NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 09-3006

_____________

JEWISH HOME OF EASTERN PA, 

 Petitioner

v.

CENTERS FOR MEDICARE AND MEDICAID SERVICES;

DEPARTMENT OF HEALTH AND HUMAN SERVICES,

 Respondents

____________

On Petition for Review from on Order by the Secretary

of the Department of Health and Human Services 

(No.A-09-42)

Submitted January 27, 2011

Before: FUENTES, CHAGARES, and ROTH, Circuit Judges.

(Filed February 11, 2011 )

____________

OPINION 

____________

CHAGARES, Circuit Judge.

Jewish Home of Eastern Pennsylvania petitions for review of the final 

decision of the Secretary of the Department of Health and Human Services 

affirming the imposition of civil money penalties for failure to be in substantial 

compliance with the Medicare and Medicaid Services participation requirements 
2

pursuant to 42 C.F.R. ' 483.25(h)(2). For the reasons that follow, we will deny 

the petition for review.

I.

We write for the parties= benefit and recite only the facts essential to our 

disposition. The Jewish Home of Eastern Pennsylvania (AJHEP@) provides 

nursing care to Medicare beneficiaries. JHEP is required to comply with the 

mandatory health and safety requirements for participation in the Medicare 

program. To participate in the Medicare program, JHEP must submit to random 

surveys conducted by state departments of health to ensure that it is meeting all 

the program requirements. See 42 C.F.R. ' 488.305. 

On December 9, 2005, the Pennsylvania Department of Health, acting on 

behalf of the Center for Medicare and Medicaid Services (ACMS@), conducted a 

survey of JHEP. The survey concluded that JHEP had eight regulatory 

deficiencies, including violations of 42 C.F.R. ' 483.25(h)(2), which requires a 

facility to ensure that each resident receives adequate supervision and 

assistance with devices to prevent accidents. Based on these deficiencies, the 

CMS imposed a $350 per day fine from December 9, 2005 through January 26, 

2006, totaling $17,150. On October 16, 2006, the CMS performed another 

survey of JHEP and found twelve deficiencies. CMS imposed a $400 per day 
3

fine effective from October 16, 2006 through November 16, 2006, totaling 

$12,800.1

 

1 Pursuant to 42 U.S.C. ' 1395i-3(h)(2)(B)(ii), the CMS may impose a civil money 

penalty in an amount not to exceed $10,000 per day. There are two categories 

of monetary penalties: (1) APenalties in the range of $3,050 - $10,000 per day 

are imposed for deficiencies constituting immediate jeopardy,@ 42 C.F.R. '

488.438(a)(1); and (2) APenalties in the range of $50 - $3,000 per day are 

imposed for deficiencies that do not cause immediate jeopardy, but either have 

caused actual harm, or caused no actual harm, but have the potential for more 

than minimal harm,@ 42 C.F.R. ' 488.438(a)(ii). 

On August 9, 2006 and October 20, 2006, JHEP appealed both civil 

monetary penalties to an Administrative Law Judge (AALJ@). JHEP argued that 

the allegations of noncompliance were based on the inadmissible disclosure of 

Aprivileged@ quality assurance records. Additionally, JHEP claimed that the 

survey violated equal protection because it was the product of discrimination 

based on race and religion. The ALJ denied JHEP=s motion to suppress the 

quality assurance records. Prior to the trial, JHEP stipulated that it failed to 

provide the necessary supervision or assistive devices to three of its residents, 

and subsequently presented no testimony as to these residents. In June 2008, a 

two-day trial took place and the ALJ upheld the fines against JHEP. The ALJ 

found that JHEP was not in substantial compliance with the participation 

requirements during the relevant time periods and declined to consider the equal 

protection claim because it lacked subject matter jurisdiction to hear substantive 

constitutional claims. 
4

JHEP timely filed an appeal to the Board of Appeals. On June 18, 2009, 

the Board affirmed both of the civil monetary penalties. On July 10, 2009, JHEP 

filed the current petition for review.2 

II.

 

2 We have jurisdiction over this petition pursuant to 42 U.S.C. ' 1320a-7a(e).

On review by this Court, the Secretary=s findings Aif supported by 

substantial evidence on the record considered as a whole, shall be conclusive.@ 

42 U.S.C. ' 1320a-7a(e). A[S]ubstantial evidence is more than a mere scintilla. 

It means such relevant evidence as a reasonable mind might accept as adequate 

to support a conclusion.@ Monsour Med. Ctr. v. Heckler, 806 F.2d 1185, 1190-91 

(3d Cir. 1986) (internal quotations omitted). In reviewing the Secretary=s 

interpretation of a Department of Health and Human Services regulation, we may 

only overturn the interpretation if it is arbitrary, capricious, an abuse of discretion, 

or otherwise not in accordance with the law. 5 U.S.C. ' 706(2); Thomas 

Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994). We give substantial 

deference to an agency=s interpretation and application of its own regulations. 

Thomas Jefferson Univ., 512 U.S. at 512. 

III.

Notably, JHEP does not contest the finding that it was not in substantial 

compliance with the Medicare program during the relevant survey periods. 

Instead, JHEP argues that CMS=s findings and penalties are invalid because they 
5

are (1) based on Aprivileged@ quality assurance documents, and (2) are a result of 

racial and religious discrimination. We conclude that both of JHEP=s grounds for 

review are unfounded. 

JHEP maintains that the incident reports in question were generated by its 

quality assurance committee, and as such, are subject to disclosure and use 

restrictions under 42 U.S.C. ' 1396r(b)(1)(B).3 The language of 42 U.S.C. '

1396r(b)(1)(B), however, limits the scope of protection from discovery to the 

records of the committee. See, e.g., State ex rel. Boone Ret. Ctr. v. Hamilton, 

946 S.W.2d 740, 743 (Mo. 1997) (finding that 42 U.S.C. ' 1396r(b)(1)(B) 

Aprotects the committee=s own records -- its minutes or internal working papers or 

statements of conclusions -- from discovery. No honest reading of the statute, 

however, can extend the statute=s privilege to records and materials generated or 

created outside the committee and submitted to the committee for its review.@). 

After reviewing the record presented, we conclude that the documents in 

question were contemporaneous, routinely-generated incident reports and not the 

quality assurance team=s minutes, internal papers, or conclusions. As such, 

these incident reports are not subject to disclosure restrictions. Hence, these 

 

3 Section 1396r(b)(1)(B) provides: AA State or the Secretary may not require 

disclosure of the records of such committee except insofar as such disclosure is 

related to the compliance of such committee with the requirements of this 

subparagraph.@ This subparagraph mandates that the nursing facility have a 

quality assessment and assurance team which Ameets at least quarterly to 

identify issues with respect to which quality assessment and assurance activities 

are necessary@ and Adevelops and implements appropriate plans of action to 
6

incident reports along with JHEP=s prior stipulations provided the Secretary with 

ample evidence to determine that JHEP was not in substantial compliance with 

the Medicare program. 

 

correct identified quality deficiencies.@
7

JHEP also alleges that the issuance of civil monetary fines violates equal 

protection because the fines are the result of selective enforcement based on 

race and religion.4 Selective discriminatory enforcement of a facially valid law is 

unconstitutional under the Equal Protection Clause. See Yick Wo v. Hopkins, 

118 U.S. 356, 373 (1886); Holder v. City of Allentown, 987 F.2d 188, 197 (3d Cir. 

1993). The Supreme Court has held that a law which is Afair on its face and 

impartial in appearance@ may nonetheless constitute illegal discrimination Aif it is 

applied and administered by public authority with an evil eye and an unequal 

hand.@ Yick Wo, 118 U.S. 356, 373-74 (1886) (finding that where Chinese 

nationals did not violate city ordinances but were still fined, the only reason for 

the fines was discrimination based on race and nationality in violation of equal 

protection). 

To establish a selective-enforcement claim, JHEP must show (1) that it was 

treated differently from other similarly situated individuals, and (2) Athat this 

selective treatment was based on an unjustifiable standard, such as race, or 

religion, or some arbitrary factor, . . . or to prevent the exercise of a fundamental 

right.@ Dique v. N.J. State Police, 603 F.3d 181, 184 n.5 (3d Cir. 2010) 

(quotations omitted)). Hence, to maintain an equal protection claim of this sort, 

JHEP must provide evidence of intentional or purposeful discriminatory purpose, 

not mere unequal treatment or adverse effect. Snowden v. Hughes, 321 U.S. 1, 

 

4 While JHEP is a non-denominational facility, JHEP argues that it may maintain 

an equal protection claim because of its association with a protected group --
8

8 (1944). JHEP must show that the Adecisionmaker . . . selected or reaffirmed a 

particular course of action at least in part because of, not merely in spite of, its 

adverse effects . . . .@ Wayte v. United States, 470 U.S. 598, 610 (1985) 

(quotations omitted).

 

persons of Jewish ancestry. 

JHEP relies upon three primary documents to show discriminatory effect 

and discriminatory purpose. First, JHEP submits side-by-side comparisons of 

citations issued to JHEP as compared to other local facilities. JHEP also 

provides a statistical report which concluded that the number of citations issued 

to JHEP was high in comparison to other facilities surveyed from the Scranton 

Field Office and that this finding was likely the result of bias and not likely the 

result of differences in the quality of care, error or chance. Additionally, JHEP 

presents the affidavit of an employee who claims that a CMS surveyor made a 

discriminatory statement in October 2004, over a year before the surveys in 

question. Specifically, in surveying whether JHEP provided activities on 

Saturdays for residents of all denominations, the surveyor was told that there was 

a KiddushCa ceremony involving a blessing and food that all individuals were 

invited to regardless of their religious affiliations. According to the employee, the 

surveyor responded that she was Christian and would feel uncomfortable 

attending such an activity. 

 We hold that JHEP has failed to establish a claim for selective enforcement 

under the Equal Protection Clause. JHEP has not demonstrated that CMS 
9

issued fines with an intentionally discriminatory purpose. We find JHEP=s 

reliance on the surveyor=s alleged statement to be misplaced as it was clearly 

taken out-of-context, was not contemporaneous to the surveys in question, and 

was not relevant or facially discriminatory. Additionally, JHEP has failed to show 

that it was treated differently from other similarly situated facilities. Therefore, 

we conclude that JHEP=s equal protection claim has no merit. 

IV.

After considering all of JHEP=s arguments, we will deny the petition for 

review.