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                              SPS Home Health Services, Inc., DAB CR5375 (2019)
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SPS Home Health Services, Inc., DAB CR5375 (2019)








  
  
    

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





SPS Home Health Services, Inc.,
(CCN:  14-7942),
Petitioner,
v.
Centers for Medicare & Medicaid Services,
Respondent.
Docket No. C-16-191Decision No. CR5375July 16, 2019

        
              
    

      DECISION
The Centers for Medicare & Medicaid Services (CMS) imposed a civil money penalty of $6,000 per day from October 14, 2015 through December 15, 2015 against Petitioner, SPS Home Health Services, Inc., for violation of a condition of participation. For the reasons set forth below, I affirm CMS’s determination to impose a Civil Money Penalty (CMP), but modify the amount of the CMP to $3,000 per day.
I. Background
Petitioner is a home health agency (HHA) enrolled as a provider of services to Medicare beneficiaries in the state of California. Following a September 3, 2015 survey, CMS notified Petitioner that it was not in substantial compliance with multiple conditions of participation requirements for HHAs under three regulatory categories: 42 C.F.R. §§ 484.10 (patients’ rights), 484.18 (acceptance of patients, plan of care and medical supervision), and 484.36 (home health aide services). CMS Exhibit (Ex.) 1 at 1; *see also* CMS Ex. 4. CMS directed Petitioner to submit a Plan of Correction (POC) for each of
**Page 2**
the cited deficiencies. CMS Ex. 1 at 1. CMS warned Petitioner that if it did not achieve substantial compliance by October 18, 2015, CMS would impose a CMP in the amount of up to $6,000 per day until it found Petitioner to be in substantial compliance. CMS Ex. 1 at 2. Petitioner submitted a POC asserting that the deficiencies had been corrected as of September 28, 2015. CMS Ex. 4.
As a result, state surveyors conducted a revisit survey on October 14, 2015. CMS Ex. 2; *see also* CMS Ex. 20. The surveyors found that Petitioner had corrected deficiencies in two out of the three regulatory categories at issue in the first survey, but remained out of compliance with 42 C.F.R. § 484.36 (home health aide services). The surveyors specified Petitioner was not in compliance with Tags G224 and G225 because it failed to ensure a registered nurse prepared written instructions for the home health aides, or ensure the home health aides provided care and/or services as directed by a home health aide care plan. CMS Ex. 20 at 3-4.
On November 4, 2015, CMS notified Petitioner that, based on the findings of noncompliance, it would impose a CMP of $6,000 per day beginning October 14, 2015.  CMS Ex. 2 at 1-2. The agency warned it would terminate Petitioner’s provider agreement unless Petitioner achieved substantial compliance before March 3, 2016. CMS also notified Petitioner that it was precluded from operating home health aide training and competency evaluation programs for two years and invited Petitioner to submit a second POC. *Id.*at 3-4. Petitioner did so, asserting it would return to substantial compliance on November 23, 2015. CMS Ex. 20.
Surveyors conducted a second revisit survey on December 16, 2015 and determined that Petitioner had returned to substantial compliance with the conditions of participation for HHAs. On February 10, 2016, CMS issued a letter notifying Petitioner that it rescinded Petitioner’s termination but imposed a per-day CMP of $6,000 from October 14, 2015 through December 15, 2015, for a total CMP of $378,000. CMS Ex. 3; *see also* CMS Ex. 28.
On December 17, 2015, Petitioner timely sought a hearing before an administrative law judge (ALJ) to dispute CMS’s determination. Petitioner attached 11 exhibits to its hearing request (P. Exs. A-K). ALJ Scott Anderson was initially designated to hear and decide this case. On December 29, 2015, he issued an Acknowledgment and Pre-Hearing Order (Pre-hearing Order) that set a schedule for the submission of the parties’ arguments and exhibits. CMS submitted a brief (CMS Br.) and 37 proposed exhibits (CMS Exs. 1-37) including the written direct testimony of three witnesses. Petitioner submitted a brief (P. Br.) and two additional proposed exhibits (P. Exs. 1-2), including the written direct testimony of one witness. On August 25, 2017, this matter was transferred to me to hear and decide.
**Page 3**
Neither party objected to the opposing party’s proposed exhibits. I therefore admit CMS Exs. 1-37 and P. Exs. A-K and 1-2 into the record. While the parties submitted written direct witness testimony, neither party requested to cross-examine the opposing party’s witnesses. Therefore, a hearing is not necessary and I issue this decision on the basis of the record provided. Pre-hearing Order at 6; Civ. Remedies Div. Pro. 19(d).
II. Issues
Whether CMS had a legitimate basis to impose a CMP; and
		Whether the CMP proposed by CMS is reasonable.
III. Applicable Law
The Social Security Act (Act) sets forth requirements for home health agencies (HHA) to participate in the Medicare program and authorizes the Secretary of Health and Human Services (Secretary) to promulgate regulations implementing these statutory provisions. Act §§ 1861(m) and (o), and 1891 (42 U.S.C. §§ 1395x(m), (o), 1395bbb). The Secretary’s regulations governing HHA participation in the Medicare program are found at 42 C.F.R. part 484.
In order to participate in the Medicare program and obtain reimbursement for services provided to beneficiaries, an HHA must comply with all applicable conditions of participation specified in 42 U.S.C. § 1395bbb(a) and 42 C.F.R. part 484. 42 U.S.C. § 1395x(o)(6); *A.M. Home Health Servs., Inc.*, DAB No. 2354 at 1 (2010). Each HHA must sign a Medicare provider agreement which subjects it to unannounced surveys performed by state or local government agencies. 42 U.S.C. §§ 1395cc(a), 1395bbb(c)(1); 42 C.F.R. § 488.10. “The survey process is the means to assess compliance with Federal health, safety, and quality standards.” 42 C.F.R. § 488.26(c)(1).
HHAs are obligated to provide quality care to their patients by ensuring the home health aides they employ are able to carry out directions and deal effectively with the demands of the job, and who are closely supervised to ensure their competence in providing care. 42 C.F.R. § 484.36. Specific standards for training, evaluation, assignment of duties, and supervision of home health aides are set forth in detail. *Id.*
State agencies routinely conduct standard surveys of HHAs, but where a standard survey reveals the HHA to have provided substandard care, that HHA “. . . shall be subject to an extended survey to review and identify the policies and procedures which produced such substandard care and to determine whether the agency has complied with the conditions of participation.” 42 U.S.C. § 1395bbb(c)(2)(D). Based on the extended survey results, the surveying state agency will then certify whether the HHA has returned to compliance with the conditions of participation. 42 C.F.R. §§ 488.20, 488.24, 488.26.
**Page 4**
The state agency will certify that an HHA is not in compliance with the conditions of participation when the deficiencies are “of such character as to substantially limit the provider’s . . . capacity to furnish adequate care or which adversely affect the health and safety of patients.” 42 C.F.R. § 488.24(b). Whether or not there is compliance with a condition of participation depends upon “the manner and degree to which the provider . . . satisfies the various standards within each condition.” 42 C.F.R. § 488.26(b). The governing regulations require State surveyors to “directly observe the actual provision of care and services to residents and/or patients, and the effects of that care, to assess whether the care provided meets the needs of individual residents and/or patients.” 42 C.F.R. § 488.26(c)(2).
For deficiencies that do not immediately jeopardize the health and safety of the individuals for whom an agency furnishes items and services, CMS may impose an intermediate sanction, such as a CMP that will not exceed $10,000 for each day of noncompliance, in lieu of terminating the agency’s certification. 42 U.S.C. § 1395bbb(e)(2), (f)(2)(A)(i); 42 C.F.R. § 488.845. “If, after such a period of intermediate sanctions, the agency is still no longer in compliance with the requirements specified in [42 U.S.C. § 1395x(o)], the Secretary shall terminate the certification of the agency.” 42 U.S.C. § 1395bbb(e)(3).
CMS may impose a CMP against an HHA for either the number of days the HHA is not in compliance with one or more conditions of participation, or for each instance that an HHA is not in compliance, regardless of whether the HHA’s deficiencies pose immediate jeopardy. 42 C.F.R. § 488.845(a)(1). The regulations allow for the imposition of CMPs in the middle range between $1,500 and $8,500 per day for a condition-level deficiency that does not constitute immediate jeopardy but are “directly related to poor quality patient care outcomes.” 42 C.F.R. § 488.845(b)(4). The regulations set out factors that are considered in determining the appropriate amount of a civil money penalty. 42 C.F.R. § 488.845(b)(1). These factors are:
The factors set out at § 488.815.
		The size of an agency and its resources.
		Accurate and credible resources, such as PECOS, Medicare cost reports and Medicare/Medicaid claims information that provide information on the operation and resources of the HHA.
		Evidence that the HHA has a built-in, self-regulating quality assessment and performance improvement system to provide proper care, prevent poor outcomes, control patient injury, enhance quality, promote safety,
**Page 5**
and avoid risks to patients on a sustainable basis that indicates the ability to meet the conditions of participation and to ensure patient health and safety.
42 C.F.R. § 488.845(b)(1).
The factors to be considered in selecting sanctions listed at 42 C.F.R. § 488.815 are:
The extent to which the deficiencies post immediate jeopardy to patient health and safety.
		The nature, incidence, manner, degree, and duration of the deficiencies or noncompliance.
		The presence of repeat deficiencies, the HHA’s overall compliance history and any history of repeat deficiencies at either the parent or branch location.
		The extent to which the deficiencies are directly related to a failure to provide quality patient care.
		The extent to which the HHA is part of a large organization with performance problems.
		An indication of any system-wide failure to provide quality care.
42 C.F.R. § 488.815.
If CMS imposes termination or a CMP, an HHA may request a hearing before an ALJ to dispute CMS’s action. 42 U.S.C. §§ 405(b), 1320a-7a(b)(2), 1395cc(h)(1), 1395bbb(c)(1); 42 C.F.R. §§ 488.845(c)(2), 498.3(b)(8), (13), 498.5(b). I review CMS’s determination of noncompliance and the penalty imposed *de novo*. *CarePlex of Silver Spring*, DAB No. 1683 (1999); *see also Claiborne-Hughes Health Ctr. v. Sebelius*, 609 F.3d 839, 843 (6th Cir. 2010) (noting that on review, the Departmental Appeals Board “reviewed the finding under the *de novo* standard that the ALJ would have applied.”). CMS must make a prima facie case before me that the HHA failed to comply substantially with federal participation requirements; should it succeed, an HHA can only prevail by proving its substantial compliance by a preponderance of the evidence. *See Hillman Rehab. Ctr.*, DAB No. 1611 at 8 (1997); *see also Batavia Nursing & Convalescent Inn*, DAB No. 1911 (2004); *Batavia Nursing & Convalescent Ctr.*, DAB No. 1904 (2004); *Emerald Oaks*, DAB No. 1800 (2001); *Cross Creek Health Care Ctr.*, DAB No. 1665 (1998).
**Page 6**
IV. Findings of Fact, Conclusions of Law, and Analysis1
CMS argues that Petitioner’s failure to comply with two standards set forth at 42 C.F.R. § 484.36 demonstrates its noncompliance with the condition of participation, and that the $6,000 per day CMP proposed by CMS is reasonable. CMS Br. at 8‐9. Petitioner does not contest its noncompliance; instead, it first contends that because its deficiencies did not rise to the level of immediate jeopardy to its patients, CMS was precluded from assessing a CMP where it had already terminated Petitioner’s provider agreement. P. Br. at 4-5. Petitioner alternatively argues that a lower-range CMP should be imposed. *Id.* at 6-8. Finally, Petitioner believes any CMP should only be imposed through November 23, 2015, the date of compliance in Petitioner’s plan of correction. *Id.* at 9-10. As I explain below, I find CMS had a basis to impose a CMP and also find the duration of noncompliance alleged by CMS to be supported by the evidence of record. However, I also find a reduction in the total amount of the CMP is warranted.
***1. THIS ONE CMS had a legitimate basis to impose a CMP because Petitioner was not in substantial compliance with the condition of participation set forth at 42 C.F.R. § 484.36.***
As a basis to impose a CMP, CMS relies on the results of three surveys conducted by IDPH on September 3, 2015, September 15, 2015, and October 14, 2015, to determine Petitioner was not in substantial compliance with the condition of participation set forth at 42 C.F.R. § 484.36 from October 14, 2015 to December 15, 2015. Specifically, the surveyors found Petitioner failed to comply with the conditions enumerated at Tags G224 and G225 with respect to two patients, identified herein as Patient No. 1 and Patient No. 2. CMS Br. at 8-9. I have reviewed the evidence of record and find it supports CMS’s determination that Petitioner was not in compliance with the condition of participation at 42 C.F.R. § 484.36.
**Patient No. 1**
Patient No. 1’s primary diagnosis was joint pain in the left leg. A home health care aide visited Patient No. 1 on September 8, 2015, September 15, 2015, and September 22, 2015. According to visit notes, that aide provided “range of motion” care to the patient. CMS Ex. 24 at 16, 17. However, Patient No. 1’s home health aide care plan for that period provided no instructions for the aide to provide “range of motion” care. *Id.* at 13. Patient No. 1’s care plan for that time period also required the home health aide to provide the following services at every visit: shower with chair, shampoo, nail care, shave and linen change. *Id.* at 4, 13.
**Page 7**
Despite these mandates, one of Petitioner’s home health aides failed to provide Patient No. 1 with these services. CMS Ex. 20 at 7; CMS Ex. 24 at 15-17. Visit notes from September 8, 2015 and September 15, 2015 demonstrate the home health aide failed to provide a shower, shampoo, nail care, shave, or linen change to Patient 1, while visit notes from September 22, 2015 reflect the home health aide failed to provide Patient No. 1 a shower, shampoo, nail care, or shave. CMS Ex. 24 at 15-17.
**Patient No. 2**
Patient No. 2’s primary diagnosis was unspecified joint pain. CMS Ex. 25 at 13. For unclear reasons, Patient No. 2’s care plan from August 13, 2015 to October 11, 2015 specified the frequency of visits to be made by a home health aide, but not the specific tasks that aide was to perform. CMS Ex. 20 at 5-6; CMS Ex. 25 at 7. Nevertheless, a home health care aide visited Patient No. 2 on September 4, 2015, September 8, 2015, September 15, 2015, September 22, 2015, September 29, 2015, and October 6, 2015. During these visits, the home health aide provided different services during each visit, but none were provided for in Patient No. 2’s care plan. CMS Ex. 20 at 5-6; CMS Ex. 25 at 15-20.
These examples demonstrate Petitioner failed to ensure that its home health aides were being provided with instructions and care plans for the care they were giving to Petitioner’s patients. Furthermore, even when the home health aides had instructions, Petitioner did not ensure that the aide provided care consistent with those instructions.
For both patients, Petitioner’s home health aides repeatedly provided unnecessary care, and in the case of Patient No. 1, failed to provide the care required by that patient’s care plan. CMS argues that home health aides are not certified to assess a patient’s needs and could have injured one or both of the patients surveyed by providing services not ordered by a qualified health care provider. CMS Br. at 9-10.
Petitioner, by contrast, does not contest these facts or argue they fail to show non-compliance.2
 P. Br. at 4-10. Accordingly, I have no difficulty concluding Petitioner was not in compliance with the condition for participation set forth at 42 C.F.R. § 484.36, identified under Tags G224 and G225, during the relevant period.
**Page 8**
***2. CMS was authorized to impose a per-day CMP under the applicable regulations.***
Rather than dispute the deficiency finding, Petitioner instead argues that CMS was not authorized to impose a CMP at all. P. Br. at 4-5. Petitioner contends that the regulations do not permit CMS to simultaneously impose a CMP while terminating its provider agreement where the deficiency in question does not rise to the level of immediate jeopardy. P. Br. citing 42 C.F.R. § 488.830. Petitioner argues that CMS’s November 4, 2015 notice imposed both a CMP and terminated Petitioner’s provider agreement, making the CMP invalid. P. Br. at 4-5; CMS Ex. 2.
It is true that the applicable regulation specifies that where an HHA is found to be non-compliant, “CMS will: (1) Terminate the HHA’s provider agreement; or (2) Impose one or more alternative sanctions [including a CMP] as an alternative to termination . . . .” 42 C.F.R. § 488.830(a) (emphasis added).
However, Petitioner’s argument fails because it mischaracterizes CMS’s notice letter, which states:
Unless your agency achieves substantial compliance before **March 3, 2016**, CMS will terminate your agency’s provider agreement . . . .
CMS Ex. 2 at 2 (emphasis in original). The notice letter clearly indicates that CMS had not yet terminated Petitioner’s provider agreement, but intended to do so if Petitioner failed to achieve substantial compliance before March 3, 2016. *Id.* CMS subsequently determined that Petitioner returned to substantial compliance on December 16, 2015. CMS Ex. 3. Therefore, termination of Petitioner’s provider agreement never occurred and CMS imposed the CMP as the sole sanction in this case.3
  Petitioner’s claim is without merit.
**Page 9**
***3. I affirm the duration of the CMP period because I have no jurisdiction to review CMS’s discretion in determining when to conduct revisit surveys, and because no other facts of record suggest the delay was otherwise improper.***
Petitioner attacks the duration of the CMP period, arguing that CMS improperly delayed its second revisit survey, which occurred on December 16, 2015, although Petitioner had asserted its return to compliance on November 23, 2015. P. Br. at 9-10. Petitioner points out that its earlier assertions of returning to compliance had been met with a swifter response by the state surveyors, and complains that the three-week delay following its November 19, 2015 submission of a plan of correction unfairly prejudiced Petitioner, resulting in a much larger CMP. *Id.*
CMS asserts that IDPH could not conduct a revisit any earlier. CMS Br. at 14. But I need not resolve this dispute between the parties, because I do not have jurisdiction to review the timing of the state agency’s revisit survey. 42 C.F.R § 498.3(d)(15) (specifying the decision by a state survey agency as to when to conduct a survey is not an initial determination subject to ALJ jurisdiction).
It is conceivable a different record might allow a petitioner to adduce facts that would demonstrate prejudicial delay by a surveyor or CMS that would warrant a reduction in duration of a CMP period. But no such facts are present here. Instead, the record reflects Petitioner was itself in part responsible for the increased period of duration, and that CMS actually selected a later start date for the CMP than it could have, to Petitioner’s benefit.
IDPH first advised Petitioner of numerous deficiencies resulting from a September 3, 2015 survey visit, and gave Petitioner until October 18, 2015 to achieve substantial compliance. CMS Ex. 1 at 2. Petitioner claimed to have corrected the identified deficiencies as of September 28, 2015, but a revisit survey on October 14, 2015 demonstrated persistent deficiencies that were at issue before me.  CMS Ex. 2. To Petitioner’s credit, CMS opted to start the CMP period only on October 14, 2015, the date of the revisit survey, over two weeks after Petitioner’s mistakenly asserted date of return to compliance.
If Petitioner had been more concerned with correcting the identified deficiencies in the first place, it would have received a much lower CMP, or perhaps none at all. It cannot receive multiple opportunities to return to compliance and then complain when the state agency does not jump into action the moment it finally chooses to do so. Accordingly, I find the state agency’s decision as to when to conduct the revisit survey that occurred on December 16, 2015 to be well within its discretion and not otherwise subject to my review. CMS reasonably selected a duration for the CMP period it imposed.
**Page 10**
***4. A significant CMP is warranted in this case, but I do not find a $6,000 per day penalty to be reasonable.***
Petitioner lastly argues that the CMP should be significantly reduced because it is “excessively punitive.” P. Br. at 5-8. CMS asserts that the CMP it selected is reasonable because it is near the middle range of the penalties allowed under 42 C.F.R. § 488.845(b)(4)4
 and otherwise justified by the factors referenced in 42 C.F.R. § 488.815. CMS Br. at 11-14.
Specifically, CMS contends Petitioner’s non-compliance reflected a system-wide failure to provide quality care because “[a]t both the September and October surveys, in almost every record the surveyors reviewed they identified failures by the agency to provide the care required by the patients.” *Id.* at 13-14. CMS also points out that the deficiencies at issue were directly related to failure to provide quality patient care, because patients either failed to receive the care they required or received care that was not ordered by a registered nurse or physician. *Id.* at 13. Lastly, CMS asserts the deficiencies were not isolated because they “occurred repeatedly at numerous [home health] aide visits in multiple patient records.” CMS Br. at 12-14.
Petitioner asserts that the CMP should be in the lower range of penalties found at 42 C.F.R. § 488.845(b)(5) because the deficiencies are “related to documentation issues that have not affected the quality of care received by [Petitioner’s] patients.” P. Br. at 6. Petitioner also cites its lack of sanction history and asserts there was no evidence of a system-wide failure to provide care. *Id.* at 7. Lastly, Petitioner asserts that it is a small agency and generates approximately $2,600 per day in gross revenue and therefore could not afford to pay a $6,000 per-day CMP. P. Br. at 8, citing P. Ex. 2.
CMS did not file a reply brief in this matter, leaving Petitioner’s assertions as to its sanctions history, its size, and its financial resources unrebutted. Nevertheless, I have considered each of the regulatory factors argued by the parties and the record as a whole, and find that CMS appropriately imposed a penalty from the middle range found at 42 C.F.R. § 488.845(b)(4).
First, I reject Petitioner’s assertion that the deficiencies at issue did not affect the quality of care for its patients. Both Patient No. 1 and Patient No. 2 were put at risk of harm from either receiving care they should not have received, or by being deprived of care ordered by a physician or nurse. As CMS pointed out, Patient No. 1, who suffered from joint pain, received “range of motion” care that was not ordered; it is easy to imagine the harm that could have befallen Patient No. 1 directly resulting from this deficiency. CMS
**Page 11**
Br. at 9, citing CMS Ex. 20 at 6; CMS Ex. 35 at 2-3. I therefore concur with CMS that the cited deficiencies were directly related to poor quality patient care outcomes. A penalty in the middle range of $1,500 to $8,500 is appropriate.
Petitioner asserts the deficiencies were isolated and relatively minor, but the record does not support this view. The mere fact that no patients were actually harmed by Petitioner’s failure to ensure its home health aides complied with the requirement to follow a plan of care is simply good fortune; it does not indicate the deficiencies were minor. Moreover, it is not accurate to characterize the numerous deficiencies that arose over three survey visits as “isolated.” The record demonstrates deficiencies that occurred on multiple visits with multiple patients even after Petitioner was put on notice as to the nature of these deficiencies. *See* CMS Exs. 4, 20.
While I find that the deficiencies were significant, not isolated, and directly related to poor quality patient care, I disagree with CMS’s argument that the deficiencies were part of a system-wide failure to provide quality care. 42 C.F.R. § 488.815(f). A system-wide failure is a factor that indicates “the current HHA administration is not able to make the needed corrections [and] temporary management directed in-service and directed plan of correction may be crucial in order for the HHA to make necessary corrections to regain compliance.” 77 Fed. Reg. 67,068, 67,145 (Nov. 8, 2012).
CMS believes Petitioner’s noncompliance was system-wide because “in almost every record the surveyors reviewed they identified failures by the agency to provide the care required.” CMS Br. at 13-14. But in September 2015, the state agency surveyed a total of ten patients. Out of those ten patients, CMS noted deficiencies under 42 C.F.R. § 484.36 concerning four of those patients. CMS Exs. 7‐16. The October 2015 survey addressed a total of four patients, and found deficiencies concerning two of them. CMS Exs. 20-29.
This is evidence that the deficiencies were not isolated, which is not the same as finding system-wide noncompliance, a separate and distinct factor. As specified in the rulemaking history, a system-wide failure indicates an inability by facility management to make needed corrections without direction from outside the facility. 77 Fed. Reg. at 67,145. Neither CMS nor the state agency thought Petitioner needed outside direction to create a plan of correction. Instead, Petitioner eventually corrected the deficiencies after implementing a successful plan of correction of its own design. CMS has not presented evidence that the deficiencies at issue indicated a system-wide failure.
Turning to the other relevant factors addressed by the parties, I note the deficiencies before me did not result in a finding of immediate jeopardy. 42 C.F.R. § 488.815(a). I have discussed the nature, incidence, manner, degree, and duration of the deficiencies at length, and have found them significant, related directly to poor quality of patient care,
**Page 12**
not isolated and occurring in multiple instances, but not widespread enough to indicate a system-wide failure. *Id.* at § 488.815(b), (d), (f).
Petitioner attempts to rely on its compliance history, asserting it has never been subject to sanctions by CMS or the state agency. P. Br. at 7. However, that is not the same as having no history of prior deficiencies. *Id.* at § 488.815(c). As neither party has adequately addressed this factor, I have not considered it further. Petitioner does not appear to be a large organization with performance problems. *Id.* at § 488.815(e).
Finally, I have considered Petitioner’s argument that its size and resources warrant a lower CMP. P. Br. at 7-8; 42 C.F.R. § 488.845(b)(1). Petitioner has submitted evidence concerning its financial resources, which CMS has made no effort to address or rebut, specifically its 2015 federal tax returns, which reflect a total yearly gross income after deductions of $127,027. P. Ex. 1 at 1. Petitioner claims it generates only $350 in net income per day. P. Br. at 8. Petitioner also asserts by means of a sworn affidavit from its nursing supervisor, Marie Philidor, that it is a small, single-establishment agency that provides home health services to approximately 60 patients. P. Ex. 2. I find the evidence submitted by Petitioner establishes it is a small agency with limited resources, and that paying a $6,000 per-day CMP for a total penalty of $378,000 would significantly burden Petitioner’s ability to operate. The purpose and intent of sanctions as an alternative to termination of a HHA’s provider agreement, such as the imposition of CMPs, is to provide incentive for an HHA to correct noncompliance promptly, not to cause its financial failure. 77 Fed. Reg. at 67,068, 67,149-50.
Accordingly, I find that a CMP in the amount of $3,000 per day, for a total CMP of $189,000, is reasonable based on my review of the evidence of record and application of the relevant regulatory factors. This penalty falls squarely in the CMP range CMS believes to be appropriate and reflects the significant nature of the deficiencies at issue before me, while also taking into account the other regulatory factors I have discussed.
V. Conclusion
I conclude CMS had a valid basis to find Petitioner to be in noncompliance and to impose a CMP in lieu of termination. However, after considering the evidence of record and the appropriate regulatory factors, I conclude a $6,000 per-day CMP is unreasonable and modify it to $3,000 per day for the duration indicated by CMS.


          /s/
        Bill Thomas

                      Administrative Law Judge
      1. My findings of fact and conclusions of law are in bold italics. back to note 1
                      2. In its hearing request, Petitioner did make some effort to argue these actions by its home health aides did not warrant a finding of deficiency, and that the services provided were in fact verbally authorized by a physician, but now appears to have abandoned this claim in its merits briefing before me.  P. Hearing Req. at 5; P. Br. at 5 (“CMS improperly sanctioned [Petitioner] for its deficiencies . . . .”) (emphasis added). back to note 2
                      3. Even if CMS had eventually terminated Petitioner, CMS is not precluded from sequentially using both sanctions.  The regulations identify CMPs as an alternative sanction “[i]n addition to termination of the provider agreement . . . .”).  42 C.F.R. § 488.820(a) (emphasis added).  They also require CMS to terminate an HHA within six months of the last survey, where no immediate jeopardy is present and the terms of a plan of correction have not been met.  42 C.F.R. § 488.830(d).  Reading these provisions together, it is clear the drafters intended to allow CMS to use CMPs to incentivize non-compliant HHAs to achieve compliance within the six months preceding termination, not to force CMS to pick one remedy exclusively over the other.  See Consolidated Home Health, DAB No. 2878 (2018) (affirming ALJ decision upholding imposition of CMP and subsequent termination of a HHA). back to note 3
                      4. Referred to as the “Middle range of penalty,” the regulation sets a penalty range of $1,500 to $8,500 per day for noncompliance stemming from a “repeat and/or condition-level deficiency that does not constitute immediate jeopardy, but is directly related to poor quality patient care outcomes.”  42 C.F.R. § 488.845(b)(4). back to note 4 Back to top
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