42 p.m. on August 19, 2014, at Respondent’s business
establishment, 806 South Central Avenue, New Albany, Mississippi 38652, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Marlboro Menthol cigarettes to a person younger than 18 years of age.

These facts establish Respondent Central Station’s liability under the Act. The Act

prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years
of age.

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

For these reasons, I enter default judgment in the amount of $250 against Respondent
Unin Discount, Inc. / Hayat Abdirahman d/b/a Central Station. Pursuant to 21 C.F.R.
§ 17.11(b), this order becomes final and binding upon both parties after 30 days of the
date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Nancy Fitzgerald
d/b/a Chevron / Westmond Store,

Respondent.

Docket No. C-15-1118
FDA Docket No. FDA-2015-H-0299

Decision No. CR3751

Date: April 3, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Nancy Fitzgerald d/b/a Chevron / Westmond Store, which alleges
facts and legal authority sufficient to justify the imposition of a civil money penalty of
$250. Respondent did not answer the Complaint, nor did Respondent request an
extension of time within which to file an answer. Therefore, I enter a default judgment
against Respondent and assess a civil money penalty of $250.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold cigarettes to
minors, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.
§ 301 et seq., and its implementing regulations, Cigarettes and Smokeless Tobacco,

21 C.F.R. pt. 1140 (2013). CTP seeks a civil money penalty of $250.
On February 4, 2015, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days, Respondent should pay the proposed
penalty, file an answer, or request an extension of time within which to file an answer.
CTP warned Respondent that if it failed to take one of these actions within 30 days, an
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering Respondent to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Chevron / Westmond Store, an establishment that sells tobacco
products and is located at 40 Westmond Road, Sagle, Idaho 83860.
Complaint 3.

e During an inspection of Respondent’s establishment on March 9, 2014, at
approximately 3:44 p.m. PST, an FDA-commissioned inspector observed that “a
person younger than 18 years of age was able to purchase a package of Camel
Crush Menthol Silver cigarettes . . . [.]” The inspector also observed that “the
minor’s identification was not verified before the sale... .” Complaint § 10.

e On May 15, 2014, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from March 9, 2014. The letter explained that the
observations constituted violations of regulations found at 21 C.F.R. § 1140.14(a)
and (b)(1), and that the named violations were not necessarily intended to be an
exhaustive list of all violations at the establishment. The Warning Letter went on
to state that if Respondent failed to correct the violations, regulatory action by the
FDA or a civil money penalty action could occur and that Respondent is
responsible for complying with the law. Complaint § 10.

e Nancy Fitzgerald responded to the Warning Letter in a July 16, 2013, letter. “Ms.
Fitzgerald stated that the employee who sold the tobacco product to the minor no
longer works at the establishment. Ms. Fitzgerald stated that Respondent retrained
all employees on the importance of complying with the ‘Federal Law’ regarding
the sale of tobacco products to minors... .” She further informed CTP “that she
stresses this ‘importance through weekly reminders and literature. . . .”

Complaint § 11.
e During a subsequent inspection of Respondent’s establishment on July 27, 2014,
at approximately 11:34 a.m. PST, FDA-commissioned inspectors documented that
“a person younger than 18 years of age was able to purchase a package of Camel
Crush Menthol Silver cigarettes . . . [.]” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 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). The regulations prohibit the
sale of cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a).
The regulations also require retailers to verify, by means of photo identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger than

18 years of age. 21 C.F.R. § 1140.14(b)(1).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on March 9,
2014, and July 27, 2014. On March 9, 2014, Respondent also violated the requirement
that retailers verify, by means of photo identification containing a purchaser’s date of
birth, that no cigarette purchasers are younger than 18 years of age. 21 C.F.R.

§ 1140.14(b)(1). Therefore, Respondent’s actions constitute violations of law that merit a
civil money penalty.

CTP has requested a fine of $250, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $250 is warranted and so
order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Deanna Worthington, NP,
(PTAN: Y5266Z),
(NPI: 1780669572)
Petitioner,
v.
Centers for Medicare & Medicaid Services
Docket No. C-15-144
Decision No. CR3750

Date: April 1, 2015

DECISION

For the reasons set forth below, I find that the Centers for Medicare & Medicaid Services
(CMS) appropriately denied Petitioner’s Medicare enrollment.

Background

Petitioner, Deann Worthington, NP, is a Florida nurse practitioner, who seeks to re-enroll
in the Medicare program following a hiatus of undetermined length. CMS denied her
enrollment application because she is not certified as a nurse practitioner by a recognized
national certifying body, as required by Medicare regulations. In a reconsidered
determination, an enrollment appeals analyst for the Medicare contractor affirmed the
denial. Petitioner now seeks review by an administrative law judge.

CMS submits a motion for summary judgment/brief (CMS Br.), along with six exhibits,
marked CMS Exs. 1-6. In addition to her hearing request (Hrg. Req.), Petitioner submits
a written argument (P. Br.) and one supporting document, a Medicare enrollment
application (CMS 855]), which she did not mark, but which I shall refer to as P. Ex. 1. In
the absence of any objections, I admit CMS Exs. 1-6 and P. Ex. 1. Neither party
proposes any witnesses or provides any written declarations of witnesses. See
Acknowledgment and Prehearing Order at 3 (4(c)); 5 (8). Because a hearing would
therefore serve no purpose, I issue this decision without considering CMS’s motion for
summary judgment.

Discussion

CMS properly denied Petitioner Worthington’s Medicare
enrollment application because she did not meet the
Medicare requirements in place at the time of her
reactivation.

The parties agree that, at one time, Petitioner was enrolled in the Medicare program and
that CMS deactivated her enrollment. They do not agree about the timing or
circumstances of her original enrollment or the deactivation. CMS claims that it
deactivated her enrollment on October 17, 2006, because she had not billed the Medicare
program for 12 consecutive months. CMS Br. at 1.

Petitioner claims otherwise. She says that she participated in the Medicare program until
August 2013, when she “was asked to revalidate.” P. Br. at 1. She thought that she had
complied with the agency’s requests, but CMS deactivated her enrollment in September
2013. P. Br. at 1; Hrg. Req. She complains that she did not learn about the deactivation
until July 2014, following which she submitted a new enrollment application. P. Br. at
1.

Neither party submits documentation in support of its position. CMS relies solely on the
reconsideration determination, which is not evidence. CMS Ex. 6 at 1. Petitioner
submits only a Medicare enrollment application (CMS-855]), signed and dated on July
31, 2013, which does not exactly support the claim that CMS asked her to revalidate in
August 2013. P. Ex. 1.

On the other hand, Petitioner does not dispute CMS’s assertion that her billing privileges
were deactivated because she had not billed the Medicare program for 12 consecutive
months. CMS may deactivate a supplier’s Medicare billing privileges if the supplier does
not submit any Medicare claims for 12 consecutive months. 42 C.F.R. § 424.540(a)(1).

' I make this one finding of fact/conclusion of law.

> That Petitioner may not have received timely notice of the deactivation is unfortunate.
Nevertheless, CMS’s determination to deactivate a supplier is not an initial determination
that is subject to review by an administrative law judge. 42 C.F.R. §§ 498.3(b); 498.5(1).
To be reactivated, the supplier must recertify that the enrollment information currently on
file with Medicare is correct, and she must furnish any missing information “as
appropriate.” The supplier must also “meet all current Medicare requirements in place at
the time of reactivation, and be prepared to submit a valid Medicare claim.” 42 C.F.R.

§ 424.540(b)(2).

To bill Medicare for the services she provides, a nurse practitioner must be a registered
professional nurse, who is authorized by her state to practice as a nurse practitioner.
Unless she first obtained her billing privileges before January 1, 2001, she must meet
other criteria, depending on when she first obtained those billing privileges as a nurse
practitioner:

e If, as Petitioner suggests, she first obtained billing privileges on or after January 1,
2003, she must be certified as a nurse practitioner by a recognized national
certifying body that has established standards for nurse practitioners and possess a
master’s degree or doctorate of nursing practice doctoral degree;

e If, as CMS maintains, Petitioner first obtained billing privileges before January 1,
2003, she must be certified as a nurse practitioner by a recognized national
certifying body that has established standards for nurse practitioners.

42 C.F.R. § 410.75(b).

Petitioner does not claim to have obtained Medicare billing privileges before January 1,
2001. She has not demonstrated that she has a master’s degree or a doctorate of nursing.
She is not certified by a recognized national certifying body. She therefore does not meet
all current Medicare requirements, and CMS properly denied her Medicare enrollment.

Conclusion

Because Petitioner Worthington does not meet all current Medicare requirements, CMS
properly denied her Medicare enrollment. I therefore affirm the reconsidered
determination.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Son Convenience, LLC
d/b/a Smoker’s Spot Convenience,

Respondent.

Docket No. C-15-1088
FDA Docket No. FDA-2015-H-0205

Decision No. CR3747

Date: April 2, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Son Convenience, LLC d/b/a Smoker’s Spot Convenience that
alleges facts and legal authority sufficient to justify the imposition of a civil money
penalty of $500. Respondent did not answer the Complaint, nor did Respondent request
an extension of time within which to file an answer. Therefore, I enter a default
judgment against Respondent and assess a civil money penalty of $500.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold tobacco
products to minors and failed to verify that tobacco product purchasers were 18 years of
age or older, thereby violating the Federal Food, Drug, and Cosmetic Act (Act),

21 U.S.C. § 301 et seq., and its implementing regulations, Cigarettes and Smokeless
Tobacco, 21 C.F.R. pt. 1140 (2013). CTP seeks a civil money penalty of $500.
On February 3, 2015, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days, Respondent should pay the proposed
penalty, file an answer, or request an extension of time within which to file an answer.
CTP warned Respondent that if it failed to take one of these actions within 30 days, an
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering Respondent to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Smoker’s Spot Convenience, an establishment that sells tobacco
products and is located at 300 Putnam Street, Bridgeport, Connecticut.
Complaint § 3.

e During an inspection of Respondent’s establishment on October 7, 2013, at
approximately 10:43 a.m., an FDA-commissioned inspector observed that “a
person younger than 18 years of age was able to purchase a package of Newport
Box 100s cigarettes . . . [.]” The inspector also observed that “the minor’s
identification was not verified before the sale... .” Complaint § 10.

¢ On December 12, 2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from October 7, 2013. The letter explained that the
observations constituted violations of regulations found at 21 C.F.R. § 1140.14(a)
and (b)(1), and that the named violations were not necessarily intended to be an
exhaustive list of all violations at the establishment. The Warning Letter went on
to state that if Respondent failed to correct the violations, regulatory action by the
FDA or a civil money penalty action could occur and that Respondent is
responsible for complying with the law. Complaint ¥ 10.

¢ Noel Dominguez responded to the Warning Letter on behalf of Respondent on
December 31, 2013. “Mr. Dominguez stated that the establishment took
disciplinary action against the employee who sold the tobacco product to the
minor. Mr. Dominguez also stated that he would increase the supervision of
tobacco transactions, and that Respondent trained and tested its employees on
tobacco regulations.” Complaint § 11.
e During a subsequent inspection of Respondent’s establishment on September 5,
2014, at approximately 10:32 a.m., FDA-commissioned inspectors documented
that “‘a person younger than 18 years of age was able to purchase a package of
Copenhagen Long Cut Wintergreen smokeless tobacco . . . [.]” The inspector also
documented that “the minor’s identification was not verified before the sale... .”
Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 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). The regulations prohibit the
sale of tobacco products to any person younger than 18 years of age. 21 C.F.R.

§ 1140.14(a). The regulations also require retailers to verify, by means of photo
identification containing a purchaser’s date of birth, that no tobacco product purchasers
are younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
tobacco products to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on
October 7, 2013, and September 5, 2014. On those same dates, Respondent also violated
the requirement that retailers verify, by means of photo identification containing a
purchaser’s date of birth, that no tobacco product purchasers are younger than 18 years of
age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s actions constitute violations of
law that merit a civil money penalty.

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

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Linda Schmidt,
(O.L File No.: 4-08-40761-9),

Petitioner,
v.

Inspector General,
U.S. Department of Health and Human Services,
Respondent.

Docket No. C-14-1991

Decision No. CR3746

Date: March 31, 2015
DECISION

Petitioner, Linda Schmidt, is excluded from participating in Medicare, Medicaid, and all
federal health care programs pursuant to section 1128(a)(1) of the Social Security Act
(Act) (42 U.S.C. § 1320a-7(a)(1)), effective August 20, 2014. There is a proper basis for
Petitioner’s exclusion based upon her conviction of a criminal offense related to the
delivery of an item or service under Medicare or a state health care program. Petitioner’s
exclusion for the minimum period of five years is mandatory pursuant to section
1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
I. Background

The Inspector General for the Department of Health and Human Services (I.G.) notified
Petitioner by letter dated July 31, 2014, that she was being excluded from participation in
Medicare, Medicaid, and all federal health care programs for a period of five years. The
1.G. cited section 1128(a)(1) of the Act as the basis for Petitioner’s exclusion, and stated
that the exclusion was based upon her conviction in the United States District Court,
Western District of Kentucky, Louisville Division, of a criminal offense related to the
delivery of an item or service under Medicare or a state health care program, including
the performance of management or administrative services relating to the delivery of
items or services, under any such program. I.G. Exhibit (Ex.) 1.

Petitioner timely filed a request for hearing (RFH) on September 26, 2014. The case was
assigned to me for hearing and decision on October 15, 2014. A telephone prehearing
conference was convened on October 28, 2014, the substance of which is memorialized
in my Prehearing Conference Order and Schedule for Filing Briefs and Documentary
Evidence (Prehearing Order) issued on October 29, 2014.

The LG. filed a motion for summary judgment and a brief in support of its motion (LG.
Br.) on December 12, 2014, with LG. Exs. | through 5. Petitioner filed her opposition to
the I.G. motion for summary judgment on January 26, 2015 (P. Br.), with Petitioner’s
exhibits (P. Exs.) 1 through 7. The L.G. filed a reply brief on February 10, 2015 (1.G.
Reply), with I.G. Ex. 6. No objections have been filed to my consideration of I.G. Exs. 1
through 6 and P. Exs. | through 7 and they are admitted as evidence.

II. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s right to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of
the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation
in any federal health care program any individual 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. The Secretary has promulgated regulations implementing this
provision of the Act. 42 C.F.R. § 1001.101(a).?

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act will be for a period of not less than five years. Pursuant to 42 C.F.R.
§ 1001.102(b), the period of exclusion may be extended based on the presence of
specified aggravating factors. Only if the aggravating factors justify an exclusion of
longer than five years are mitigating factors considered as a basis for reducing the period
of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

The standard of proof is a preponderance of the evidence, and there may be no collateral
attack of the conviction that is the basis for the exclusion. 42 C.F.R. § 1001.2007(c), (d).
Petitioner bears the burden of proof and the burden of persuasion on any affirmative
defenses or mitigating factors, and the I.G. bears the burden on all other issues.

42 CFR. § 1005.15(b).

B. Issues
The Secretary has by regulation limited my scope of review to two issues:

Whether there is a basis for the imposition of the exclusion; and

Whether the length of the exclusion is unreasonable.
42 C.F.R. § 1001.2007(a)(1). If the 1.G. imposes the minimum authorized five-year
period for exclusion under section 1128(a) of the Act, there is no issue as to whether or
not the period of exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(2).

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

My conclusions of law are set forth in bold followed by the pertinent findings of fact and
analysis.

1. Petitioner’s request for hearing was timely and I have jurisdiction.

2. Summary judgment is appropriate in this case.

> References are to the revision of the Code of Federal Regulations (C.F.R.) in effect at
the time of the I.G. action, unless otherwise indicated.
There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction
pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to hearing before an ALJ, and both the
sanctioned party and the LG. have a right to participate in the hearing. 42 C.F.R.

§§ 1005.2-.3. Either or both parties may choose to waive appearance at an oral hearing
and to submit only documentary evidence and written argument for my consideration.
42 C.F.R. § 1005.6(b)(5). An ALJ may also resolve a case, in whole or in part, by
summary judgment. 42 C.F.R. § 1005.4(b)(12).

Summary judgment is appropriate in an exclusion case when there are no disputed issues
of material fact and when the undisputed facts, clear and not subject to conflicting
interpretation, demonstrate that one party is entitled to judgment as a matter of law.
Tanya A. Chuoke, R.N., DAB No. 1721 (2000); David A. Barrett, DAB No. 1461 (1994);
Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992);
Catherine L. Dodd, R.N., DAB No. 1345 (1992); John W. Foderick, M.D., DAB No.
1125 (1990). When the undisputed material facts of a case support summary judgment,
there is no need for a full evidentiary hearing, and neither party has the right to one.
Surabhan Ratanasen, M.D., DAB No. 1138 (1990); John W. Foderick, M.D., DAB No.
1125 (1990). In opposing a properly-supported motion for summary judgment, the
nonmoving party must show that there are material facts that remain in dispute, and that
those facts either affect the proponent’s prima facie case or might establish a defense.
Garden City Medical Clinic, DAB No. 1763 (2001); Everett Rehab. and Med. Ctr., DAB
No. 1628 (1997). It is insufficient for the nonmovant to rely upon mere allegations or
denials to defeat the motion and proceed to hearing. See Anderson v. Liberty Lobby, Inc.,
477 US. 242, 247 (1986).

There are no genuine issues of material fact in dispute in this case. Petitioner argues that
there are material facts in dispute as to whether her conviction was related to the delivery
of an item or service under Medicare or a state health care program. RFH; P. Br. at 1,
8-14. As discussed in more detail in the section of this decision titled “Analysis,” I
conclude that there is no genuine dispute as to the facts that support the legal conclusion
that Petitioner was convicted of a criminal offense related to the delivery of an item or
service under Medicare or a state health care program. Furthermore, the period of
exclusion imposed is the minimum permitted by Congress for a mandatory exclusion and
whether or not the five-year minimum period is unreasonable is not an issue before me.
42 C.F.R. § 1001.2007(a)(2). Petitioner’s challenge to her exclusion must be resolved
against her as a matter of law. Accordingly, summary judgment is appropriate.

3. Petitioner’s exclusion is required by section 1128(a)(1) of the Act.
a. Facts

The following facts are drawn from the documents which were admitted without
objection. The following facts are undisputed and considered true. Prehearing Order 9.

On August 9, 2011, an Information was filed in the United States District Court, Western
District of Kentucky, charging Petitioner and another person with the misdemeanor
offense of causing misbranded inhalation drugs to be introduced and delivered for
introduction into interstate commerce during the period of on or about July 2006
continuing until at least October 2008, in violation of 18 U.S.C. § 2, and 21 U.S.C. §§
331(a), 333(a)(1), and 352(a). The Information alleged that Petitioner and another person
“introduced compounded inhalation drugs into interstate commerce that bore false and
misleading labeling representing them to be of greater strength and potency than they
actually had.” P. Ex. 4 at 7; 1.G. Ex. 2 at 1; LG. Ex. 3 at 1. Petitioner signed a plea
agreement and entered a guilty plea to the single count alleged by the Information on
October 19, 2011. P. Ex. 4 at 1; LG. Exs. 3; 4 at 1. The plea agreement stated that
Petitioner’s guilty plea was voluntary; she agreed to plead guilty because she was in fact
guilty; and she agreed to the following statement of the factual basis for her guilty plea:

Petitioner] was employed as a pharmacist at National
Respiratory Services. It was her responsibility to prepare
medication for patients and ensure that the appropriate
medications were sent out to patients. In the course of her
employment, [Petitioner] caused compounded medications to
be sent out to patients which were adulterated (i.e. sub-potent
and non-sterile) and misbranded. This medication was then
billed to Medicare as if non-compounded FDA approved
(commercially manufactured) medication was being
provided.

1.G. Ex. 3 at 1, 2. The plea agreement also states that Petitioner understood that the
government would inform the court “that it should set restitution in the amount of
$193,931.10 jointly and severally with the co-defendants payable to the Centers for
Medicare and Medicaid Services [CMS].” I.G. Ex. 3 at 3.

The district court accepted Petitioner’s guilty plea and entered judgment against her on
May 10, 2013. The district court sentenced Petitioner to one year of probation, a $25
assessment, and a $1,000 fine but no restitution. I.G. Ex. 4; P. Ex. 4 at 1-6. On July 15,
2013, the district court amended the judgment by adding an order for Petitioner to pay
$20,000 in restitution to CMS. I.G. Ex. 5 at 5.
The LG. notified Petitioner by letter dated May 29, 2013, that based on her conviction,
the I.G. was required to exclude her for at least five years pursuant to section 1128(a) of
the Act. P. Ex. 1. I note that this I.G. notice is dated nineteen days after the judgment
was initially entered against Petitioner by the district court.

The LG. sent Petitioner another letter dated July 3, 2013. The second letter stated it
superseded the May 29, 2013 notice. The July 3, 2013 letter notified Petitioner that the
1.G. was considering excluding her pursuant to section 1128(b)(1) of the Act, and gave
her the opportunity to submit materials to the I.G. to consider prior to the determination
whether or not to exclude. P. Ex. 2. This letter is dated before the July 15, 2013 order
which amended the judgment to impose restitution.

The LG. sent Petitioner a third letter dated August 5, 2013, advising Petitioner that, based
on information submitted by her attorney, no exclusion would be implemented at that
time. P. Ex. 3.

The LG. sent Petitioner a letter dated May 14, 2014. The letter advised Petitioner that it
superseded the May 29, 2013, July 3, 2013, and August 5, 2013 letters. The letter
advised that as a result of the amended judgment and conviction in the U.S. District
Court, Western District of Kentucky, the I.G. was required to exclude Petitioner pursuant
to section 1128(a) of the Act. The letter further advised Petitioner that she had 30 days to
submit information for the I.G. to consider before the IG. made the final determination.
LG. Ex. 6.

The LG. notified Petitioner by letter dated July 31, 2014, that she was being excluded for
five years pursuant to section 1128(a)(1) of the Act. The letter advised Petitioner that the
exclusion was based upon her conviction in the U.S. District Court, Western District of
Kentucky. LLG. Ex. 1. Petitioner seeks my review based on this letter notifying Petitioner
of her exclusion.

b. Analysis

The LG. cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:

(a) MANDATORY EXCLUSION. - The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):

(1) Conviction of program-related crimes. — Any
individual or entity that has been convicted of a criminal
offense related to the delivery of an item or service under
title XVIII or under any State health care program.

The statute requires that the Secretary exclude from participation any individual or entity:
(1) convicted of a criminal offense (whether felony or misdemeanor); (2) where the
offense is related to the delivery of an item or service; and (3) the delivery of the item or
service was under Medicare or a state health care program.

Petitioner does not deny that she was convicted of a criminal offense within the meaning
of section 1128(i) of the Act (42 U.S.C. 1320a-7(i)). RFH; P. Br. at 5, 8. An individual
or entity is considered to have been “convicted” of an offense if, among other things, “a
judgment of conviction has been entered . . . by a Federal, State, or local court,” “there
has been a finding of guilt against the individual or entity by a Federal, State, or local
court,” or “a plea of guilty or nolo contendere by the individual or entity has been
accepted by a Federal, State, or local court.” Act § 1128(i)(1), (2), (3) (42 U.S.C.

§ 1320a-7(i)(1), (2), (3)). Petitioner’s guilty plea was accepted by the district court, and
she was found guilty pursuant to her plea. The district court issued a judgment of
conviction and sentenced Petitioner for the offense of which she was convicted. I
conclude that Petitioner was convicted of a criminal offense within the meaning of the
Act.

Petitioner disputes that her conviction for introducing misbranded inhalation drugs into
interstate commerce was related to the delivery of an item or service under Medicare or a
state health care program. I have considered Petitioner’s arguments and find they are
without merit. I conclude that the undisputed facts establish the requisite connection or
nexus between Petitioner’s criminal offense and the delivery of a health care item or
service under Medicare or a state health care program.

Petitioner argues that the I.G. has presented no facts to establish a nexus or connection
between her conviction and Medicare or a state health care program. Petitioner argues
that the offense to which she pled guilty does not on its face refer to Medicare or other
covered programs. P. Br. at 8. Petitioner argues further that the district court’s judgment
nowhere states that Medicare or Medicaid was ever billed for the inhalation drugs. P. Br.
at 9. The charge of which Petitioner was convicted does not refer to Medicare or
Medicaid or contain an element related to the delivery of an item or service under such
programs. However, the Departmental Appeals Board (the Board) has long held that the
statutory terms of an offense do not control whether that offense is “related to” the
delivery of a health care item or service under Medicare or a state health care program for
purposes of an exclusion pursuant to section 1128(a)(1) of the Act. Dewayne Franzen,
DAB No. 1165 (1990) (inquiry is whether conviction is related to Medicaid fraud, not
whether the petitioner was convicted of Medicaid fraud). Rather, an ALJ must examine
whether there is a “common sense connection or nexus between the offense and the
delivery of an item or service under the program.” Scott D. Augustine, DAB No. 2043 at
5-6 (2006) (citations omitted); Berton Siegel, D.O., DAB No. 1467 (1994). To determine
whether there is a nexus or common-sense connection between the offense and the
delivery of an item or service under Medicare or Medicaid, “evidence as to the nature of
an offense may be considered,” including “facts upon which the conviction was
predicated.” Siegel, DAB No. 1467 at 6-7. Therefore it is necessary for me to examine
the circumstances surrounding Petitioner’s conviction to determine whether it was
program-related. Siegel, DAB No. 1467 at 6-7; Franzen, DAB No. 1165 at 6 (finding
that an ALJ’s “task is to examine all relevant conduct to determine if there is a
relationship between the judgment of conviction and the Medicaid program.”)

In this case, the nexus between the offense of which Petitioner was convicted and the
Medicare program is obvious from the plea agreement she signed. The plea agreement
specifically states:

The parties agree to the following factual basis for this plea:

[Petitioner] was employed as a pharmacist at National
Respiratory Services [NRS]. It was her responsibility to
prepare medication for patients and ensure that the
appropriate medications were sent out to patients. In the
course of her employment, [Petitioner] caused compounded
medications to be sent out to patients which were adulterated
(i.e. sub-potent and non-sterile) and misbranded. This
medication was then billed to Medicare as if non-
compounded FDA approved (commercially manufactured)
medication was being provided.

1.G. Ex. 3 at 1-2 (emphasis added). Therefore, Petitioner admitted in her plea agreement
that the misbranded drugs which she, a pharmacist, caused or permitted to be distributed
to patients were billed to Medicare. Petitioner’s confession in her plea agreement clearly
shows a nexus between Petitioner’s offense and the Medicare program. Petitioner cannot
now disavow the admissions she made as part of her plea agreement before the district
court. Petitioner’s criminal conviction by the federal district court, evidenced by the
judgment of conviction, was based upon Petitioner’s guilty plea which was supported by
the foregoing admission of her criminal conduct. The judgment of the district court and
the bases for that judgment are not reviewable by me or subject to collateral attack by
Petitioner in this forum. 42 C.F.R. § 1001.2007(d).

Further evidence of the nexus is the fact that Petitioner agreed in her plea agreement that
the government would inform the court “that it should set restitution in the amount of
$193,931.10 jointly and severally with the co-defendants payable to the Centers for
Medicare and Medicaid Services.” I.G. Ex. 3 at 3. The fact that the district court entered
an amended judgment in which it ordered Petitioner to pay restitution in the amount of
$20,000 to CMS is further evidence of a nexus between Petitioner’s criminal conduct and
the Medicare program. Petitioner notes that the original court judgment did not order any
restitution and argues that the restitution imposed in the amended judgment was a
“compromise” to avoid further litigation costs, not based on the facts of the case and her
conduct as a pharmacist. P. Br. at 5. But Petitioner’s rationalization for why she agreed
to make restitution is of no avail. In exclusion cases, restitution has long been considered
a reasonable measure of program loss and evidence of the nexus between the offense and
the program to which restitution is to be made. Juan de Leon, Jr., DAB No. 2533 at 5
(2013); Craig Richard Wilder, DAB No. 2416 at 9 (2011); Jason Hollady, M.D., DAB
No. 1855 (2002). Furthermore, the amended judgment is not subject to collateral attack
in this forum or review by me. 42 C.F.R. § 1001.2007(d).

Petitioner argues that the offense to which she pled guilty is a strict liability offense that
does not require that an individual act knowingly or willfully. The gist of the argument is
that there is no judicial finding from the criminal case that Petitioner ever intended to
defraud or adversely affect Medicare or Medicaid. Petitioner argues that she had no
knowledge of the fraud committed by NRS administrators and she did not participate in
any scheme to defraud Medicare. She argues she had no duty to Medicare recipients
related to the inhalant medication she compounded. She argues she made no
misrepresentations. RFH; P. Br. at 9-13. I accept as true for purposes of summary
judgment that Petitioner never intended to defraud Medicare or Medicaid and that she did
not knowingly participate in any scheme to defraud, made no misrepresentations, and had
no specific duty to Medicare recipients. However, these facts and Petitioner’s arguments
do not establish a genuine dispute as to any material fact or a defense. “Section
1128(a)(1) does not require that the individual must intend to commit a criminal offense,
or indeed fraud, for an exclusion to be proper.” Franzen, DAB No. 1165 at 8.
Petitioner’s intent is simply not material under section 1128(a)(1) of the Act. Section
1128(a)(1) of the Act also “does not require any knowledge on the part of a petitioner of
the relationship between the offense and the program.” Lyle Kai, R.Ph., DAB No. 1979
at 7 (2005). In Kai, the Board found “irrelevant” whether the petitioner knew that
Medicaid was being billed, his specific role in the scheme, and the degree of his
responsibility. Kai, DAB No. 1979 at 7. All that is required for a criminal offense to be
program-related is that there is some nexus between the offense of which one is convicted
and the delivery of an item or service under Medicare or a state health care program.
There is nothing in the statutory language of section 1128(a)(1) that imposes a
requirement of “intent.” Franzen, DAB No. 1165; Kai, DAB No. 1979. A nexus exists
in this case between the offense of which Petitioner was convicted and Medicare as
shown by the language of her plea agreement. Petitioner pled guilty to the offense of
introducing misbranded inhalation drugs into interstate commerce and the drugs were
billed to Medicare. I accept as true for purposes of summary judgment that Petitioner did
not know at the time that some of the drugs were being billed to Medicare. However, her
lack of knowledge of the billing at the time is no defense in this case.
10

Petitioner argues that the I.G.’s letters of May 29, 2013, July 3, 2013, and August 5,
2013, reflect that the I.G. initially imposed a mandatory exclusion under section 1128(a);
but then determined exclusion should be permissive under section 1128(b)(1); and finally
determined that no exclusion was appropriate. Petitioner asserts that the I.G.’s prior
letters reflect that the I.G. determined in 2013 that there was no commonsense connection
between Petitioner’s conviction and the Medicare program, and nothing changed in 2014
that created that connection. P. Br. at 12. For purposes of summary judgment, I draw all
inferences in favor of Petitioner. Therefore, based on the I.G. letters from 2013, I infer
that the I.G. determined that exclusion was not appropriate under either sections 1128(a)
or (b)(1) of the Act in August 2013. However, the evidence does not permit any more
specific inference as to the motives or reasoning of the I.G. Drawing the inference in
Petitioner’s favor does not, however, impact the decision in this case. Regardless of the
1.G.’s reasoning in 2013 when the I.G. determined not to exclude Petitioner, Congress has
mandated through section 1128(a)(1) that on facts such as the undisputed facts of this
case, Petitioner be excluded. The I.G. has no discretion under the Act not to exclude
Petitioner once the elements of section 1128(a)(1) are satisfied, as they are by the
undisputed facts in this case. The fact that the 1.G. waited a year until July 31, 2014, to
notify Petitioner of her exclusion also is not a basis for relief for Petitioner. The Act and
the regulations do not dictate when the I.G. must impose an exclusion. Kailash C.
Singhvi, M.D., DAB No. 2138 at 4-5 (2007). The Board and I have no authority to
review the timing of the I.G.’s imposition of an exclusion or to change the effective date
of the exclusion. Randall Dean Hopp, DAB No. 2166 (2008); Singhvi, DAB No. 2138;
42 C.F.R. § 1001.2007(a)(1).

4. The minimum period of exclusion under section 1128(a) is five
years.

5. Petitioner’s exclusion for five years is not unreasonable as a matter
of law.

I have concluded that there is a basis to exclude Petitioner pursuant to section 1128(a)(1)
of the Act. Therefore, Petitioner must be excluded for a minimum period of five years
pursuant to section 1128(c)(3)(B) of the Act. The I.G. has no discretion to impose a
lesser period, and I may not reduce the period of exclusion below five years. Petitioner
concedes that, if exclusion is mandated under section 1128(a), there is no review of the
five-year period of exclusion. P. Br. at 2.

Petitioner states that she is the sole provider of her family. She asserts that she has 25
years of experience as a pharmacist and had no professional misconduct prior to her
conviction. She states that the exclusion prohibits her from employment in the healthcare
field, where her pharmacy experience and knowledge could benefit employers and
patients in Kentucky. RFH at 5, 6. I appreciate that an exclusion will adversely impact
Petitioner’s ability to obtain employment and provide for her family. But the five-year

11

period of exclusion is the minimum period authorized by Congress and I have no
authority to reduce the period of exclusion.

Exclusion is effective 20 days from the date of the I.G.’s written notice of exclusion to
the affected individual or entity. 42 C.F.R. § 1001.2002(b).

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,

Medicaid, and all other federal health care programs for the minimum statutory period of
five years, effective August 20, 2014.

/s/
Keith W. Sickendick
Administrative Law Judge