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# Living Wisdom Home Health Agency, LLC, DAB CR5460 (2019)

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

### Living Wisdom Home Health Agency, LLC

### (CCN: 22-7565)

### Petitioner,

### v.

### Centers for Medicare & Medicaid Services.

### Docket No. C-17-62Decision No. CR5460November 4, 2019

### DECISION

Petitioner was not in compliance with 42 C.F.R. § 484.14,1 a Medicare condition for participation for a home health agency (HHA), from July 26 through November 24, 2016. There is a basis for imposing a civil money penalty (CMP) from July 26 through November 24, 2016; suspension of payments for new admissions (SPNA) from September 23 through November 24, 2016; and termination of Petitioner’s provider agreement and participation in Medicare effective November 25, 2016. The CMP imposed by CMS is reasonable.

### I. Background

Petitioner is an HHA located in Brockton, Massachusetts, that began participating in the Medicare program as a deemed-status provider of services (provider) on May 24, 2013. Joint Stipulation of Undisputed Facts (Jt. Stip.) ¶¶ 1-3. On July 26, 2016, the

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Massachusetts Department of Public Health (state agency) completed a survey of Petitioner and found that Petitioner did not meet the condition for Medicare participation found at 42 C.F.R. § 484.14 (Tag2 G122) and cited noncompliance under Tags G123, G124, G133, and G135. CMS Exhibit (Ex.) 1; Jt. Stip. ¶ 5.

CMS notified Petitioner on September 8, 2016, that it removed Petitioner’s deemed status as a provider and imposed the following enforcement remedies based on the July 26, 2016 survey findings: termination of Petitioner’s provider agreement on October 24, 2016, if Petitioner remained out of substantial compliance through that date; a SPNA effective September 23, 2016, if Petitioner remained out of substantial compliance through that date; and a CMP in the amount of $1,500 per day, effective July 26, 2016, and continuing until Petitioner returned to substantial compliance or its provider agreement was terminated. CMS Ex. 3 at 1, 4; Jt. Stip. ¶¶ 6-7. Petitioner was also advised that from July 26, 2016 through July 25, 2018, it was prohibited from providing a home health aide training and competency evaluation program (HHATCEP) or a home health aide competency evaluation program (HHACEP). CMS Ex. 3 at 5-6; Jt. Stip. ¶ 7. CMS directed Petitioner to submit a plan of correction and notified Petitioner of its right to request informal dispute resolution (IDR) and administrative law judge (ALJ) review. Jt. Stip. ¶ 8; CMS Ex. 3 at 2-4, 6-7.

On October 20, 2016, the state agency completed a revisit survey of Petitioner and again found that Petitioner did not meet the condition for Medicare participation found at 42 C.F.R. § 484.14 (Tag G122). The state agency found that Petitioner had not corrected three of the four deficient practices identified during the July 26, 2016 survey and cited noncompliance under Tags G123, G124 and G133. CMS Ex. 2; Jt. Stip. ¶ 10.

On October 24, 2016, Petitioner requested a hearing before an ALJ to challenge the involuntary termination of its provider agreement. Jt. Stip. ¶ 11. Petitioner’s hearing request was docketed as C-17-62. In November 9, 2016, the case was assigned to me for

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hearing and decision, and an Acknowledgement and Prehearing Order (Prehearing Order) was issued at my direction. There is no dispute that Petitioner’s request for hearing was timely and I have jurisdiction.

On October 28, 2016, CMS notified Petitioner that, due to Petitioner’s continuing noncompliance, the following alternative sanctions continued to be in effect: Petitioner’s provider agreement would be terminated on November 25, 2016; a SPNA effective September 23, 2016, continued until termination of Petitioner’s provider agreement on November 25, 2016; and a CMP effective July 26, 2016, in the amount of $1,500 per day continued until termination of Petitioner’s provider agreement on November 25, 2016. CMS Ex. 4 at 1-3; Jt. Stip. ¶ 12. The October 28, 2016 notice further informed Petitioner that, effective July 26, 2016 through November 25, 2018, it was prohibited from providing an HHATCEP or HHACEP. CMS Ex. 4 at 3. CMS also notified Petitioner of its right to request ALJ review. CMS Ex. 4 at 3-4.

On November 30, 2016, CMS informed Petitioner that CMS declined to reopen and revise its decision to terminate or authorize a second revisit because Petitioner failed to submit an acceptable plan of correction. CMS also informed Petitioner of the final remedies imposed: Petitioner’s provider agreement was terminated effective November 25, 2016; the SPNA ran from September 23 through November 24, 2016;3 and the CMP accrued from July 26 through November 24, 2016, and totaled $183,000. CMS Ex. 5.

On February 2, 2017, Petitioner’s motions to amend its hearing request were granted. As amended, Petitioner’s hearing request challenges both the involuntary termination of its provider agreement and the alternative sanctions imposed by CMS.

CMS filed a motion for summary judgment (CMS MSJ) and prehearing brief (CMS Br.) and CMS Exs. 1 through 7. Petitioner filed a prehearing brief (P. Br.), Petitioner’s exhibits (P. Exs.) 1 through 7, and a combined opposition to CMS’s motion for summary judgment and cross-motion for summary judgment (P. MSJ). Neither party objected to

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my consideration of the other party’s exhibits and CMS Exs. 1 through 7 and P. Exs. 1 through 7 are admitted as evidence.

### II. Discussion

**A. Applicable Law**

The Social Security Act (Act) sets forth requirements for HHAs participating in the Medicare and Medicaid programs, and authorizes the Secretary of Health and Human Services (Secretary) to promulgate regulations implementing the statutory provisions. Act §§ 1861(m) and (o), 1891 (42 U.S.C. §§ 1395x(m) and (o), 1395bbb). The Secretary’s regulations governing HHA participation in the Medicare program are found at 42 C.F.R. pt. 484. The conditions for participation are established by 42 C.F.R. pt. 484, subpts. B and C.

In order to participate in the Medicare program and obtain reimbursement for its services, an HHA must be in compliance with all applicable conditions of participation specified in the Act, including sections 1861(o) and (z) and 1891(a) (42 U.S.C. §§ 1395x(o), (z); 1395bbb(a)) and 42 C.F.R. pt. 484. 42 C.F.R. § 488.3(a); *A.M. Home Health Servs., Inc.*, DAB No. 2354 at 1 (2010); *Aspen Grove Home Health*, DAB No. 2275 at 1-2 (2009). Periodic review of compliance with the conditions of participation is required and accomplished through surveys by the appropriate state or local agency. Act §§ 1864, 1891(c) (42 U.S.C. §§ 1395aa, 1395bbb(c)). Based upon its survey, the state agency certifies either compliance or noncompliance of the surveyed provider. 42 C.F.R. §§ 488.20-.26.

The state agency must 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); *Aspen Grove*, DAB No. 2275 at 2; *CSM Home Health Servs.*, DAB No. 1622 at 6-7 (1997).

The Secretary is authorized to terminate the provider agreement of an HHA or impose intermediate sanctions against an HHA in violation of the conditions for participation. Act § 1891(e), (f) (42 U.S.C. § 1395bbb(e), (f))). CMS is authorized to terminate a provider agreement or impose a variety of “alternative sanctions,” including a CMP or SPNA, when the provider no longer meets the requirements of the Act or fails to meet the conditions of participation, among other grounds listed in the regulation. 42 C.F.R. §§ 488.820 - .845, 489.53(a)(3). CMS has the discretion and is authorized to terminate an HHA’s provider agreement, and may impose intermediate sanctions, based on a single

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condition-level deficiency. *Nightingale Home Healthcare, Inc.*, DAB No. 2784 at 2 (2017); *United Med. Home Care, Inc.*, DAB No. 2194 at 13-14 (2008); *Aspen Grove*, DAB No. 2275 at 3.

SPNAs are governed by the procedures set forth in 42 C.F.R. § 488.840. CMS may impose a SPNA on an HHA with a condition-level deficiency, even if the deficiencies do not pose immediate jeopardy. 42 C.F.R. § 488.840(a)(1). Once imposed, the SPNA remains in effect until CMS determines the HHA has achieved substantial compliance or terminates the HHA’s provider agreement. 42 C.F.R. § 488.840(b)(2)(ii); (c). Pursuant to 42 C.F.R. § 488.840(b)(1)(i), CMS must give the HHA notice of the SPNA before it takes effect and must include in the notice the nature of the noncompliance, the effective date of the SPNA, and the right to appeal the determination leading to the SPNA. In this case, there is no dispute that, on September 8, 2016, CMS notified Petitioner it was imposing a SPNA on Petitioner effective September 23, 2016, and that the notice included all pertinent information required by 42 C.F.R. § 488.840(b)(1)(i). CMS Ex. 3 at 1, 4; Jt. Stip. ¶¶ 6-8.

CMPs are governed by the procedures set forth in 42 C.F.R. § 488.845. CMS may impose a CMP against an HHA for each day of the HHA’s condition-level noncompliance or for each instance of the HHA’s condition-level noncompliance, even if the deficiencies do not pose immediate jeopardy. 42 C.F.R. § 488.845(a)(1). Once imposed, a per-day CMP remains in effect until CMS determines the HHA has achieved substantial compliance or terminates the HHA’s provider agreement. 42 C.F.R. § 488.845(d)(3)(ii), (4)(ii). CMS may not impose a per-day and per-instance CMP for the same deficiency. 42 C.F.R. § 488.845(a)(3), (d)(2). The maximum penalty authorized by statute and regulation is $10,000, whether per day or per instance. Act § 1891(f)(2)(A)(i) (42 U.S.C. § 1395bbb(f)(2)(A)(i)); 42 C.F.R. § 488.845(b)(2)(iii), (b)(6). A per-day CMP falls into one of three ranges, depending on the nature and seriousness of the HHA’s noncompliance. 42 C.F.R. § 488.845(b)(3)-(5). The upper CMP range, from $8,500 to $10,000 per day of noncompliance, is reserved for the most serious deficiencies that pose “immediate jeopardy” to patient health or safety. 42 C.F.R. § 488.845(b)(3). The middle CMP range, from $1,500 to $8,500 per day of noncompliance, applies to one or more repeat or condition-level, non-immediate jeopardy deficiencies that directly relate to poor quality patient care outcomes. 42 C.F.R. § 488.845(b)(4). The lower CMP range, from $500 to $4,000 per day of noncompliance, applies to repeat or condition-level, non-immediate jeopardy deficiencies that are related predominantly to structure-oriented or process-oriented conditions and not directly related to patient care outcomes. 42 C.F.R. § 488.845(b)(5). CMS is required to increase the amount of a per-day CMP when an HHA’s deficiencies from an earlier survey remain uncorrected at the revisit survey. 42 C.F.R. § 488.845(b)(8)(ii). Pursuant to 42 C.F.R. § 488.845(c)(1), CMS must give the HHA notice of a CMP, including the amount of the CMP, the basis for imposing the CMP, and the effective date of the CMP. In this case, there is no dispute that, on September 8, 2016, CMS notified Petitioner it was imposing a

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CMP on Petitioner effective July 26, 2016, and that the notice included all pertinent information required by 42 C.F.R. § 488.845(c)(1). CMS Ex. 3 at 1, 4-5; Jt. Stip. ¶¶ 6-8.

An HHA may request a hearing on the determination of noncompliance that is the basis for imposition of a CMP. 42 C.F.R. § 488.845(c)(2)(i). The scope of ALJ review of a CMP is specified in 42 C.F.R. § 488.845(h). If the ALJ concludes that a basis for imposing a CMP exists, the ALJ is limited to considering only the factors in 42 C.F.R. § 488.845(b) in determining the CMP amount. 42 C.F.R. § 488.845(h)(3). The ALJ may not reduce the penalty to zero or review the exercise of discretion by CMS to impose a CMP. 42 C.F.R. § 488.845(h)(1), (2). When the HHA requests a hearing to challenge a per-day CMP, CMS computes the total amount of the CMP and sends notice of this computation, along with the due date of the penalty and other pertinent information, when a final administrative decision is made. 42 C.F.R. § 488.845(e)(1), (3). The CMP is due 15 days from notice of the final administrative decision. 42 C.F.R. § 488.845(f).

Termination of a provider agreement is governed by the procedures set forth in 42 C.F.R. § 489.53. CMS may terminate a provider’s, such as Petitioner’s, participation in Medicare when the provider no longer meets the appropriate conditions for participation under the Act and 42 C.F.R. pt. 484. 42 C.F.R. § 489.53(a)(3). Pursuant to 42 C.F.R. § 489.53(d)(1), CMS must give the provider notice of termination at least 15 days before the effective date of termination. In this case, there is no dispute that CMS notified Petitioner on October 28, 2016, that Petitioner’s provider agreement would be terminated November 25, 2016. CMS Ex. 4 at 1-2; Jt. Stip. ¶ 12. There is also no dispute that CMS gave public notice by publication on November 7, 2016, as required by 42 C.F.R. § 489.53(d)(5). CMS Ex. 5 at 2.

The provider’s right to review includes rights to notice and a de novo hearing by an ALJ and judicial review. Act §§ 1866(h)(1); 205(b), (g); 1891(f)(2)(A); 1128A(c)(2)-(4), (e) (42 U.S.C. §§ 1395cc(h)(1); 405(b), (g); 1395bbb(f)(2)(A); 1320a-7a(c)(2)-(4), (e)); 42 C.F.R. §§ 488.810(g)(1); 488.845(c)(2); 498.3(b)(8), (13); 498.5(b). A hearing on the record, also known as an oral hearing, is required under the Act. *Crestview Parke Care Ctr. v. Thompson*, 373 F.3d 743, 748-51 (6th Cir. 2004). The hearing before an ALJ pursuant to 42 C.F.R. pt. 498 is a de novo proceeding. *The Residence at Salem Woods*, DAB No. 2052 (2006); *Cal Turner Extended Care Pavilion*, DAB No. 2030 (2006); *Beechwood Sanitarium*, DAB No. 1906 (2004); *Emerald Oaks*, DAB No. 1800 at 11 (2001). The standard of proof, or quantum of evidence required, is a preponderance of the evidence. CMS has the burden of coming forward with the evidence and making a prima facie showing of a basis for termination or alternative sanctions. Appellate panels of the Departmental Appeals Board (Board) have stated that CMS must come forward with “evidence related to disputed findings that is sufficient (together with any undisputed findings and relevant legal authority) to establish a prima facie case of noncompliance with a regulatory requirement.” *Evergreene Nursing Care Ctr.*, DAB No. 2069 at 7 (2007); *Batavia Nursing & Convalescent Ctr.*, DAB No. 1904 (2004);

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*see also* *Nightingale*, DAB No. 2784 at 11. “Prima facie” means generally that the evidence is “[s]ufficient to establish a fact or raise a presumption unless disproved or rebutted.” *Black’s Law Dictionary* 1228 (8th ed. 2004). CMS makes a prima facie showing if the credible evidence CMS relies on is sufficient to support a decision in its favor absent an effective rebuttal.

The Board has long held that Petitioner bears the ultimate burden of persuasion to show by a preponderance of the evidence that it was in compliance with conditions of participation or any affirmative defense. *Batavia Nursing & Convalescent Inn*, DAB No. 1911 (2004); *Batavia Nursing & Convalescent Ctr.*, DAB No. 1904, *aff’d*,*Batavia Nursing & Convalescent Ctr. v. Thompson*, 129 F. App’x 181 (6th Cir. 2005); *Emerald Oaks*, DAB No. 1800; *Cross Creek Health Care Ctr.*, DAB No. 1665 (1998); *Hillman Rehab. Ctr.*, DAB No. 1611 (1997) (remanding *Hillman Rehab Ctr.*, DAB CR419 (1996)), DAB CR500 (1997) (on remand), *rev’d*, DAB No. 1663 (1998), *aff’d*,*Hillman Rehab. Ctr. v. United States*, No. 98-3789 (GEB), 1999 WL 34813783 (D.N.J. May 13, 1999). However, only when CMS makes a prima facie showing of noncompliance, is the HHA burdened to show, by a preponderance of the evidence on the whole record, that it was in substantial compliance or had an affirmative defense. *Nightingale*, DAB No. 2784 at 11; *Evergreene*, DAB No. 2069 at 7. An HHA can overcome CMS’s prima facie case by either rebutting the evidence upon which that case rests or proving facts that affirmatively show compliance. “An effective rebuttal of CMS’s prima facie case would mean that at the close of the evidence the provider had shown that the facts on which its case depended (that is, for which it had the burden of proof) were supported by a preponderance of the evidence.” *Evergreene*, DAB No. 2069 at 7-8 (citations omitted).

**B. Issues**

Whether summary judgment is appropriate;

Whether there was a basis to impose alternative sanctions, including a CMP and SPNA, against Petitioner and to terminate Petitioner’s provider agreement as an HHA in the Medicare program; and

Whether the alternative sanctions are appropriate and reasonable.

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

My conclusions of law are set forth in bold text followed by my findings of undisputed fact and analysis.

**1. Summary judgment is appropriate.**

Both parties assert that summary judgment is appropriate in their favor.

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An HHA whose provider agreement has been terminated or against which a CMP has been imposed has a right to a hearing and judicial review pursuant to sections 1866(h), 1891(f)(2)(A), and 1128A(c)(2)-(4), (e) of the Act (42 U.S.C. §§ 1395cc(h); 1395bbb(f)(2)(A); 1320a-7a(c)(2)-(4), (e)) and 42 C.F.R. §§ 488.810(g)(1); 488.845(c)(2); 498.3(b)(8), (13); 498.5(b). A hearing on the record, also known as an oral hearing, is required under the Act. Act §§ 205(b), 1866(h)(1), 1891(f)(2)(A), and 1128A(c)(2)-(4) (42 U.S.C. §§ 405(b), 1395cc(h)(1), 1395bbb (f)(2)(A), 1320a-7a(c)(2)-(4)); *Crestview*, 373 F.3d at 748-51. A party may waive appearance at an oral hearing, but must do so affirmatively in writing. 42 C.F.R. § 498.66. Petitioner has not filed a written waiver of the right to appear and present evidence. Because Petitioner has not waived the right to oral hearing, disposition on the written record alone is not permissible unless summary judgment is appropriate.

Summary judgment is not automatic upon request, but is limited to certain specific conditions. The Secretary’s regulations at 42 C.F.R. pt. 498 that establish the procedure to be followed in adjudicating Petitioner’s case do not establish a summary judgment procedure or recognize such a procedure. However, the Board has long accepted that summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42 C.F.R. pt. 498. *See, e.g.*, *Ill. Knights Templar Home*, DAB No. 2274 at 3-4 (2009); *Garden City Med. Clinic*, DAB No. 1763 (2001); *Everett Rehab. & Med. Ctr.*, DAB No. 1628 at 3 (1997). The Board also has recognized that the Federal Rules of Civil Procedure do not apply in administrative adjudications such as this, but the Board has accepted that Fed. R. Civ. Pro. 56 and related cases provide useful guidance for determining whether summary judgment is appropriate. Furthermore, a summary judgment procedure was adopted as a matter of judicial economy within my authority to regulate the course of proceedings and made available to the parties in the litigation of this case by my Prehearing Orders, para. II.D.3. The parties were given notice by my Prehearing Order that summary judgment is an available procedural device and that the law as it has developed related to Fed. R. Civ. Pro. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any material fact for adjudication and/or the moving party is entitled to judgment as a matter of law. In determining whether there are genuine issues of material fact for trial, the reviewer must view the evidence in the light most favorable to the non-moving party, drawing all reasonable inferences in that party’s favor. The party requesting summary judgment bears the burden of showing that there are no genuine issues of material fact for trial and/or that it is entitled to judgment as a matter of law. Generally, the non-movant may not defeat an adequately supported summary judgment motion by relying upon the denials in its pleadings or briefs but must furnish evidence of a dispute concerning a material fact, i.e., a fact that would affect the outcome of the case if proven. *Mission Hosp. Reg’l Med. Ctr.*, DAB No. 2459 at 5 (2012) (and cases cited therein); *Experts Are Us, Inc.*, DAB No. 2452 at 5 (2012) (and cases cited therein); *Senior Rehab. & Skilled*

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*Nursing Ctr.*, DAB No. 2300 at 3 (2010) (and cases cited therein); *see also Anderson v. Liberty Lobby, Inc.*, 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment and an ALJ’s decision-making in deciding a summary judgment motion differ from that used in resolving a case after a hearing. On summary judgment, the ALJ does not make credibility determinations, weigh the evidence, or decide which inferences to draw from the evidence, as would be done when finding facts after a hearing on the record. Rather, on summary judgment, the ALJ construes the evidence in a light most favorable to the non-movant and avoids deciding which version of the facts is more likely true. *Holy Cross Vill. at Notre Dame, Inc.*, DAB No. 2291 at 5 (2009). The Board also has recognized that on summary judgment it is appropriate for the ALJ to consider whether a rational trier of fact could find that the party’s evidence would be sufficient to meet that party’s evidentiary burden. *Dumas Nursing & Rehab., L.P.*, DAB No. 2347 at 5 (2010). The Secretary has not provided in 42 C.F.R. pt. 498 for the allocation of the burden of persuasion or the quantum of evidence required to satisfy the burden. However, the Board has provided some persuasive analysis regarding the allocation of the burden of persuasion in cases subject to 42 C.F.R. pt. 498. *Batavia Nursing & Convalescent Ctr.*, DAB No. 1904.

There is no genuine dispute as to any material fact in this case. Petitioner does not dispute that it violated 42 C.F.R. § 484.14. Rather, Petitioner argues that its deficiencies did not rise to the condition level and thus do not support imposition of alternative sanctions or termination of its provider agreement. In the alternative, Petitioner argues that it corrected its noncompliance prior to the date of termination of its provider agreement, so the alternative sanctions should have ended when it returned to compliance and its provider agreement should not have been terminated. Finally, Petitioner argues that the CMP, if there is a basis for one at all, should be reduced. Even accepting as true, for purposes of summary judgment, all of Petitioner’s assertions of fact and drawing all inferences in favor of Petitioner, its arguments must be resolved against it as a matter of law. I conclude that summary judgment is appropriate.

**2. At least as early as July 26, 2016, Petitioner violated 42 C.F.R. § 484.14 (Tags G123 and G124) and 484.14(c) (Tag G133).4**

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**3. Petitioner’s violation of 42 C.F.R. § 484.14 (Tags G123 and G124) and 484.14(c) (Tag G133) substantially limited Petitioner’s capacity to furnish adequate care.**

**4. Petitioner was not in compliance with the condition of participation for HHAs established by 42 C.F.R. § 484.14 (Tag G122).**

**5. Petitioner’s noncompliance with the condition at 42 C.F.R. § 484.14 (Tag G122) began at least as early as July 26, 2016, and Petitioner has not averred facts from which it can be inferred that Petitioner returned to compliance before the revisit survey conducted October 20, 2016.**

**6. There was a basis to impose on Petitioner a CMP from July 26 through November 24, 2016, and a SPNA from September 23 through November 24, 2016.**

**7. The CMP imposed by CMS is appropriate to accomplish the regulatory purpose for imposing sanctions and is appropriate and reasonable.**

**8. There was a basis to terminate Petitioner’s provider agreement and participation in Medicare as an HHA effective November 25, 2016.**

**a. Facts**

The material facts are not disputed. The parties were informed by the Prehearing Order, para. II.D.3, that “a fact alleged and not specifically denied, may be accepted as true for purposes of a motion or cross-motion for summary judgment.” The observations of the surveyor recorded in the SODs are not disputed or rebutted by Petitioner, and they are accepted as credible and true for purposes of summary judgment. No objections were made to the documents offered by the parties, and their contents are also accepted as credible and true for purposes of summary judgment. Prehearing Order, ¶ II.D.3.

The surveyor recorded in the SOD for the survey completed on July 26, 2016, that the surveyor reviewed Petitioner’s organizational chart, which showed that Petitioner’s nurses were supposed to report to the director of clinical services, who in turn reported to the administrator. CMS Ex. 1 at 3.

The administrator told the surveyor that since February 2016, Petitioner used a staffing agency to supply skilled nursing visits to approximately 100 of Petitioner’s patients. CMS Ex. 1 at 3, 5, 8. Petitioner identified the staffing agency as Seaside Psych. P. Br.

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at 6; P. MSJ at 3. The surveyor recorded in the SOD that Petitioner had two directors of clinical services who shared the duties of the position. Both directors of clinical services informed the surveyor that they expected all of Petitioner’s nurses, including those employed by the staffing agency who performed skilled nursing visits for Petitioner’s patients, to contact either of them regarding any clinical or administrative concerns they had related to any of Petitioner’s patients they visited. CMS Ex. 1 at 3.

The surveyor reviewed Petitioner’s staff list and interviewed several nurses who worked for the staffing agency. CMS Ex. 1 at 3-5. Nurse #1 was interviewed by the surveyor, and she told the surveyor that she worked with Petitioner’s administrator and directors of clinical services to schedule staffing agency nurse visits. CMS Ex. 1 at 7, 8-9.

Nurse #2 told the surveyor that she worked for the staffing agency. She stated that she worked with Petitioner’s administrator and directors of clinical services to schedule client visits by staff agency nurses. However, Nurse #2 told the surveyor that the staffing agency’s owner was her supervisor. CMS Ex. 1 at 3, 5, 7, 9. Nurse #2 told the surveyor that she reported to the physician and staffing agency’s owner any clinical or administrative concerns arising from her visits to Petitioner’s patients, not Petitioner’s administrator or directors of clinical services. CMS Ex. 1 at 3-4, 5.

The surveyor interviewed Nurse #3. Nurse #3 told the surveyor that she worked for the staffing agency and performed skilled nursing visits for Petitioner’s patients. Nurse #3 identified Nurse #1, who was also employed by the staffing agency, as her supervisor. Nurse #3 told the surveyor that she could identify Petitioner’s administrator and two directors of clinical services, but she stated that she rarely spoke to them, perhaps as little as one time in the five months she worked with Petitioner’s patients. Nurse #3 stated that she previously worked with Nurse #1 at another HHA; Petitioner’s patients she saw were patients at the HHA where she previously worked; and she felt most comfortable reporting to Nurse #1 about those patients. CMS Ex. 1 at 4, 6. Nurse #3 also said that Nurse #1 was listed in the electronic medical record as the case manager for her patients, so she believed she needed to inform Nurse #1 of any concerns she had with Petitioner’s patients. CMS Ex. 1 at 4, 6.

Nurse #4 was interviewed by the surveyor. Nurse #4 also told the surveyor that she worked for the staffing agency and cared for some of Petitioner’s patients. Nurse #4 incorrectly identified the staffing agency’s owner as Petitioner’s administrator and Nurse #1 as Petitioner’s director of clinical services. CMS Ex. 1 at 4-5, 6.

Petitioner’s administrator told the surveyor that Nurse #1 and Nurse #2 scheduled skilled nurse visits by staffing agency nurses for Petitioner’s patients. CMS Ex. 1 at 7. The administrator said that while Petitioner’s nurses were required to generate in the electronic medical record computer program a schedule of skilled nurse visits for the following week, Nurse #1 and Nurse # 2 did not require the same of the staffing agency’s

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nurses. CMS Ex. 1 at 7, 9. Because of this difference in scheduling practices, the administrator was unable to generate a complete list of all skilled nurse visits scheduled for July 23 and 24, 2016. CMS Ex. 1 at 7, 9. Although the administrator used the electronic medical record program to generate a list of scheduled skilled nurse visits on those dates, the list did not include visits for several of the staffing agency’s nurses. CMS Ex. 1 at 7, 8.

During the October 20, 2016 survey, the surveyor again reviewed Petitioner’s organizational chart, which still required Petitioner’s nurses to report to the directors of clinical services, who in turn reported to the administrator. Petitioner also had an “Agency Line of Authority Statement,” which indicated that Petitioner would provide each employee with a copy of its organizational chart and a list of telephone numbers for Petitioner’s leadership staff. CMS Ex. 2 at 3. The administrator told the surveyor that she was terminating Petitioner’s contract with the staffing agency, but the staffing agency was still providing services to some of Petitioner’s patients at the time of the survey. CMS Ex. 2 at 3.

The surveyor identified Nurse #7 and Nurse #8 as staffing agency employees scheduled to make skilled nurse visits to several of Petitioner’s patients. CMS Ex. 2 at 3. The surveyor interviewed both nurses. CMS Ex. 2 at 3-4. Both Nurse #7 and Nurse #8 told the surveyor that they worked for the staffing agency and provided skilled nurse visits to some of Petitioner’s patients. CMS Ex. 2 at 3-4. Both said that the staffing agency’s owner was their supervisor and that they would report to the staffing agency’s owner any clinical or administrative concerns they had about those patients. CMS Ex. 2 at 3-4. Nurse #7 also indicated she would not report those concerns to Petitioner. CMS Ex. 2 at 3.

Petitioner’s administrator provided the surveyor with a copy of the education Petitioner provided Nurse #7 on October 2, 2016, which included education about Petitioner’s line of authority. CMS Ex. 2 at 4. The administrator did not produce any evidence that Nurse #8 was provided with similar education, nor could she demonstrate an ability to ensure that either nurse complied with Petitioner’s policy regarding lines of authority. Petitioner’s administrator told the surveyor that staffing agency nurses had convinced many of Petitioner’s patients to go with another HHA; that patients would only allow the staffing agency nurses in their homes; and the administrator believed not even the directors of clinical services would be granted permission to visit the patient’s homes to provide supervision. CMS Ex. 2 at 4.

The administrator gave the surveyor a schedule of skilled nurse visits for October 20 through 23, 2016, as well as a census of Petitioner’s patients. Although the administrator told the surveyor that Petitioner had approximately 100 patients at that time, the census listed 251 patients. The administrator explained that the staffing agency was discharging some of Petitioner’s patients to another HHA and that the census likely contained the

**Page 13**

names of some patients who had already been discharged. According to the administrator, every few days the staffing agency would send Petitioner a list of discharged patients; Petitioner would confirm that each discharged patient had a discharge order and then process the discharge paperwork in the electronic medical record. The administrator was unable to give the surveyor an accurate census by the end of the survey. CMS Ex. 2 at 5-6, 8-9.

During the October 20, 2016 survey, the surveyor interviewed two nurses, Nurse #5 and Nurse #6, both of whom worked for the staffing agency as schedulers. Both informed the surveyor of multiple errors in the schedule provided by the administrator. CMS Ex. 2 at 6-7, 9-10. Nurse #5 reported the following mistakes on the schedule: Patient B was scheduled to receive care on October 20, 2016, but the visit was changed to October 23, 2016. Nurse #5 stated that she had informed Petitioner of the change, but the schedule was not updated. Patient C was scheduled to receive daily skilled nursing care on October 20, 21, and 22, 2016, but Petitioner discharged Patient C on October 14, 2016. Patient F was scheduled to receive a skilled nursing visit on October 21, 2016, but Petitioner discharged Patient F on October 19, 2016. Patients H and I were both scheduled to receive skilled nurse visits on October 20, 2016, but Petitioner discharged Patient H on October 15, 2016, and Patient I on October 16, 2016. CMS Ex. 2 at 6-7, 9.

Nurse #6 also reported mistakes on the schedule given to the surveyor by Petitioner’s administrator. Nurse #9 was scheduled to provide care to two of Petitioner’s patients on October 20 and 21, 2016, but she had not worked for Petitioner since October 16, 2016. Patient D was hospitalized and Patient E was discharged to another HHA on October 15, 2016, but both remained on Petitioner’s schedule. Patient J was scheduled to receive skilled nursing care on October 20 and 21, 2016, but Petitioner discharged Patient J on October 15, 2016. Patient K was scheduled to receive skilled nursing care on October 21, 2016, but Nurse #6 said Patient K was not actually scheduled to be seen until sometime between October 24 and 29, 2016. CMS Ex. 2 at 7, 10.

There is no dispute that on November 23, 2016, CMS notified Petitioner that it would be willing to reopen and revise its decision to terminate Petitioner’s provider agreement if Petitioner submitted by November 25, 2016, an acceptable plan of correction for the noncompliance cited by the survey that ended on October 20, 2016. Petitioner submitted a plan of correction that CMS found inadequate, and CMS gave Petitioner until November 28, 2016, to amend its plan. Petitioner submitted an amended plan that was also found unacceptable. CMS Ex. 5 at 2. Petitioner does not dispute that its plan of correction submitted on November 25, 2016, as supplemented on November 28, 2016, was found unacceptable by CMS and that CMS refused to reopen and revise its determination to terminate Petitioner’s provider agreement. CMS Ex. 5 at 2; CMS Ex. 7; P. Ex. 4.

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Petitioner provided a declaration of Verona N. Boothe, the owner and president of a company that provides accreditation and compliance consulting services to HHAs. Ms. Boothe earned a BSN in nursing, an MBA in business administration, and a Ph.D. in organization management. For purposes of summary judgment, I accept her as qualified to render expert opinions regarding HHA organization and management. She opined that the deficiencies cited by the surveyor focused on: (1) some members of the nursing staff failed to understand Petitioner’s lines of authority; (2) Petitioner delegated scheduling responsibility to the staffing agency; and (3) Petitioner’s administrator gave the surveyor an inaccurate schedule and census. She further opined that Petitioner’s plan of correction submitted on November 25, 2016, as supplemented on November 28, 2016, was adequate to correct the deficiency citations. However, she did not opine that Petitioner achieved compliance on or before the revisit survey on October 20, 2016, or termination on November 25, 2016. She also did not specifically opine that Petitioner was in compliance with the condition-level requirement of 42 C.F.R. § 484.14 (Tag G122) on or before the revisit survey on October 25, 2016, or termination on November 25, 2016. On summary judgment, I do not attempt to assess the credibility of Ms. Boothe or her opinions. Although she opines Petitioner’s plan of correction was adequate to address the citations of noncompliance, she does not opine that Petitioner achieved compliance with the condition-level requirement of 42 C.F.R. § 484.14 on or before the revisit survey on October 20, 2016, or termination on November 25, 2016.

**b. Analysis**

The surveyor alleged in the SODs for the complaint survey completed July 26, 2016, and the revisit survey completed on October 20, 2016, a violation of the condition established by 42 C.F.R. § 484.14 and the standard established by 42 C.F.R. § 484.14(c). In relevant part, the condition of participation established by 42 C.F.R. § 484.14 requires:

Organization, services furnished, administrative control, and lines of authority for the delegation of responsibility down to the patient care level are clearly set forth in writing and are readily identifiable. Administrative and supervisory functions are not delegated to another agency or organization and all services not furnished directly, including services provided through subunits are monitored and controlled by the parent agency. If an agency has subunits, appropriate administrative records are maintained for each subunit.

* * *

(c) Standard: Administrator. The administrator, who may also be the supervising physician or registered nurse required under paragraph (d) of this section, organizes and directs the

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agency’s ongoing functions; maintains ongoing liaison among the governing body, the group of professional personnel, and the staff; employs qualified personnel and ensures adequate staff education and evaluations; ensures the accuracy of public information materials and activities; and implements an effective budgeting and accounting system. A qualified person is authorized in writing to act in the absence of the administrator.

42 C.F.R. § 484.14, 484.14(c). The surveyor cited the condition-level violation of the regulation under Tag G122 based on the noncompliance alleged under Tags G123 and G124 and the standard-level noncompliance under Tag G133, for both the complaint survey completed on July 26, 2016, and the revisit completed October 20, 2016. CMS Ex. 1 at 1; CMS Ex. 2 at 1.

The surveyor alleges under Tag G123 for both surveys a violation of the requirement of 42 C.F.R. § 484.14 that HHAs must ensure that “[o]rganization, services furnished, administrative control, and lines of authority for the delegation of responsibility down to the patient care level are clearly set forth in writing and are readily identifiable.” CMS Ex. 1 at 2-3; CMS Ex. 2 at 2-3. Under Tag G124 for both surveys, the surveyor alleges a violation of the requirement of 42 C.F.R. § 484.14 that HHAs must ensure that “[a]dministrative and supervisory functions are not delegated to another agency or organization and all services not furnished directly, including services provided through subunits[,] are monitored and controlled by the parent agency.” CMS Ex. 1 at 5; CMS Ex. 2 at 5. The surveyor alleges under Tag G133 that Petitioner violated the standard-level requirement of 42 C.F.R. § 484.14(c) that an HHA must ensure that its “administrator . . . organizes and directs the agency’s ongoing functions . . . .” CMS Ex. 1 at 7-8; CMS Ex. 2 at 7-8.

I conclude that the undisputed facts show that Petitioner violated the condition established by 42 C.F.R. § 484.14 and the standard established by 42 C.F.R. § 484.14(c) at least as early as the July 26, 2016 survey, and the noncompliance continued through Petitioner’s termination on November 25, 2016. There is no dispute that CMS did not accept Petitioner’s plan of correction submitted on November 25, 2016, as supplemented on November 28, 2016. Because CMS did not accept Petitioner’s plan of correction, CMS refused to reopen and revise its October 28, 2016 revised initial determination to terminate Petitioner’s provider agreement on November 25, 2016. CMS’s refusal to accept Petitioner’s plan of correction is not subject to review by the Board or me. *Apollo Behavioral Health Hosp., L.L.C.*, DAB No. 2561 at 9 (2014); *Elant at Fishkill*, DAB No. 2468 (2012) (the acceptance or rejection of Petitioner’s plan of correction is not a matter subject to appeal or to ALJ review); *Foxwood Springs Living Ctr.*, DAB No. 2294 at 12 (2009) (“The acceptance or rejection of a proposed [plan of correction] is not an appealable initial determination.”); *Hermina Traeye Memorial Nursing Home*, DAB

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No. 1810 at 13 (2002) (noting that the ALJ “properly concluded that he lacked authority to adjudicate the question of whether [CMS] abused its discretion in deciding to reject the [plan of correction]”), *aff’d sub nom. Sea Island Comprehensive Healthcare Corp. v. U.S. Dep’t of Health & Human Servs.*, 79 F. App’x 563 (4th Cir. 2003).

The undisputed observations of the surveyor show that during both surveys, multiple staffing agency nurses incorrectly identified a staffing agency employee or the staffing agency’s owner, not Petitioner’s administrator or directors of clinical services, as their supervisor and the correct person to whom they should report patient-related clinical and administrative issues. CMS Ex. 1 at 3-6; CMS Ex. 2 at 3-4. Therefore, I conclude that Petitioner failed to ensure that staffing agency nurses were able to readily identify Petitioner’s organization, administrative control, and lines of authority for delegating responsibility down to the patient care level, in violation of 42 C.F.R. § 484.14 (Tag G123).

During both surveys, staffing agency nurses told the surveyor that they in fact reported patient-related clinical and administrative issues to the staffing agency’s owner or a staffing agency employee, not to Petitioner’s personnel. CMS Ex. 1 at 3-6; CMS Ex. 2 at 3-4. One of the staffing agency nurses, Nurse #7, incorrectly identified her supervisor as the appropriate person to report clinical and administrative concerns to even after Petitioner educated her on Petitioner’s line of authority. CMS Ex. 2 at 3, 4. During both surveys, staffing agency nurses indicated that they maintained responsibility for scheduling staffing agency nurse visits. CMS Ex. 1 at 7-9; CMS Ex. 2 at 6-7. The administrator confirmed that staffing agency personnel scheduled staffing agency nurse visits and also reported that, unlike for nurses directly employed by Petitioner, Petitioner did not require staffing agency nurses to include their scheduled patient visits in the electronic medical records system, which made it impossible for the administrator to generate a complete list of all skilled nursing visits. CMS Ex. 1 at 7-9. Furthermore, during the second survey, Petitioner produced a grossly inaccurate census of patients and, to explain the inaccuracy, Petitioner’s administrator indicated that the staffing agency was given responsibility for discharging patients to new HHAs and had not yet removed from the census all the patients who had been discharged. CMS Ex. 2 at 5-6, 8. The second survey also revealed multiple errors in the schedule the administrator produced, including a date change for a patient visit made by a staffing agency nurse that was not added to the administrator’s schedule and scheduled visits that should have been removed because the patient had been discharged or because the scheduled nurse no longer worked for Petitioner. CMS Ex. 2 at 6-7, 9-10. These facts are undisputed and show that Petitioner improperly delegated important organizational functions, including administrative and supervisory functions, to the staffing agency and did not monitor and control the staffing agency’s provision of services to its patients, in violation of 42 C.F.R. § 484.14 (Tag G124).

**Page 17**

Finally, by sharing important responsibilities with the staffing agency, Petitioner’s administrator was unable to actually organize and direct Petitioner’s ongoing functions. Petitioner’s administrator was unable to even generate an accurate census or schedule. Therefore, Petitioner’s administrator was unable to organize and direct Petitioner’s delivery of care and services in violation of 42 C.F.R. § 484.14(c) (Tag G133).

CMS raises an issue regarding my authority to conduct a de novo review that must be addressed to avoid any confusion about the extent of review I accorded to Petitioner in this case. CMS argues that Petitioner has no right to administrative review of the level of noncompliance of the October survey findings, i.e., whether the noncompliance was condition-level or standard-level. CMS MSJ at 10, 27-28. CMS suggests that I have no authority to determine whether or not the alleged noncompliance was condition-level or standard-level. CMS argues, in the alternative, that even if Petitioner can challenge the “level of noncompliance,” “the level of noncompliance citation was not clearly erroneous and is entitled to be sustained” on that basis. CMS MSJ at 28. Petitioner responds that it is not challenging the level of noncompliance under authority of 42 C.F.R. § 498.3(b)(14). Rather, Petitioner argues that it is challenging the threshold determination of whether noncompliance supporting the imposition of alternative sanctions and termination existed, which, according to Petitioner, is separately appealable under 42 C.F.R. § 498.3(b)(8). P. PHB at 2-4; P. MSJ at 5-8. I conclude that my authority is not so limited as CMS suggests based on its reading of the regulations and prior decisions of the Board in cases not involving home health agencies. As the Board stated in *Aspen Grove*, “[i]n an appeal of CMS’s imposition of administrative remedies, the ALJ reviews de novo whether the evidence supports CMS’s determination of noncompliance.” DAB No. 2275 at 24. The de novo review necessarily requires determining whether the noncompliance rises to a condition-level violation or not. CMS’s authority to impose termination and alternative sanctions are also affected by whether noncompliance is condition-level or not and the determination as to whether imposed sanctions are permitted, appropriate, or reasonable. 42 C.F.R. pt. 488, subpt. J. I accord Petitioner de novo review of whether or not there was noncompliance and the seriousness or level of that noncompliance. I conclude that Petitioner did not comply with a condition of participation established by 42 C.F.R. § 484.14 beginning July 26, 2016, and failed to return to compliance before the revisit survey conducted on October 20, 2016, or termination of Petitioner’s provider agreement on November 25, 2016. Thus, I conclude that CMS had a basis for imposing a CMP on Petitioner from July 26 through November 24, 2016; imposing a SPNA on Petitioner from September 23 through November 24, 2016; and terminating Petitioner’s provider agreement and Medicare participation effective November 25, 2016.

Petitioner takes the position that “CMS must show more than the *potential* for harm” to prove that noncompliance is condition-level, citing *Profound Health Care*, DAB No. 2371 at 9 (2011). P. Br. at 3; P. MSJ at 2. In *Profound*, an ALJ granted summary judgment for CMS concluding that the HHA in that case was noncompliant at the

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condition level. An appellate panel of the Board upheld the ALJ’s determination that the HHA violated a regulatory requirement. However, the Board remanded for the ALJ to resolve a genuine dispute of material fact related to the determination that the regulatory violation rose to the condition level, which was necessary for the determination that the violation was a basis for termination of the HHA’s provider agreement. DAB No. 2371 at 10. The Board’s concern was that the ALJ characterized the regulatory violation as posing the potential for limiting substantially that HHA’s capacity to furnish adequate care and to protect the health and safety of its residents. DAB No. 2371 at 9-10. 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); *CSM Home Health Services*, DAB No. 1622 at 6-7. The regulation is clear that there is a condition-level violation “where 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). The regulation does not suggest that the potential to substantially limit Petitioner’s ability to furnish adequate care or the potential for an adverse effect on health and safety of patients constitutes a condition-level violation. Unlike the situation in *Profound*, the undisputed facts in this case show that Petitioner’s violations rose to the condition level because the violations actually substantially limited Petitioner’s ability to furnish adequate care and actually adversely affected the health and safety of patients. The existence of both criteria are amply demonstrated by the facts that Petitioner’s administrator could not accurately identify Petitioner’s patients when asked by the surveyor; Petitioner had limited or no ability to cause the agency nursing staff to report to Petitioner’s management team to ensure needed care and services were coordinated and delivered to Petitioner’s patients; and Petitioner had limited or no ability to control discharges by agency nursing staff. There is no favorable inference that may be drawn for Petitioner based on these facts. Petitioner’s deficiencies substantially limited or completely prevented the delivery of adequate care, which adversely affected the health and safety of patients. It is axiomatic that Petitioner could not deliver adequate care and ensure the health and safety of its patients without knowing who its patients were and without controlling the delivery of care and services. Although there is no evidence of actual harm to any patient, no such showing is required because the inability to ensure that any patient received adequate care and service is a sufficient adverse effect under the regulations even absent actual harm. Accordingly, I conclude on the undisputed facts that Petitioner’s violation of 42 C.F.R. § 484.14 rose to the condition level as a matter of law.

The absence of evidence of actual harm also does not deprive CMS of a legal basis to impose CMPs against an HHA. Rather, the regulations authorize different amounts for CMPs depending upon whether there is immediate jeopardy, actual harm, or a potential for harm. *Compare* 42 C.F.R. § 488.845(b)(3)(i) (authorizing a $10,000 per day CMP for immediate jeopardy noncompliance resulting in actual harm) *with* 42 C.F.R. § 488.845(b)(3)(ii) (authorizing a $9,000 per day CMP for immediate jeopardy

**Page 19**

noncompliance creating the potential for harm). Additionally, smaller per-day CMPs are authorized for any “condition-level deficiency that does not constitute immediate jeopardy and that [is] related predominantly to structure or process-oriented conditions . . . rather than directly related to patient care outcomes.” 42 C.F.R. § 488.845(b)(5).

Two appellate panels of the Board have concluded in similar types of cases that CMS need not show more than the potential for patient harm to prove that a provider’s noncompliance is condition-level. One panel concluded that “[a] condition-level deficiency may exist where the deficiency results in a potential for harm to patients, even if no actual harm resulted from the deficiency.” *Nat’l Hosp. for Kids in Crisis*, DAB No. 1600 (1996); *see also**Beverly Cal. Corp. v. Shalala*, 78 F.3d 403, 409 (8th Cir. 1996) (holding that a showing of actual harm to patients was unnecessary to support decertifying a Medicaid provider because “[a] standard requiring harm to Medicaid patients before the Secretary could take action would improperly subvert the Secretary’s oversight of the program”); *Dialysis Ctr. at Moreno Valley, Inc.*, DAB No. 2193 at 23 (2008); *Affectionate Home Health Care*, DAB CR3638 at 19 (2015). A different panel upheld an ALJ’s conclusion that a dialysis facility “failed to meet the conditions for coverage because its deficiencies had a ‘great potential for harm.’” *Angel Kidney Care of Inglewood, Inc.*, DAB No. 2795 at 9 (2017). The Board’s remand decision *Profound Health Care*, on which Petitioner relies, is not inconsistent. The Board in *Profound*did not hold that CMS was required to show the provider’s noncompliance caused actual harm to a patient to prove that the provider’s noncompliance rose to the condition level. DAB No. 2371.

I conclude that Petitioner has failed to identify any disputed issue of material fact related to the violation of the condition established by 42 C.F.R. § 484.14 (Tag G122). Petitioner also failed to identify any genuine dispute of material fact related to whether Petitioner’s violations actually substantially limited Petitioner’s ability to furnish adequate care and actually adversely affected the health and safety of patients.

The census and scheduling errors arose from Petitioner’s improper delegation of responsibility and loss of control to staff agency nurses of the important tasks of discharging patients and scheduling skilled nursing visits. The errors created a risk that patients could be discharged erroneously, receive skilled nurse visits and care that they did not need, or fail to receive skilled nurse visits and care that they needed. There is also a significant concern related to the fact that staffing agency nurses made it their practice to report clinical and administrative issues with Petitioner’s patients to the staffing agency’s owner or other personnel, rather than reporting those issues to Petitioner. One staffing agency nurse persisted in this practice even after Petitioner educated her on Petitioner’s line of authority. CMS Ex. 2 at 3, 4. This fact made it difficult, if not impossible, for Petitioner to ensure that its patients’ clinical issues were addressed at all, much less in a timely manner, creating a risk for harm to any patient who developed health issues that needed to be addressed quickly by Petitioner’s administrator or

**Page 20**

directors of clinical services. The fact that the surveyor did not identify any specific harm to a particular patient is immaterial; the risk of harm posed by Petitioner’s noncompliance was serious enough to warrant a condition-level citation even if no actual harm arose from Petitioner’s deficiencies. I reject Petitioner’s contention that CMS has failed to make a prima facie case that condition-level noncompliance existed during the July and October surveys because it did not produce evidence that Petitioner’s deficiencies in fact affected patient health and safety or Petitioner’s ability to furnish care. P. Br. at 3-4; P. MSJ at 3-5.

Petitioner argues that, even if a condition-level deficiency existed, it corrected that deficiency and returned to compliance with all conditions of participation as of October 26, 2016, the date it terminated its relationship with the staffing agency, Seaside Psych. P. Br. at 7; P. MSJ at 11. This argument fails for several reasons.

Appellate panels of the Board have held that, when a provider’s Medicare participation agreement is terminated because of noncompliance, “the critical date for establishing compliance is the survey date, not the subsequent effective date of the termination.” *Carmel Convalescent Hosp.*, DAB No. 1584 at 12 (1996); *see also Rosewood Living Ctr.*, DAB No. 2019 at 3, 11 (2006) (quoting *Carmel*, DAB No. 1584 at 12). The panel in *Carmel* explained that a provider’s efforts to bring itself into compliance after the date of the resurvey are “completely irrelevant to the facility’s appeal of [CMS’s] determination to terminate.” DAB No. 1584 at 13. CMS is not required to afford a provider the opportunity to correct its failure to comply with a condition of participation before terminating the provider. 42 C.F.R. § 489.53; *Aspen Grove*, DAB No. 2275 at 23.5 The Board decisions, which are persuasive on this issue, show that whether or not Petitioner was in compliance at the time of the revisit survey is the critical issue and whatever corrective actions Petitioner purportedly took after the October 20 revisit survey are simply irrelevant to the issue of whether there was a basis for termination of Petitioner’s provider agreement.

Petitioner’s argument that the CMP should have stopped accruing when it terminated the staffing agency on October 26, 2016 (P. MSJ at 11), is also without merit. Petitioner’s own plan of correction identifies many more steps, beyond terminating its relationship with Seaside Psych, that Petitioner purported to take to correct its noncompliance. P. Exs. 3, 5. Petitioner reported in its plan of correction that it did not actually complete those steps until November 22, 2016. P. Exs. 3, 5. “The Board has long rejected as

**Page 21**

contrary to the goals of the program the notion[] . . . that a [provider] can belatedly claim to have achieved substantial compliance at a date earlier than it even alleged that it had done so . . . .” *Cal Turner Extended Care Pavilion*, DAB No. 2030 at 18 (2006). November 22, 2016, is the earliest date Petitioner can plausibly claim that it returned to compliance with the conditions of HHA participation, however CMS was not required to conduct a revisit survey to verify compliance and no second revisit occurred.

More fundamental, however, is that Petitioner has not shown that it in fact returned to compliance before CMS terminated its provider agreement on November 25, 2016. Petitioner has presented no evidence that it implemented the many corrective actions listed in the plan of correction. Petitioner’s lone witness opines in her declaration that Petitioner’s plan of correction “included detailed corrective actions for each cited deficiency” and was “responsive to the cited deficiencies” identified by CMS. P. Ex. 7 at 2, 3 (emphasis removed). However, the expert does not opine that Petitioner actually accomplished the corrective actions contained in the plan before termination on November 25, 2016. The fact that Petitioner’s expert did not opine correction occurred before November 25, 2016, and the fact no revisit survey occurred to confirm Petitioner achieved substantial compliance before November 25, 2016, support a conclusion that no rational trier of fact could find that Petitioner’s evidence would be sufficient to meet its evidentiary burden to show it regained substantial compliance prior to termination on November 25, 2016. *Dumas Nursing & Rehab., L.P.*, DAB No. 2347 at 5.

**9. A $1,500 per day CMP effective July 26 through November 24, 2016, and a SPNA effective September 23 through November 24, 2016, are reasonable alternative sanctions.**

The Act authorizes the Secretary to impose termination or alternative sanctions to remove or correct deficiencies in an HHA. Act § 1891(e) (42 U.S.C. § 1395bbb(e)); 42 C.F.R. § 488.800. The purpose of sanctions that CMS may impose “is to ensure prompt compliance with program requirements . . . to protect the health and safety” of HHA patients. 42 C.F.R. § 488.810(a). If an HHA is not in compliance with one or more conditions of participation or fails to correct a previously identified deficiency, CMS has the authority to impose one or more of the alternative sanctions listed in 42 C.F.R. § 488.820, including a SPNA or a CMP. 42 C.F.R. § 488.810(b). CMS may impose a SPNA when an HHA is not in compliance with a condition of participation, and payment does not resume until the facility returns to compliance or the HHA’s provider agreement is terminated. 42 C.F.R. § 488.840(a)(1), (c).

I conclude that a SPNA from September 23 through November 24, 2016, is appropriate and reasonable in this case based on my conclusion that Petitioner was not in compliance with a condition of participation under 42 C.F.R. § 484.14 for that entire period.

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CMS may impose a per-day CMP for the number of days that an HHA is not in compliance or a per-instance CMP for each instance that an HHA is not in compliance, whether or not the deficiencies pose immediate jeopardy. 42 C.F.R. § 488.845(a)(1). The regulations specify that a CMP imposed against a facility on a per-day basis will fall into one of three ranges, referred to as the upper range, middle range, and lower range. 42 C.F.R. § 488.845(b)(3)-(5). The upper range of a CMP, $8,500 per day to $10,000 per day, is reserved for condition-level deficiencies that pose immediate jeopardy to an HHA’s patients. 42 C.F.R. § 488.845(b)(3). The middle range of CMPs, $1,500 per day to $8,500 per day, is reserved for repeat or condition-level deficiencies that do not constitute immediate jeopardy but that directly relate to poor quality patient outcomes. 42 C.F.R. § 488.845(b)(4). The lower range of CMPs, $500 per day to $4,000 per day, is reserved for deficiencies that do not pose immediate jeopardy and that are predominantly related to structure or process-oriented conditions, rather than directly related to patient care outcomes. 42 C.F.R. § 488.845(b)(5).

If I conclude, as I have in this case, that there is a basis for the imposition of an alternative sanction and the sanction imposed is a CMP, my authority to review the CMP is limited by 42 C.F.R. § 488.845(h). The limitations are: (1) I may not set the CMP at zero or reduce it to zero; (2) I may not review the decision of CMS to impose a CMP; and (3) I may only consider the factors specified by 42 C.F.R. § 488.845(b) when reviewing the CMP. The regulation does not limit ALJ and higher level review to the issue of whether or not the CMP imposed by CMS is reasonable. 42 C.F.R. § 488.845(h). Indeed, the regulation imposes only three limits on my review authority. However, appellate panels of the Board in long-term care facility cases subject to 42 C.F.R. pts. 488 and 498 have concluded that ALJs and the Board are limited to assessing the reasonableness of a CMP; more specifically, whether the amount of an imposed CMP is within reasonable bounds considering the purpose of the Act and regulations. *Emerald Oaks*, DAB No. 1800 at 10 (2001); *CarePlex of Silver Spring*, DAB No. 1683 at 14-16 (1999); *Capitol Hill Cmty. Rehab. & Specialty Care Ctr.*, DAB No. 1629 (1997). A fair reading of the plain language of the Secretary’s regulations is that my de novo review of the alternative sanctions, specifically the CMP, is not as limited as the Board suggests. In this case, my review of the amount of the CMP is de novo and based upon the evidence in the record before me. I conclude that I am not bound to defer to the CMS determination of the reasonable amount of the CMP to impose but am free to provide meaningful review as specified by 42 C.F.R. § 488.845(h). However, out of an abundance of caution, I also conduct my review with due consideration of the “reasonableness standard” adopted by the Board.

Pursuant to 42 C.F.R. § 488.845(b), I must consider the following factors in reviewing the CMP amount: (1) the factors set out at 42 C.F.R.§ 488.815, the same factors CMS was to consider when setting the CMP amount; (2) the size of the HHA and its resources; (3) accurate and credible resources that provide information on the operation and resources of the HHA; and (4) evidence that the HHA has a built-in, self-regulating

**Page 23**

quality assessment and performance improvement system to provide proper care, prevent poor outcomes, control patient injury, enhance quality, promote safety, and avoid risks to patients on a sustainable basis that indicates the ability to meet the conditions of participation and ensure patient health and safety. If a CMP is imposed, 42 C.F.R. § 488.845(b)(2) through (7) list other factors that may be considered in determining whether CMP amounts should be increased or decreased.

Pursuant to 42 C.F.R. § 488.815, I must consider: (1) the extent to which the HHA’s deficiencies pose immediate jeopardy to patient health and safety; (2) the nature, incidence, manner, degree, and duration of the deficiencies or noncompliance; (3) the presence of repeat deficiencies, the HHA’s overall compliance history, and any history of repeat deficiencies at either the parent or branch location; (4) the extent to which the deficiencies are directly related to a failure to provide quality patient care; (5) the extent to which the HHA is part of a larger organization with performance problems; and (6) any indication of a system-wide failure to provide quality care to HHA patients.

I conclude that a $1,500 per day CMP from July 26 through November 24, 2016, is appropriate and reasonable in this case. I have concluded that Petitioner was not in compliance with a condition of participation throughout the entire period.

The parties disagree about the correct range for the CMP. CMS takes the position that the CMP should fall into the middle range. CMS MSJ at 24. A middle range CMP is authorized for a deficiency that does not cause “immediate jeopardy, but is directly related to poor quality patient outcomes.” 42 C.F.R. § 488.845(b)(4). The SOD reflects no evidence that the surveyor observed or found documentation of poor patient outcomes and CMS points to no such evidence in its pleadings. Therefore, the CMS position is unsupported by evidence and is without merit. Petitioner argues that, if there is a basis for imposing a CMP, the CMP should be a lower range CMP. P. Br. at 5-6; P. MSJ at 9-10. Higher range and middle range CMPs are not authorized absent immediate jeopardy or evidence of poor quality patient care outcomes. 42 C.F.R. § 488.845(b)(3)-(4). There is no allegation of immediate jeopardy and no evidence of poor quality patient care outcomes. Therefore, only a lower range CMP is authorized, as Petitioner urges. However, Petitioner’s correct reading of the regulations is not a ground for relief in this case. 

CMS imposed a $1,500 per day CMP, which is in the lower half of the lower range of CMPs authorized, which is $500 to $4,000.6 CMS Ex. 3 at 1, 4-5; CMS Ex. 4 at 1, 3; CMS Ex. 5 at 1, 3; 42 C.F.R. § 488.845(b)(5).

**Page 24**

I have considered the prescribed regulatory factors in this case and conclude that the undisputed facts support a CMP of $1,500 per day for the period July 26 through November 24, 2016. The regulations do not specify how factors are to be weighed but are specific that sanctions may be chosen based on one or more factors. 42 C.F.R. § 488.815. I consider that there is no allegation of immediate jeopardy in this case. I consider that Petitioner’s noncompliance was systemic and placed at risk of harm any of Petitioner’s patients receiving care from contract staffing agency nurses who failed to report those patients’ clinical or administrative problems to Petitioner. This problem was identified during the July survey and continued at the time of the October revisit. Petitioner was responsible for ensuring that its patients received quality care that complied with Medicare requirements. By delegating administrative responsibility to the staffing agency and failing to exercise clinical and administrative control of the care being provided under its aegis, Petitioner essentially lost the ability to ensure its patients were receiving quality, Medicare-compliant care. This posed a major threat to the quality of care provided to Petitioner’s patients, which is cause for grave concern even absent evidence of specific patient harm or failure to deliver quality care. Petitioner’s noncompliance lasted for four months until termination. In addition, considering the factors under 42 C.F.R. § 488.845(b), I note that there was no immediate jeopardy and the surveyor, CMS, and Petitioner do not point to evidence of substantial or sustainable improvement as of the revisit survey, which might have warranted either an increase or decrease in the CMP amount. There is no evidence and Petitioner does not aver that it had a built-in, self-regulating quality assessment and performance improvement system to, among other things, sustainably avoid risks to patients that might indicate Petitioner had an ability to meet the conditions of participation and ensure patient health and safety. Petitioner’s continued noncompliance over a period of months shows that Petitioner lacked such a system. These factors are a sufficient basis for imposing a lower-range CMP of $1,500 per day.

**Page 25**

Petitioner argues that other factors weigh in its favor. P. Br. at 5-6; P. MSJ at 9-10. Petitioner correctly observes that there was no immediate jeopardy to patients alleged, a fact I have considered. P. Br. at 5; P. MSJ at 9. Petitioner also asserts that it did not have a history of noncompliance, that its noncompliance merely related to “structure and process,” and that “no actual effect on patient care was documented.” P. Br. at 5-6; P. MSJ at 9-10. Petitioner does not aver or offer evidence that its size or resources should be considered in determining the CMP amount. I accept as true for purposes of summary judgment Petitioner’s assertions regarding its history of noncompliance. I also accept as true that the noncompliance cited relates to structure and process and that there is no evidence of adverse impact on the quality of care actually delivered to patients. However, Petitioner’s failure to control care delivered to its patients by agency nurses substantially limited Petitioner’s capacity to furnish adequate care because Petitioner could not control that care. Even accepting all these assertions as true, a lower range CMP of $1,500 per day is fully supported by the factors I have considered over which there are no genuine disputes. Petitioner asserts that it implemented “substantial and sustainable improvements” between surveys, even if it did not return to full compliance, warranting a reduction in the CMP under 42 C.F.R. § 488.845(b)(2)(ii). However, there is no dispute that Seaside Psych was still caring for Petitioner’s patients when the October 20, 2016 revisit occurred and continued to do so until October 26, 2016. Therefore, even if I accept as true that Petitioner made substantial and sustainable improvements of some sort, the undisputed fact is Seaside Psych was still involved and the evidence shows that the surveyor and Petitioner’s administrator both saw Seaside’s involvement as the key problem. I accept as true Petitioner’s assertion that its noncompliance was of “short duration, and [was] caused by the wrongful conduct of the nurse staffing agency (Seaside Psych)”; and it “worked earnestly to correct all deficiencies and to demonstrate improvement.” P. Br. at 6; P. MSJ at 10. The undisputed evidence shows that the noncompliance began July 26 and continued at least until Petitioner rid itself of Seaside Psych on October 26, 2016. Whether Petitioner achieved substantial compliance after the October 26, 2016 revisit is irrelevant. *Carmel Convalescent Hosp.*, DAB No. 1584 at 12; *see also Aspen Grove*, DAB No. 2275 at 23; *Rosewood Living Ctr.*, DAB No. 2019 at 3, 11.

Accordingly, I conclude that there was a basis for terminating Petitioner’s provider agreement; a CMP of $1,500 per day from July 26 through November 24, 2016 is both appropriate and reasonable; and the SPNA is also appropriate and reasonable as a matter of law.

### III. Conclusion

For the foregoing reasons, I conclude as a matter of law that Petitioner was not in compliance with the condition of participation at 42 C.F.R. § 484.14 from July 26 through November 25, 2016. There is a basis for imposing alternative sanctions, including a CMP of $1,500 per day from July 26 through November 24, 2016; and a

**Page 26**

SPNA from September 23 through November 24, 2016. The alternative sanctions are appropriate and reasonable. There is also a basis for terminating Petitioner’s participation in the Medicare program effective November 25, 2016.

Keith W. SickendickAdministrative Law Judge

                                              1. Citations are to the 2016 revision of the Code of Federal Regulation (C.F.R.), the revision in effect on October 26, 2016, the date of the revised initial determination, unless otherwise stated. 
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                                                  2. This is a “Tag” designation used in CMS Pub. 100-07, State Operations Manual (SOM), app. B – Guidance to Surveyors:  Home Health Agencies (rev. Aug. 12, 2005) (http://www.cms.hhs.gov/Manuals/IOM/list.asp).  The “Tag” refers to the specific regulatory provision allegedly violated and CMS’s policy guidance to surveyors.  Although the SOM does not have the force and effect of law, the provisions of the Act and regulations interpreted clearly do have such force and effect.  Ind. Dep’t of Pub. Welfare v. Sullivan, 934 F.2d 853 (7th Cir. 1991); NW Tissue Ctr. v. Shalala, 1 F.3d 522 (7th Cir. 1993).  Thus, while the Secretary may not seek to enforce the provisions of the SOM, he may seek to enforce the provisions of the Act or regulations as interpreted by the SOM. 
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                                                  3. The notice elsewhere lists the SPNA end date as “November 15, 2016,” CMS Ex. 5 at 2, but I treat the date as a scrivener’s error.  The parties stipulated that the SPNA remained in effect from “September 23, through November 25, 2016,” Jt. Stip. ¶ 23.  However, the date “November 25, 2016” is clearly in error because Petitioner’s provider agreement was terminated on November 25, 2016.  Pursuant to 42 C.F.R. § 488.840(c)(2), the SPNA ended upon termination of Petitioner’s provider agreement.  Therefore, the SPNA ran from September 23 through November 24, 2016, or alternatively, from September 23 to November 25, 2016. 
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                                                  4. Petitioner was cited in the Statement of Deficiencies (SOD) for the survey that ended on July 26, 2016, under Tag G135 for violation of 42 C.F.R. § 484.14(c).  CMS Ex. 1 at 9-10.  However, the surveyors did not cite Tag G135 in the SOD for the revisit survey completed on October 20, 2016.  CMS Ex. 2.  Because I conclude that Petitioner’s violations of the standards cited under Tags G123, G124, and G133, show continuing condition-level noncompliance with 42 C.F.R. § 484.14 (Tag G122), I do not discuss Tag G135 further. 
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                                                  5. It is thus irrelevant that, as Petitioner complains, neither CMS nor the state agency allowed it “to submit a plan of correction and submit to a resurvey . . . until November 21, 2016, when CMS contacted [Petitioner’s] attorney to authorize the submission of a supplemental plan of correction.”  P. Br. at 7; P. MSJ at 11. 
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                                                  6. Although neither party alludes to this issue and I do not make any findings or conclusions based on it, I note that, effective September 6, 2016, the Department of Health and Human Services increased CMP amounts to account for inflation in compliance with the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015, Pub. L. No. 114-74, § 701, 129 Stat. 584, 599 (2015).  81 Fed. Reg. 61,538, 61,549 (Sept. 6, 2016).  The inflation-adjusted amounts apply to CMPs assessed after August 1, 2016, for deficiencies occurring on or after November 2, 2015.  Id. at 61,538.  The inflation-adjusted amounts applicable to CMPs imposed pursuant to 42 C.F.R. § 488.845 were, for the middle range, $2,968 per day to $16,819 per day, and for the lower range, $989 per day to $7,915 per day.  Id. at 61,555-56; 45 C.F.R. § 102.3.  Even given the new amounts, the $1,500 per day CMP imposed by CMS clearly fell into the lower half of the lower range of CMPs. 
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