Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
AccentCare Home Health ) Date: November 28, 2008

of Phoenix, Inc., )
)
Petitioner, )
)

-V.- ) Docket No. C-08-467

) Decision No. CR1869
Centers for Medicare & Medicaid )
Services. )
)

DECISION

I consider here whether the Centers for Medicare and Medicaid Services (CMS) may
properly terminate the Medicare provider agreement of a home health agency that has
stopped providing services.

Petitioner, AccentCare Home Health of Phoenix, (Petitioner or AccentCare) is a home
health agency (HHA) based in Phoenix, Arizona, that, until its May 15, 2008 termination,
was certified to participate in the Medicare program. But when surveyors from the
Arizona Department of Health Services (State Agency) attempted to survey the HHA on
March 13, 2008, they discovered that it was not operational. CMS therefore determined
that AccentCare no longer met the statutory definition for HHAs and terminated its
Medicare participation. Petitioner here challenges its termination. The parties have filed
cross motions for summary judgment.'

' CMS’s motion is accompanied by one attachment (CMS Exhibit (Ex.) 1) and
Petitioner’s motion is accompanied by nine attachments (P. Exs. 1-9).
2

For the reasons set forth below, I find that CMS was authorized to terminate
AccentCare’s Medicare provider agreement, and I grant CMS’s motion for summary
judgment.

I. Discussion

A, CMS is entitled to summary judgment because the undisputed facts
establish that AccentCare did not meet the statutory definition of “home
health agency”; CMS is therefore authorized to terminate its provider
agreem ent.

Summary judgment is appropriate here because this case turns on a question of law and
presents no genuine dispute as to any material fact. Anderson v. Liberty Lobby, 477 U.S.
242, 247-48 (1986); Livingston Care Center v. United States Department of Health and
Human Services, 388 F. 3d 168, 173 (6" Cir. 2004).

An HHA is a public agency or private organization that “is primarily engaged in
providing skilled nursing services and other therapeutic services” to patients in their
homes. Social Security Act (Act), section 1861(0). It may participate in the Medicare
program as a provider of services if it meets that statutory definition and complies with
certain requirements, called Conditions of Participation. Act, sections 1861(0), 1891; 42
C.F.R. Part 484; 42 C.F.R. § 488.3. On the other hand, CMS, acting on behalf of the
Secretary of Health and Human Services, may terminate a provider agreement based on
the provider’s failure to comply with provisions of section 1861 or the regulations
governing its program participation. Act, section 1866(b)(2); 42 C.F.R. § 489.53(a)(1).

In this case, the undisputed facts establish the following:

. on or about May 1, 2007, Petitioner, an HHA operating in Yuma, Arizona, notified
its Medicare Fiscal Intermediary that it was relocating to Phoenix. P. Ex. 7, at 2;

. AccentCare stopped transmitting OASIS (Outcome and Assessment Information
Set) data to CMS on July 16, 20073 CMS Ex. 1, at 1.

> My findings of fact and conclusions of law are set forth, in italics and in bold, in
the discussion captions.

> An HHA must conduct an initial assessment of each new patient within 48 hours
of referral or the physician-ordered start of care date. No later than 5 calendar days after
starting care, it must complete a comprehensive patient assessment. 42 C.F.R. § 484.55.
3

. On March 13, 2008, State Agency surveyors went to AccentCare’s new location
but were unable to survey the HHA because it was not then providing services.
CMS Ex. 1.

. AccentCare assessed its first patient at the Phoenix location on April 7, 2008; it

assessed a second patient on April 16, 2008. P. Ex. 1, at 3,4; P. MSJ at 3.

. By notice letter dated April 22, 2008, CMS advised AccentCare that its provider
agreement would terminate effective May 15, 2008. P. Ex. 6.

Aside from an oblique reference to the “summer of 2007,” Petitioner has been
conspicuously silent as to the specific date it stopped providing services to patients.
Hearing Request at 6. Nevertheless, based on the OASIS data, which Petitioner has not
challenged, I can reasonably infer that Petitioner stopped providing services to patients in
July 2007. Moreover, as CMS accurately points out, even assuming that AccentCare saw
a patient on the last day of summer (September 23, 2007, according to CMS’s
interpretation of autumnal equinox data), the HHA would still have gone more than six
months without seeing a patient. In CMS’s view, an HHA that is not providing services
to any patients does meet the statutory definition of HHA, which requires that it be
“primarily engaged in providing skilled nursing and other therapeutic services,” so CMS
is authorized to terminate its provider agreement. Act, sections 1861(0)(1); 1866(b)(2). I
agree.

The Departmental Appeals Board (Board) definitively resolved this question in a recent
decision, United Medical Home Care, Inc., DAB No. 2194 (2008). There, an HHA
declined to serve patients for six months while its payments were suspended pending the
outcome of an audit. The Board ruled that CMS could terminate its provider agreement
under section 1866(b)(2), since the HHA “substantially failed” to meet the statutory
definition that it be “primarily engaged” in providing services. United Medical, DAB No.
2194, at 9-11.

I note that, here, CMS was also authorized to terminate AccentCare’s provider agreement
because the HHA could not be surveyed in any meaningful way. To determine whether
an HHA complies substantially with Medicare’s statutory and regulatory requirements,
the regulations require that it be surveyed at least once every twelve months. 42 C.F.R.
§§ 488.10, 488.11, 488.20. CMS contracts with state agencies to conduct the surveys.
Act, section 1864(a); 42 C.F.R. § 488.20. But, since AccentCare was not in operation and

These assessments must incorporate OASIS items, which are electronically transmitted to
CMS. 42 C.F.R. § 484.20; 64 Fed. Reg. 3748 et seq. (January 25, 1999).
4

was not providing services to patients, the state agency could not conduct a survey and
could not determine that the HHA met the statutory and regulatory requirements. Ifa
provider cannot be surveyed, it cannot participate in the Medicare program. See, e.g.,
State Operations Manual, section 2008A; Regency on the Lake, DAB CR1760, at 3
(2008), aff'd DAB No. 2205 (2008).

B. After more than six months of inactivity, admitting one or two
patients does not establish that AccentCare was “primarily
engaged” in providing services.

Citing provisions from the State Operations Manual (SOM), Petitioner argues that its
termination should have been halted when it began seeing patients again on April 7, 2008.
In Petitioner’s view, that single patient assessment corrected all of its purported
deficiencies, so the termination should have been halted effective that date. See SOM §
3038A (“The RO stops the processing of an involuntary termination if it is positively
ascertained that the provider now complies with all requirements and that termination is
no longer appropriate.”) I disagree.

First, the Board specifically rejected a similar contention in United Medical. Petitioner
there also argued that it satisfied the statutory definition when it admitted two patients.
The Board rejected Petitioner’s contention, holding:

[G]iven the length of United’s prior inactivity (six months),
we do not think the admission of one or two patients is
sufficient to establish that United had become primarily
engaged in providing skilled nursing and other therapeutic
services.

United Medical, DAB No. 2194, at 12.

Second, Petitioner wrongly assumes that its termination could be based solely on its
failure to provide services, and that, so long as it began providing services, it could not be
terminated. As noted above, an HHA must not only meet the statutory definition of an
HHA, it must also demonstrate (generally during its annual survey) that it complies with
all Medicare conditions of participation. Here, because the HHA could not undergo its
annual survey, it failed to demonstrate its substantial compliance with any Medicare
condition of participation. A provider that has not demonstrated substantial compliance
with program requirements cannot participate in the Medicare program.
5

Cc. CMS complied with regulatory requirements for providing notice
of termination, 42 C.F.R. § 489.53(d)(1).

Citing provisions of the SOM that strictly limit the notice given when a provider’s
conditions pose immediate jeopardy, Petitioner complains that, since its conditions did
not pose immediate jeopardy, it was entitled to additional notice prior to its termination.
First, as CMS correctly points out, | am bound by the statute and regulations, not by
manual provisions. With limited exceptions that are not applicable here, the regulation
governing notice of termination requires that CMS provide notice of termination “at least
15 days before the effective date of termination.” 42 C.F.R. § 489.53(d)(1). CMS
satisfied the regulatory notice requirements.

Moreover, the alternative provision of the SOM — which would have allowed Petitioner
additional time — does not apply here. It sets forth a notice schedule beginning “on the
date on which the entire survey is completed.” SOM, § 3012. Since survey completion
initiates the entire schedule, and no survey could be performed here, CMS justifiably did
not follow that provision.

D. Petitioner was not entitled to an opportunity to correct.

Petitioner also complains that CMS did not afford it the opportunity to correct its
deficiencies prior to termination.

The statutory and regulatory provisions that authorize termination do not include any
opportunity to correct prior to termination. Act, section 1866(b)(2); 42 C.F.R.

§ 489.53(a)(1). Petitioner, however, argues that I should disregard section 1866(b)(2) and
limit my analysis to section 1891(e) of the Act, which applies specifically to HHAs.
Petitioner then claims that section 1891(e) affords it a six-month opportunity to correct
prior to termination. Neither assertion is correct.

The two statutory provisions are wholly consistent and I must consider both. Section
1866(b) authorizes termination of any provider that fails to meet its statutory definition or
fails to comply with applicable conditions of participation. Section 1891(e)(1) applies to
immediate jeopardy situations, and requires that the Secretary “take immediate action” to
remove the immediate jeopardy or to terminate an HHA’s provider agreement. Section
1891(e)(2) applies to non-immediate jeopardy situations, and gives the Secretary the
discretion to impose intermediate sanctions (not to exceed 6 months) instead of
termination. Nothing in that section requires that the Secretary afford a deficient HHA
the opportunity to correct.
6

By regulation, CMS describes the circumstances in which certain deficient providers,
including HHAs, may be granted the opportunity to correct. Where deficiencies are at
standard — not condition — level, CMS will allow a reasonable time to achieve compliance
if the provider submits an acceptable plan of correction, and CMS determines that its
deficiencies neither jeopardize the health and safety of patients nor “are of such character
as to seriously limit the provider’s capacity to render adequate care.” 42 C.F.R. § 488.28.

I find that section 488.28 does not apply to providers such as AccentCare that have
stopped providing services and have therefore not been subject to annual survey. Since
the HHA has not been surveyed and could not be surveyed, CMS is not able to determine
that it has the capacity to render adequate care. CMS may not, therefore, allow it the
opportunity to correct.*

II. Conclusion

Because AccentCare no longer met the statutory definition for HHAs, CMS was
authorized to terminate its provider agreement. I therefore grant CMS’s motion for
summary judgement, and deny Petitioner’s motion for summary judgment.

/s/
Carolyn Cozad Hughes
Administrative Law Judge

* Petitioner claims that CMS’s alleged failure to comply with its regulations and
the SOM is arbitrary and capricious and violates the due process clause. I have no
authority to review constitutional claims. Hermina Traeye Memorial Nursing Home,
DAB No. 1810 (2002). Nevertheless, I find no failure by CMS to comply with its
regulations and the SOM, nor do I find any basis for Petitioner’s claim that CMS’s
enforcement actions were arbitrary and capricious.


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

New Horizon Rehabilitation Center
(CNN: 10-5196),

Petitioner,

Centers for Medicare & Medicaid
Services,

Respondent.

1

DECISION

Date: November 25, 2008

Docket No. C-07-163
Decision No. CR1868

Petitioner, New Horizon Rehabilitation Center, failed to follow its own policies for
investigating allegations of sexual abuse of one of its residents, putting it in
noncompliance with program requirements and placing its residents in immediate

jeopardy for a period of three days. Petitioner returned to su
resumed adhering to its policies regarding resident abuse.

I. BACKGROUND

Petitioner is a skilled nursing facility located in Ocala, Flori

stantial compliance when it

a, dually certified to

participate in both the Medicare and Medicaid programs. On November 7, 2006, the
Florida Agency for Health Care Administration (state agency) conducted a complaint
investigation at Petitioner’s facility. The complaint investigation concerned events
surrounding one of Petitioner’s residents. The survey resulted in the citation of Petitioner

for its failure to investigate and report violations involving a

leged resident abuse as

required by the regulations, with Petitioner being cited at the immediate jeopardy level.
2

CMS imposed a civil money penalty (CMP) of $7500 per day for the period of November
4 through November 6, 2006, and a $400 per day CMP beginning on November 7, 2006
and continuing until December 8, 2006, when the State agency made a re-visit to
Petitioner’s facility and determined that Petitioner had achieved substantial compliance.

This case was docketed and assigned to me for hearing and decision on December 28,
2006. The parties submitted pre-hearing briefs. I held a hearing in Ocala, Florida, on
January 8 and 9, 2008. At the hearing, CMS offered 42 exhibits (CMS Exs. 1-42).
Petitioner objected to parts of CMS Exs. 8 and 9, but I overruled the objections.
Petitioner offered 23 exhibits (P. Exs 1-23), but withdrew its Ex. 19. CMS made no
objection to Petitioner’s exhibits. Accordingly, | admitted into the record CMS Exs. | -
42 and P. Exs. 1-18 and 20-23. Additionally, I admitted into the record ALJ Ex. l,a
portion of a deposition a CMS witness had given in a related matter. The parties then
submitted post-hearing briefs and CMS a reply brief.

II. ISSUES
The issues presented in this case are:

1) Whether Petitioner failed to ensure that an allegation of resident abuse
was immediately investigated and reported to the proper authorities.

2) Whether immediate jeopardy was present, and if so, was the amount of
the CMP reasonable; and

3) When did Petitioner return to substantial compliance.
Il. FINDINGS OF FACT AND CONCLUSIONS OF LAW
I make findings of facts and conclusions of law (Findings) to support my decision in this
case. I set forth each finding below in boldface italics as a separate heading and I discuss

each Finding in detail.

1. Petitioner failed to investigate and report immediately an allegation of sexual
abuse of one of its residents.

A facility is required by regulation to ensure that its residents are free of mistreatment and
abuse. Specifically, the facility must develop and implement written policies and
procedures that prohibit the abuse of residents. 42 C.F.R. § 483.13(c). In addition,
3

The facility must ensure that all alleged violations involving mistreatment, neglect,
or abuse, including injuries of unknown source, and misappropriation of resident
property are reported immediately to the administration of the facility and to other
officials in accordance with State law through established procedures (including to
the State survey and certification agency).

42 C.F.R. § 483.13(c)(2).
Moreover, a facility —

must be administered in a manner that enables it to use its resources effectively
and efficiently to attain or maintain the highest practicable physical, mental, and
psychosocial well-being of each resident.

42 C.F.R. § 483.75.

The survey report found deficiencies of the requirements of the provisions of 42 C.F.R.
§ 483.13(c) at Tags F225 and F226, at a scope and severity level of “L,” indicating
immediate jeopardy to resident health and safety. CMS Ex. 1, at 1-14. Additionally, the
survey report also cited Petitioner for failure to meet the requirements of 42 C.F.R.

§ 483.75 at Tag F490, also at the “L” level, for Petitioner’s administration of its facility.
CMS Ex. 1, at 14-16. All of the alleged deficiencies arose from the same incident.

Shortly before noon on Saturday November 4, 2006, a housekeeping employee at the
facility, JH, told a certified nursing assistant (CNA), TA, that he had seen another
housekeeping employee, RV, in Resident 1’s room and that RV had his hand down by
Resident 1’s groin area.' Resident 1, a 50-year-old female at the time of the incident, had
diagnoses which included blindness, deafness, and muteness. TA told JH that he should
report what he saw to the licensed practical nurse (LPN) on duty, DM, which he promptly
did. DM told another nurse, DB, about the alleged abuse, and together they monitored
RV, but did not notify the nurse supervisor of the incident.

On Sunday, November 5, 2006, LPN DM was again on duty, and again failed to notify
any of her superiors about the incident. Meanwhile, RV continued to work at the facility,
working shifts on Sunday and Monday.

' T identify all of Petitioner’s employees by their initials.
4

On November 6, 2006, at approximately 8:00 a.m., LPN DM informed the Director of
Nursing (DON) about the incident. The DON informed the facility’s administrator at
8:20 a.m. At around noon, Petitioner informed the State agency of the incident.

A surveyor from the state agency, Richard Brooker, arrived on November 7, 2006, to
perform a complaint survey. After Mr. Brooker conferred with Petitioner’s administrator,
the administrator notified the police of the incident.

RV was suspended on November 6, pending an investigation of the incident. Petitioner
also suspended DM for three days for her failure to report the incident, and subsequently,
terminated DM on November 15, 2006. CMS Ex. 10. On November 8, 2006, police
arrested RV and charged him with “lewd/lascivious molestation of elderly person.” CMS
Ex. 16. LPN DM was charged on November 14, 2006, with the failure to report
abuse/neglect of a vulnerable adult. CMS Ex. 27.

The issue in this case is not about whether Resident 1 was sexually abused; that, while
very disturbing, is not relevant to the basis for Petitioner’s alleged noncompliance with
program requirements. Nor is Resident 1’s physical status as an individual who is blind,
deaf, and mute relevant. To suggest otherwise would be to posit that a facility’s duty of
care to its residents is somehow dependent on the physical or mental status of each
resident. The duty of care ofa facility to prevent the abuse of its residents, be it physical
or sexual, is absolute. No greater or lesser duty of care is owed because of a resident’s
particular frailties.

Rather, the dispositive issue before me is whether Petitioner adhered to the regulatory
requirements and its own procedures in investigating and reporting this incident.

Petitioner maintains that it had policies and procedures in place to prevent, identify, and
report resident abuse. It states that all employees received an in-depth orientation on
resident abuse. All of its employees wore identification badges which had on their back
instructions on how to report abuse. It placed numerous signs throughout the facility on
ow to report abuse of residents. All healthcare employees received continuing abuse
identification and reporting training as part of their professional education.

Petitioner states that once the incident was reported on November 6, 2006, it immediately
undertook a series of actions in accord with its established policies. RV was removed
from the facility, suspended, and ultimately terminated. Petitioner’s abuse coordinator
arranged for a specialist from blind services to conduct an interview with Resident 1. The
abuse coordinator also conducted a physical examination of Resident 1, and found no
physical or psychological distress. Resident 1’s family members were immediately
notified. Petitioner interviewed all of the other female residents in the facility and found
5

no signs or symptoms of abuse. Petitioner immediately conducted in-service training of
all its staff on abuse prevention, as well as on identification and reporting polices and
procedures. Petitioner reported the incident to the Abuse Registry, Florida’s Abuse
Reporting Clearing House, around noon on November 6. Petitioner further notified the
State agency on November 6, which sent in a surveyor to conduct a complaint
investigation on November 7. Petitioner’s department heads reviewed policies and
procedures and directed that all vulnerable residents be assessed for indicators of abuse or
neglect. It arranged for Resident 1’s personal physician to schedule an examination
which was completed several days later. The facility also ordered a psychiatric consult of
Resident 1 to be conducted on November 6.

Petitioner maintains that it never before had a breakdown in its abuse reporting system
and had no inkling that a breakdown would occur, and that LPN DM’s failure to follow
clear policy was beyond its control. Petitioner maintains that LPN DM’s failure to follow
policy was beyond its control. Petitioner argues that DM made a judgment call that was

admittedly wrong, in that she should have noti
incident, but that this was an isolated technica

fied immediately her superiors about the
violation of the regulations and not an

indication of a systemic problem within the facility.

Neither numerous measures Petitioner took to

prevent the abuse of its residents and to

ensure the reporting of suspected cases of abuse, nor the actions Petitioner took after it

was notified of the incident are in dispute. Al

those measures, however, prove

meaningless when Petitioner’s employees fail to act on their training or Petitioner fails to
effectively communicate and implement those procedures. Here, it was not just one, but
at least three of its employees - CNA TA, LPN DM, and nurse DB — who failed to report
the incident to higher authorities within the facility. Furthermore, even when Petitioner’s
administration was notified of the potential abuse of one of its residents on November 6,
it was not until November 7 that it notified, at the prompting of the State agency surveyor,
the police of the incident.

At the hearing CMS presented the expert testimony of Dr. Peter Lichtenberg, who was
qualified as a clinical psychologist and a neuropsychologist, and also as an expert in
interdisciplinary teamwork. Dr. Lichtenberg testified that LPN DM should have
recognized the urgency of the situation when the incident was reported to her and that she
should have acted according to the procedures formulated by Petitioner. Tr. at 112. Dr.
Lichtenberg further testified that the failure to immediately suspend RV, instead of
allowing RV to continue working at the facility throughout the weekend, did not meet the
standard of care. Tr. at 39.
6

I reject Petitioner’s position that it should not be punished because of the actions of one of
its employees to follow its procedures on abuse reporting. First, Petitioner is responsible
for the actions of its employees. Second, as noted above, three of the employees were
aware of the incident throughout the weekend, and none sought to keep RV from access
to residents for two days. The failure of multiple employees to alert Petitioner’s
administration of the incident indicates a systemic problem within the facility.

Moreover, there was evidence that RV was involved in an earlier incident involving
alleged sexual harassment of one of his fellow employees for nearly three months from
November 2005 through January 2006; these incidents were not reported until November
6, 2006. CMS Ex. 8. Petitioner did not write RV up for these incidents of sexual
arassment until November 9, 2006, five days after the incident that is at the heart of this
case. CMS Ex. 7. Dr. Lichtenberg testified that this raised questions about whether
Petitioner effectively communicated the importance of professional boundaries to its staff,
particularly in relation to sexual matters (Tr. at 58), and that this was evidence that RV
was a “troubled employee” (Tr. at 115). Additionally, there was evidence that DM had
een suspended for a three-day period just 10 days before the incident at issue. P. Ex. 4.
Dr. Lichtenberg testified that this was an indication of a failure of DM’s position as a role
model for other staff in the facility. Tr. at 60. Dr. Lichtenberg testified that the prior
suspension indicated that the relationship between DM and her supervisors was in “real
trouble.” Tr. at 115.

therefore find that CMS has established a prima facie case that Petitioner, through its
employees, did not follow its own policies in reporting and investigating allegations of
resident abuse, and that Petitioner has failed to rebut this case.

2. Petitioner’s failure to investigate and report the allegation of resident abuse
put the residents of the facility in immediate jeopardy, justifying the amount of
the CMP imposed.

CMS asserted that Petitioner’s failure to immediately investigate an allegation of resident
abuse constituted immediate jeopardy to all the residents in the facility. Petitioner was
cited at a scope and severity level of “L,” which means widespread immediate jeopardy to
resident health and safety. According to the regulations, immediate jeopardy --

means a situation in which the provider’s noncompliance with one or more
requirements of participation has caused, or is likely to cause, serious injury, harm,
impairment, or death to a resident.
7

42 C.F.R. § 489.3. I note that the regulation does not require that actual harm to a
resident occur in order for immediate jeopardy to apply, but only that there is a Jikely
potential for harm to a resident.

Here, it is inconclusive whether Resident | suffered any actual injury or harm as a result
of the alleged abuse. No convincing evidence of actual harm or injury has been
presented. Nevertheless, even though Resident 1 may not have been actually harmed,
there was certainly the potential for harm to her and to other residents as the allegation of
sexual abuse went uninvestigated for nearly 48 hours, time during which the suspected
abuser remained at work at the facility among other residents. There were 132 residents
at the facility at the time of the incident, including 36 with dementia and two with mental
retardation. CMS Ex. 23, at 1. Each of the residents was potentially at risk while a
member of the cleaning staff, charged with a credible accusation of abuse, was among
them. Consequently, I find that immediate jeopardy was present for the period November
4 through 6, 2006.

The amounts of a CMP for deficiencies constituting immediate jeopardy are set forth at
42 C.F.R. § 488.438(a)(1). The amounts range from $3,050 to $10,000 per day. Here
CMS imposed a CMP of $7,500 per day for three days, a penalty toward the upper end of
the range of possible CMPs.

Petitioner argues that at most the CMP imposed should be a one-time per instance CMP
or, in the alternative, that the CMP imposed should be in the lower range of available
CMPs from November 4 through November 6.

I find that the CMP of $7,500 is reasonable in the light of the circumstances. First, the
scope and severity of the deficiencies were placed at the “L” level, the highest possible
level in the matrix of the seriousness of deficiencies. CMS’s determination as to the level
of noncompliance must be upheld unless it is clearly erroneous. 42 C.F.R.

§ 498.60(c)(2). Moreover, one of the factors to be considered in determining the amount
of a CMP is the facility’s degree of culpability, which includes “neglect, indifference, or
disregard of resident care, comfort, or safety.” 42 C.F.R. § 488.438(f)(4). Here,
Petitioner’s culpability must be considered high, as several of its employees failed to
report an incident of suspected abuse to higher authorities, and, once it was reported,
Petitioner’s administration failed to notify the police until prompted by the State agency
surveyor. Thus, I find nothing erroneous about the level at which CMS set the CMP.

As for Petitioner’s argument that a per-instance, rather than a daily, CMP should have
been imposed, I do not have the authority to review CMS’s choice of the type of CMP it
decides to impose. 42 C.F.R. § 488.438(e).
8

I therefore find that Petitioner’s noncompliance placed its residents in immediate jeopardy
and that a daily CMP of $7,500 was reasonable under the circumstances.

3. Petitioner returned to substantial compliance on November 7, 2006, and no
further CMP should have been imposed on or after that date.

n addition to the CMP imposed for the immediate jeopardy citation, CMS also imposed a
CMP of $400 per day for the period November 7 through December 8, 2006. CMS
offered no argument for the duration of this CMP other than that it was not until
December 8, 2006, that a surveyor from the State agency revisited the facility for a
follow-up survey and determined that Petitioner was in substantial compliance. That
State agency surveyor, Mr. Brooker, was the same surveyor who visited the facility for
the complaint investigation on November 7, 2006. During its examination of Mr.

Brooker at the hearing, CMS suggested that since Petitioner in its plan of correction to the
deficiencies identified during the November 7 complaint survey indicated that it planned
to have all the cited deficiencies corrected by November 16, 2006’, it was illogical to
assume that Petitioner had achieved substantial compliance prior to that date. Tr. at 213.

Petitioner established in its cross-examination of Mr. Brooker that it was, in fact, in
substantial compliance after his initial visit on November 7, 2006. Mr. Brooker
responded affirmatively to all the actions Petition had taken once it had become informed
of the incident on November 6. Those actions included: an in-house investigation; the
suspension of involved staff; in-service training for staff; the interviewing of all female
residents; the examination of Resident 1 and a care plan team meeting to address her
needs; and the reporting of the incident to the abuse registry. Tr. at 204-07. Mr. Brooker
further testified that Petitioner was not in substantial compliance with the reporting
requirements when he entered the facility on November 7 because of Petitioner’s failure
to report the incident to the police. However, Mr. Brooker’s testimony established that
Petitioner was in compliance when he left the facility later that day as Petitioner had
prepared and implemented a plan of corrective measures. Tr. at 209. Mr. Brooker also
testified that he did not know why a CMP was imposed for the 30-day period afer
November 7. Tr. at 210. In short, Mr. Brooker testified that Petitioner had returned to
substantial compliance by the end of November 7, 2006.

> Petitioner’s plan of correction seems to indicate that it would correct all the
deficiencies and return to compliance by November 9, 2006. See CMS Ex. 1, at 1, 5, 8,
11, and 14.
9

Contrary to CMS’s assertions, Petitioner has sustained its burden of establishing that it
returned to substantial compliance on November 7, 2006. Accordingly, I conclude that
no CMP should have been imposed after November 6, 2006.

IV. CONCLUSION

Based on my review of all of the evidence and testimony presented in this case, I sustain
the imposition of a CMP of $7,500 per day for the period of November 4 through
November 6, 2006. I also find that the evidence in this case established that Petitioner
returned to substantial compliance on November 7, 2006. Therefore, no additional CMP
should be imposed after November 6, 2006.

/s/
Alfonso J. Montano
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Heartland of Madeira (CCN: 36-5186), ) Date: November 21, 2008

)
Petitioner, )
)

-Vv.- ) Docket No. C-07-761

) Decision No. CR1867
Centers for Medicare & Medicaid )
Services. )
)

DECISION

Petitioner, Heartland of Madeira (Petitioner or facility), is a long term care facility located
in Madeira, Ohio, that is certified to participate in the Medicare program as a provider of
services. The parties have agreed that, from July 19 through August 26, 2007, the facility
was not in substantial compliance with most of the Medicare requirements cited following
a July 19, 2007 facility survey. However, Petitioner continues to challenge the Centers
for Medicare & Medicaid Services’ (CMS’s) determination that it was not then in
substantial compliance with the quality-of-care regulation, 42 C.F.R. § 483.25.

I conclude that the facility was not in substantial compliance with 42 C.F.R. § 483.25,
along with the nine uncontested requirements. I affirm the civil money penalty (CMP)
imposed, $950 per day for 39 days ($37,050 total).

I. Background

The Social Security Act (Act) sets forth requirements for nursing facility participation in
the Medicare program, and authorizes the Secretary of Health and Human Services to
promulgate regulations implementing those statutory provisions. Act, section 1819. The
Secretary’s regulations are found at 42 C.F.R. Part 483. To participate in the Medicare
program, a nursing facility must maintain substantial compliance with program
requirements. To be in substantial compliance, a facility’s deficiencies may pose no
2

greater risk to resident health and safety than “the potential for causing minimal harm.”
42 C.F.R. § 488.301.

The Secretary contracts with state survey agencies to conduct periodic surveys to
determine whether skilled nursing facilities are in substantial compliance with program
participation requirements. Act, section 1864(a); 42 C.F.R. § 488.20. The regulations
require that each facility be surveyed once every twelve months, and more often, if
necessary, to ensure that identified deficiencies are corrected. Act, section 1819(g)(2)(A);
42 C.F.R. §§ 488.20(a); 488.308.

Here, following an annual survey, completed July 19, 2007, CMS determined that the
facility was not in substantial compliance with the following Medicare participation
requirements:

. 42 C.F.R. § 483.10(c)(2)-(5) (Tag F159 — protection of resident funds) at a
D level of scope and severity (isolated instance of noncompliance that
causes no actual harm with the potential for more than minimal harm);

. 42 C.F.R. § 483.13(a) (Tag F221 — physical restraints) at a D level of scope
and severity;

. 42 C.F.R. § 483.15(e)(1) (Tag F246 — accommodation of needs) at a D level
of scope and severity;

. 42 C.F.R. § 483.15(h)(2) (Tag F253 — housekeeping/maintenance) at an E
level of scope and severity (pattern of noncompliance that causes no actual
harm with the potential for more than minimal harm);

. 42 C.F.R. §§ 483.20, 483.20(b) (Tag F272 — comprehensive assessments) at
a D level of scope and severity;

. 42 C.F.R. §§ 483.20(d), 483.20(k)(1) (Tag F279 — comprehensive care
plans) at a D level of scope and severity;

. 42 C.F.R. § 483.25 (Tag F309 — quality of care) at a G level of scope and
severity (isolated instance of noncompliance that causes actual harm that is
not immediate jeopardy).

. 42 C.F.R. § 483.25(h)(2) (Tag 324 — accidents) at a D level of scope and
severity;
. 42 C.F.R. § 483.25(m)(1) (Tag F332 — medication errors) at a D level of
scope and severity;

and

. 42 C.F.R. § 483.25(m)(2) (Tag F333 — medication errors) at a D level of
scope and severity.

CMS subsequently found the facility in substantial compliance with certification
requirements as of August 27, 2007. CMS has imposed against the facility a CMP of
$950 per day for 39 days of substantial noncompliance ($37,050 total). CMS Ex. 1.

In its hearing request, Petitioner initially challenged all ten deficiency findings. The
parties subsequently resolved their disputes with respect to all of the deficiencies cited
except one, 42 C.F.R.§ 483.25 (quality of care). Order (July 22, 2008). To resolve this
remaining issue, I held a hearing by telephone on July 29, 2008. Thomas W. Hess
appeared on behalf of Petitioner, and Juanita S. Temple appeared on behalf of CMS. I
have admitted into evidence CMS Exhibits (Exs.) 1-38, including CMS Exhibits 3A, 35A,
and 36A', and P. Exs. 1-3. Tr. 2-3.

The parties have also filed opening briefs (Br.), closing briefs (Cl. Br.) and reply briefs
(Reply).

II. Issues

By conceding its noncompliance with nine of the ten Medicare requirements cited,
Petitioner admits that it was not in substantial compliance, and CMS is therefore
authorized to impose a remedy. Act, section 1819(h); 42 C.F.R. §§ 488.400, 488.402,
488.406. I have no authority to review CMS’s determination to impose a remedy nor its
selection of remedies — in this case a per day CMP. 42 C.F.R. §§ 488.408(g)(2),
488.438(e). The per day penalty must be at least $50 per day. 42 C.F.R. § 488.438.

' CMS initially submitted unsigned witness declarations: CMS Exhibits 34
(Louderback Decl.), 35 (Gilmore Decl.), and 36 (Smith Decl.). It subsequently submitted
signed versions of those documents, marked CMS Ex. 35A (Gilmore Decl.), CMS Ex.
36A, at 1-4 (Louderback Decl.), and CMS Ex. 38 (Smith Decl.).
The following issues remain:

. whether, from July 19 through August 26, 2007, the facility was in substantial
compliance with 42 C.F.R. § 483.25 (quality of care);

and
. whether the $950 per day CMP is reasonable.
III. Discussion

A, The facility was not in substantial compliance with 42 C.F.R.
§ 483.25.

Under the statute and the “quality-of-care” regulation, each resident must receive, and the
facility must provide, the necessary care and services to allow a resident to attain or
maintain the highest practicable physical, mental, and psychosocial well-being, in
accordance with the resident’s comprehensive assessment and plan of care. Act, section
1819(b); 42 C.F.R. § 483.25. The regulation also requires that the facility “take
reasonable steps to ensure that a resident receives supervision and assistance devices
designed to meet his assessed needs and to mitigate foreseeable risks of harm from
accidents.” Guardian Health Care Center, DAB No. 1943, at 18 (2004) (citing 42 C.F.R.
§ 483.25(h)(2)). The facility must anticipate what accidents might befall a resident and
take steps to prevent them.

A facility is permitted the flexibility to choose the methods it
uses to prevent accidents, but the chosen methods must
constitute an “adequate” level of supervision under all the
circumstances.

Windsor Health Care Center, DAB No. 1902, at 5 (2003).

1. Facility staff did not provide Resident 56 with a two-person assist
as her assessments required.

Resident 56 (R56) was a 68-year-old woman with a below the knee amputation of her
right leg, severely impaired vision, and incontinence of bowl and bladder. Her diagnoses

> My findings of fact and conclusions of law are set forth, in italics and bold, in
the discussion captions.
5

included Parkinson’s Disease, contractures of the hands, diabetes, cardiomyopathy,
coronary artery disease, congestive heart failure, hypertension, intractable back pain
causing general weakness, end-stage renal disease, and depression. She took several
medications, was on dialysis, had an in-dwelling catheter, and had frequent nausea. CMS
Ex. 12, at 1, 14, 18, 51, 59, 60, 61, 68, 74; Tr. 50.

From as early as November 2006, R56’s assessments have consistently called for two-
person assists with “bed mobility,” which is defined as “[h]ow resident moves to and
from lying position, turns side to side, and positions body while in bed.” CMS Ex. 12, at
67; see CMS Ex. 12, at 60 (February 2007 assessment also calls for a two-person assist
with bed mobility). Yet, on March 6, 2007, a lone certified nurse assistant (CNA) “rolled
[the] patient over on her left side to clean her bottom[.]” CMS Ex. 12, at 20. According
to the CNA, R56 then “proceeded to slide off side of bed. I could not stop her... .”
Both side rails were up, but they did not prevent the fall. CMS Ex. 12, at 20.

R56 sustained a subacute left hip fracture, which required open reduction/internal fixation
surgery. CMS Ex. 12, at 36, 45.

In her statement, the CNA acknowledged that R56 needed assistance from two people
when being changed. CMS Ex. 12, at 20. The facility’s subsequent incident report, dated
March 7, 2007, reiterates that R56 required a two-person assist with bed mobility. CMS
Ex. 12, at 30; see also CMS Ex. 12, at 88 (March 7, 2007 care plan requiring two-person
assist with bed mobility).

Thus, the facility appropriately anticipated that an accident might befall the resident, and
took steps to prevent it by requiring a two-person assist when turning or otherwise
repositioning R56 in her bed. Unfortunately, staff failed to follow the unambiguous
instruction and an accident resulted — an error that plainly constitutes a deficiency under
42 C.F.R. §§ 483.25 and 483.25(h)(2).

Petitioner, however, claims no violation. While not disputing that the CNA turned R56
without assistance, Petitioner notes that the repositioning was incidental to providing
“personal care,” and R56’s care plan required only a one-person assist for providing
“personal hygiene.” CMS Ex. 12, at 60, 67. In Petitioner’s view, the CNA was not
obligated to follow the “bed mobility” instructions in R56’s care plan, but could instead
follow the “personal hygiene” instructions. I disagree.

I recognize that personal care, even perineum care, may not always require a two-person
assist. So long as the resident could be cared for without changing her position in bed,
one staff member might safely have performed the function. But the critical factor here is
resident safety. For its argument to prevail, Petitioner would have to show that the
6

underlying reason for changing R56’s position somehow alters the level of risk posed by
not providing her the requisite two-person assist. Petitioner has made no such showing.

Iam not persuaded that R56’s purported ability to assist her care-giver by holding on to
the side rails changed the level of risk. See Tr. 50. Certainly, at the time of R56’s fall,
nothing in her care plan even suggested that her ability to grasp the side rail would
alleviate the need for an additional person to reposition her in bed. Moreover, some
months later, a rehabilitation assessment dated August 10, 2007, reiterated that R56
required two staff members to move her from a supine to side lying position. She was
then able to maintain her side-lying position so long as her left hand was free so that she
could grab the bed rail, which meant that one person could safely care for her so long as
she was already in position and holding the side rail. However, she was unable to use her
right hand to hold the bed rail, so if her left hand was encumbered, she still required a
two-person assist for back and perineum care. CMS Ex. 12, at 11. In any event, the
assessment found that she always required a two-person assist when her position was
being changed; only after the position change, when she was safely on her side with her
left hand securely grasping the side rail, could the facility reduce the assist to one staff
member. Thus, the August 13, 2007 amendment to R56’s care plan still required “2 staff
assist for bed mobility,” although it added “may use one staff member if patient able to
maintain side lying position for back and peri care.” CMS Ex. 12, at 82.

The facility understood that safely changing R56’s position in bed required a two-staff
assist, and it care planned accordingly. Staff unfortunately did not follow the care plan’s
instructions, and a plainly foreseeable accident resulted. The facility was therefore not in
substantial compliance with 42 C.F.R. §§ 483.25 and 483.25(h)(2).

2. Facility staff did not provide Resident 95 with the appropriate
number of Heparin flushes.

Resident 95 (R95) had diagnoses of lung cancer, renal failure, congestive heart failure,
hypertension, deep vein thrombosis, and anemia. She had two portacaths in place. CMS
Ex. 7, at 17; CMS Ex. 17, at 1, 14. Her physician ordered that the portacaths be flushed
every 12 hours with 5 cubic centimeters (ccs) of normal saline, and 3 ccs of the blood-
thinning medication, Heparin. CMS Ex. 7, at 17; CMS Ex. 17, at 13.

* A portacath is a small medical appliance that is installed beneath the skin and
connected to a vein, providing easier access to the vein for administering medications or
drawing blood.
7

According to a July 2007 Medication Administration Record (MAR), staff administered
the ordered flushes at 10:00 a.m. on July 1. From July 2 through July 9, and on July 11,
they administered the flushes twice daily, as ordered, at 10:00 a.m. and at 10:00 p.m. On
July 10, at 10:00 a.m., the MAR indicates that staff administered one of the two ordered
flushes. From July 12 through 13, the MAR indicates once daily flushes, each at 10:00
p.m. The document records no additional flushes for the month. CMS Ex. 17, at 13 (First
MAR); see CMS Ex. 7, at 17.

However, a second MAR shows an undated order for flushing twice daily with 10 ccs of
normal saline and 5 ccs of Heparin.* According to this document, flushes were
administered at 6:00 p.m. on July 9; at 6:00 p.m. on July 11, 12, and 13; at 6:00 a.m. on
July 14; and at 6:00 a.m. and 6:00 p.m. on July 15. CMS Ex. 17, at 5. Surveyors
observed staff administering 10 ccs of normal saline and 5 ccs of Heparin. CMS Ex.
35A, at 4 (Gilmore Decl. { 9).

It appears that staff were inconsistently following inconsistent orders. CMS suggests that
the First MAR was, in fact, the valid order, and Petitioner has not suggested otherwise.
So staff should have been administering 3 ccs of Heparin twice per day (total 6 ccs per
day). But, as the two documents establish, for at least half the time from July | through
July 15, 2007, staff were not following the valid physician order. On July | and July 10,
2007, they administered only one flush (3 ccs). Probably even more troubling, on July 9
and 11, they administered three flushes — totaling 11 ccs. For two days (July 12-13), they
administered 3 ccs of Heparin at 10:00 p.m., and 5 ccs of Heparin at 6:00 p.m. (total 8 ccs
per day). On July 14, they administered only one flush, at 6:00 a.m., containing 5 ccs of
Heparin. Finally, on July 15, they administered two flushes, each containing 5 ccs of
Heparin, at 6:00 a.m. and 6:00 p.m. (total 10 ces).

Petitioner has neither denied CMS’s allegations, nor explained how or why this erratic
and potentially dangerous situation arose. Instead, pointing to testimony from Surveyor
Sharon Smith, Petitioner asserts that no harm befell R95 as a result of the medication
errors, and argues that, in the absence of actual harm, no penalty should be imposed. P.
Reply at 3-4 (citing Tr. 29).

* Although the document is dated July 5, 2005, its individual orders are dated July
2007, so the 2005 date appears to be in error. The alternative explanation is even more
problematic for the facility: its staff were occasionally referring to and following an out-
of-date order.
8

For its part, CMS contends that Surveyor Smith did not observe R95 nor assess this
deficiency, so her opinion is not dispositive. See Tr. at 30-32. CMS also offers some
evidence of actual harm, pointing out that R95 experienced itching and burning, which
are side effects of Heparin. CMS Ex. 37, at 4; CMS Ex. 17, at 4, 10. Surveyors also
found that R95 had also fallen recently and had “bleeding by the cath site,” possibly
related to excessive blood thinners, although the facility did not adequately assess the
situation. CMS Ex. 27, at 40.

I need not find actual harm in order to sustain the finding of substantial noncompliance.
Whenever a deficiency poses the potential for more than minimal harm, the facility is not
in substantial compliance, and CMS has the authority to impose a remedy. Act, section
1819(h); 42 C.F.R. §§ 488.301, 488.402, 488.406. Failure to follow a valid physician’s
order almost inevitably presents the potential for more than minimal harm. See, e.g.,
Premier Living and Rehab Center, DAB No. 2146 (2008); Barn Hill Care Center, DAB
No. 1848 (2002). Failure to clarify vague or conflicting physician orders almost
inevitably presents the potential for more than minimal harm. See, e.g., Hawthorne Inn of
Danville, DAB CR1801 (2008); Rosewood Care Center of Peoria, DAB No. 1912
(2004). Moreover, here, R95 was also taking the blood thinner, Coumadin. Exceeding
the physician’s order for an additional blood thinner (Heparin) placed R95 at increased
risk for bleeding complications. See, e.g., Rosewood Care Center of Peoria, DAB No.
1912.

Because facility staff did not clarify inconsistent physician orders, and likely administered
excessive Heparin doses, it failed to provide the care necessary for R95 to attain or
maintain her highest practicable physical well-being and was not in substantial
compliance with 42 C.F.R. § 483.25.

B. The amount of the CMP — $950 per day for 39 days — is reasonable.

I next consider whether the CMP was reasonable by applying the factors listed in 42
C.F.R. § 488.438(f): 1) the facility’s history of noncompliance; 2) the facility’s financial
condition; 3) factors specified in 42 C.F.R. § 488.404; and 4) the facility’s degree of
culpability, which includes neglect, indifference, or disregard for resident care, comfort or
safety. The absence of culpability is not a mitigating factor. The factors in 42 C.F.R.

§ 488.404 include: 1) the scope and severity of the deficiency; 2) the relationship of the
deficiency to other deficiencies resulting in noncompliance; and 3) the facility’s prior
history of noncompliance in general and specifically with reference to the cited
deficiencies.

CMS has imposed a penalty of $950 per day, which falls within the lower to mid-range
for non-immediate jeopardy situations ($0 — $3000). 42 C.F.R. § 488.438(a)(1).
9

With respect to facility history, CMS points to multiple deficiencies cited during the
facility’s June 2006 survey, some of which were repeated at the time of the July 2007
survey. Notably, in June 2006, the facility was also not in substantial compliance with the
quality-of-care regulation, 42 C.F.R. §§ 483.25 (Tag F309) and 483.25(h)(2) (Tag F324).
Its violation of section 483.25(h)(2) was at a G level of scope and severity (isolated
instance of noncompliance that causes actual harm that is not immediate jeopardy). CMS
Ex. 26, at 1. During both surveys, deficiencies were cited under 42 C.F.R. §§ 483.20(d)
and 483.20 (k)(1) (Tag F279 — comprehensive care plans). The June 2006 survey
included multiple additional deficiencies at scope and severity levels D and E and one
deficiency at a level H (pattern of noncompliance that causes actual harm but is not
immediate jeopardy). Jd.* CMS has thus established a significant history of
noncompliance.

Petitioner has not argued that its financial condition affects its ability to pay the penalty.
With respect to the remaining factors, I note that the sheer number of deficiencies cited in
July 2007, each of which poses the potential for more than minimal harm, justifies an

increase in the penalty. In addition to the quality-of-care problems:

. facility management of patient funds was inadequate, violating 42 C.F.R.
§ 483.10(c)(2)-(5) (CMS Ex. 7, at 2-3);

. two residents were inappropriately restrained, violating 42 C.F.R. § 483.13(a)
(CMS Ex. 7, at 3-5);

. staff did not ensure that one resident’s call light would be within her reach, which
is required by 42 C.F.R. § 483.15(e)(1) (CMS Ex. 7, at 5-7);

. surveyors cited a lengthy list of housekeeping and maintenance problems, 42
C.F.R. § 483.15(h)(2) (CMS Ex. 7, at 7-9);

. for two residents, the comprehensive assessments, required by 42 C.F.R. §§ 483.20
and 483.20(b), were inadequate (CMS Ex. 7, at 10-11);

* CMS’s OSCAR (On-line Survey, Certification and Reporting System) Report
does not include citations to regulations, but only to the tag numbers. Those cited in June
2006 were F164, F248, F274, F278, F279, F281, F309, F314, F324, F371, F431, and
F469. CMS Ex. 26, at 1.
10

. two of the sampled residents had inadequate care plans, violating 42 C.F.R.
§§ 483.20 and 483.20(k)(1) (CMS Ex. 7, at 12-14);

and

. medication errors were observed and documented, putting the facility out of
compliance with 42 C.F.R. §§ 483.25(m)(1) and 483.25(m)(2).

Moreover, the facility’s quality-of-care deficiencies caused R56 serious harm, and put
R95 at significant risk. Staff’s actions threatened resident comfort, health and safety, for
which the facility is culpable. This, along with facility’s significant substandard history,
justifies the CMP imposed.

IV. Conclusion

For all of the reasons discussed above, I uphold CMS’s determination that Petitioner was
not in substantial compliance with program participation requirements and I find that the
CMP imposed was reasonable.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Decision No. CR1866
Centers for Medicare & Medicaid
Services.

)
In the Case of: )
)

Capitol House Nursing and Rehab ) Date: November 17, 2008
Center (CCN: 19-5476), )
)
Petitioner, )
)

-V.- ) Docket No. C-08-475

)
)
)
)

DECISION DISMISSING REQUEST FOR HEARING

dismiss the hearing request filed by Petitioner, Capitol House Nursing and Rehab
Center, a skilled nursing facility doing business in the State of Louisiana, as a
consequence of Petitioner’s persistent failure to comply with the requirements governing
earing requests stated at 42 C.F.R. § 498.40(b) and also, because of the absence of any
good cause for Petitioner’s failure to comply with the regulation’s requirements.

I. Background

Petitioner, evidently, is a skilled nursing facility which participates in the Medicare
program. Its participation in Medicare is governed by sections 1819 and 1866 of the
Social Security Act (Act) and by regulations at 42 C.F.R. Parts 483 and 488. Its right toa
earing in this case is defined in regulations at 42 C.F.R. Part 498.

On May 19, 2008 Petitioner filed a hearing request challenging “findings” contained in an
attachment consisting of a May 13, 2008 letter to Petitioner from the Louisiana
Department of Health and Hospitals. That letter, in turn, constitutes a notice by a
Louisiana State informal dispute resolution (IDR) panel addressing findings of
noncompliance that were made at a survey of Petitioner’s facility that was conducted on

2

February 29, 2008. Petitioner’s hearing request does not directly challenge any findings
of noncompliance made by The Centers for Medicare & Medicaid Services (CMS) based
on the compliance survey findings. Nor does the hearing request challenge — or even
mention — remedy determinations made by CMS.

On October 2, 2008 CMS filed a motion for summary judgment. The gravamen of
CMS’s motion is that Petitioner’s hearing request fails in any meaningful respect to
comply with the specificity requirements for hearing requests stated at 42 C.F.R.
§ 498.40(b). On October 30, 2008, Petitioner, evidently in response to the motion, filed a
document entitled “Revised Appeal Notice”. Additionally, on October 31, 2008, it filed a
brief opposing CMS’s motion.
II. Issues, findings of fact and conclusions of law

A. Issue

The issues in this case are whether Petitioner:

1. Complied with the requirements of 42 C.F.R. § 498.40(b) so as to
protect its right to a hearing; and

2. Made a showing of good cause for not timely filing an acceptable
hearing request.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this
case. I set forth each Finding below as a separate heading.

1. Petitioner failed to comply with the specificity requirements stated at
42 C.F.R. § 498.40(b).

The regulation governing the contents of a hearing request in a case in which a party
challenges a determination made by CMS is explicit:

The request for hearing must —

(1) Identify the specific issues, and the findings of fact and
conclusions of law with which the affected party disagrees; and
3

(2) Specify the basis for contending that the findings and conclusions
are incorrect.

42 C.F.R. § 498.40(b)(1), (2).

By any measure Petitioner failed utterly to comply with these requirements. Indeed, the
“Revised Appeal Notice” that Petitioner filed after CMS filed its motion for summary
judgment is just as deficient as is Petitioner’s May 19, 2008 request.

Neither CMS nor Petitioner has provided me with a copy of CMS’s initial notice letter to
Petitioner nor with a copy of the survey report on which that notice was based. But, it is
apparent that CMS made a determination to impose civil money penalties, and possibly
other remedies, against Petitioner based on adverse survey findings. It is apparent also
that the survey findings on which CMS based its remedy determinations included specific
findings of noncompliance, some of which were at the immediate jeopardy level of scope
and severity.

Neither Petitioner’s hearing request nor its revised notice of appeal provides CMS or me
with anything from which CMS or I might determine what is at issue in this case.

There is nothing in either Petitioner’s initial hearing request or in its revised appeal notice
which identifies which issues Petitioner challenges, let alone the specific findings of fact
and conclusions of law which Petitioner contests. In neither document has Petitioner
identified so much as a single specific fact finding with which it disagrees. Nor has
Petitioner articulated any arguments that CMS’s determinations of noncompliance are
wrong as a matter of law. No reasonable person could determine from either of these two
documents what Petitioner’s arguments and defenses are. Nor has Petitioner challenged
the remedies that CMS imposed. The May 19 hearing request is completely silent as to
that issue. The revised notice of appeal contains a boilerplate statement that Petitioner
“further contests the reasonableness and appropriateness of the civil monetary penalty
imposed” against it. But, Petitioner provides not a word of explanation as to why the civil
money penalties imposed by CMS might be unreasonable.

In opposing CMS’s motion Petitioner argues that its hearing request was adequate
because, in attaching the May 13, 2008 letter from the IDR panel to its hearing request,
Petitioner provided CMS with adequate notice of the deficiencies that it was challenging.
But, Petitioner’s simply reciting that it intended to challenge certain findings of

' The term “immediate jeopardy” is defined at 42 C.F.R. § 488.301 to include
noncompliance by a facility which causes, or which has a likelihood of causing, serious
injury, harm, impairment, or death to one or more residents of the facility.
4

noncompliance is unacceptable. The regulation’s requirements are explicit. A party
filing a hearing request must, at a minimum, set forth those fact findings and conclusions
of law which it intends to challenge and explain why it is challenging them. There is
absolutely nothing in either Petitioner’s initial hearing request or in its amended appeal
notice which identifies the fact findings or conclusions that Petitioner is challenging and,
also, the request and amended appeal notice are absolutely silent as to why Petitioner
believes CMS’s determinations to be wrong.

2. I may dismiss a hearing request which fails to comply with the
regulation’s specificity requirements.

A hearing request that is so inadequate as are the documents filed on behalf of Petitioner
is not a hearing request within the meaning of 42 C.F.R. § 498.40(b)(1) and (2). Failure
by a facility to file a hearing request timely, absent a showing of good cause for an
untimely filing, is grounds for dismissal pursuant to 42 C.F.R. § 498.70(c). I have
authority to dismiss Petitioner’s hearing request because the time period within which it
was entitled to file a hearing request has long since elapsed and because Petitioner has yet
to file anything which comprises a “hearing request” within the meaning of regulatory
requirements.

3. Petitioner has not made a showing of good cause for its failure to file a
hearing request in compliance with regulatory requirements.

Petitioner has not denied that it was given notice by CMS of CMS’s intent to impose
remedies against it nor has Petitioner asserted that it was unaware of the regulatory
requirements governing hearing requests. Petitioner is represented by counsel who is
either aware of, or should be aware of, the specificity requirements of 42 C.F.R.

§ 498.40(b). Moreover, CMS’s motion for summary judgment explicitly put counsel on
notice of the deficiencies in Petitioner’s hearing request.

Notwithstanding, Petitioner has done nothing to satisfy the regulation’s specificity
requirements. It continues to fail to offer even the least explanation of its reasons for
demanding a hearing.

Petitioner has offered no explanation for its obstinacy in the face of the regulation’s
requirements for specificity. It has not contended that it does not understand the
regulation or that some events beyond its capacity to control prevent it from filing an
acceptable hearing request.
5

Petitioner argues that CMS, if it was truly concerned about the inadequacy of Petitioner’s
earing request, should have corresponded with Petitioner’s counsel asking for
clarification of Petitioner’s basis for requesting a hearing. But, that is not CMS’s
obligation. The burden is squarely on Petitioner to explain why it seeks a hearing.
Petitioner failed to do so even after CMS put Petitioner on notice that it sought to dismiss
the hearing request on grounds of inadequacy.

To order Petitioner now to file an acceptable request might be an exercise in futility given
Petitioner’s refusal thus far to file one. Furthermore, CMS would be prejudiced if I did
so. Months have already transpired since CMS determined to impose remedies against
Petitioner for noncompliance with nursing home participation requirements. Remedies
lose their purpose and may even become meaningless if the delay between the
determination to impose them and their actual imposition becomes protracted. Giving
Petitioner a third bite at the apple at this juncture of the case certainly would protract the
process to CMS’s detriment. I find no justification for doing so in view of Petitioner’s
persistent failure to comply with requirements governing hearing requests.

4. Dismissal of Petitioner’s hearing request is appropriate given
Petitioner’s failure to file an acceptable request and the absence of any
good cause for its failure to do so.

I dismiss Petitioner’s hearing request.’ There is no reason why I should give Petitioner
another chance to file an acceptable hearing request given its persistent failure to comply
with the requirements of 42 C.F.R. § 498.40(b).

/s/
Steven T. Kessel
Administrative Law Judge

> CMS characterized its motion as a motion for summary judgment although it
asked for dismissal as an alternative remedy. I do not impose summary judgment here
because I make no finding as to whether there are disputed issues of material fact in this
case. Indeed, I have no idea what the fact issues are, given Petitioner’s failure to file an
acceptable hearing request.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Gilroy Healthcare and Rehabilitation )
Center (CCN: 05-5797), ) Date: November 14, 2008
)
Petitioner, )
)
-V.- ) Docket No. C-08-404
) Decision No. CR1865
Centers for Medicare & Medicaid )
Services. )
)
DECISION

For the reasons set forth below, I conclude that Petitioner, Gilroy Healthcare and
Rehabilitation Center, is not entitled to Administrative Law Judge (ALJ) review of
determinations made by the Centers for Medicare & Medicaid Services (CMS) following
surveys completed on November 20, 2007, and January 23, 2007, because CMS has
withdrawn any enforcement remedies. I therefore grant CMS’s motion to dismiss
pursuant to 42 C.F.R. § 498.70(b).

I. Background

Petitioner is a skilled nursing facility located in Gilroy, California, participating in the
Medicare program as a provider of services. On November 20, 2007, and January 23,
2008, the California Department of Public Health (state agency) completed surveys of the
facility and found that it was not in substantial compliance with federal requirements. By
letter dated February 22, 2008, CMS advised Petitioner that, based on the survey findings,
it would deny payment for new admissions, effective March 8, 2008. Denial of payment
for new admissions is one of the remedies that CMS may impose to ensure prompt
compliance with program requirements. 42 C.F.R. §§ 488.402, 488.406.
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CMS subsequently determined that the facility had returned to substantial compliance as
of February 15, 2008, and, by letter dated March 10, 2008, notified Petitioner that it was
rescinding the proposed remedy. CMS Attachment 3.

Nevertheless, by letter dated April 22, 2008, Petitioner requested a hearing to challenge
the November 20, 2007 and January 23, 2008 survey findings. CMS moves to dismiss the
hearing request.

II. Discussion

A, Petitioner has no right to a hearing if CMS has not imposed a
remedy."

The hearing rights of a long-term care facility are established by federal regulations at 42
C.F.R. Part 498. A provider dissatisfied with CMS’s initial determination is entitled to
further review, but administrative actions that are not initial determinations are not
subject to appeal. 42 C.F.R. § 498.3(d). The regulations specify which actions are
“initial determinations” and sets forth examples of actions that are not. A finding of
noncompliance that results in the imposition of a remedy specified in 42 C.F.R. § 488.406
is an initial determination for which a facility may request an ALJ hearing. 42 C.F.R.

§ 498.3(b)(13). However, a finding of noncompliance is not an initial determination
unless CMS then imposes one of the specified remedies. 42 C.F.R. § 498.3(d)(10)(ii).
The imposition of a remedy, not the citation of a deficiency, triggers the right to a
hearing. Schowalter Villa, DAB No. 1688 (1999). Where, as here, CMS withdraws the
remedies, Petitioner no longer has a hearing right because the determination that is
subject to a hearing no longer exists. Fountain Lake Health & Rehabilitation, Inc., DAB
No. 1985 (2005).

B. CMS has the authority to impose penalties whenever it finds
substantial noncompliance and the facility has no right to an opportunity
to correct.

Citing what it labels the “Double G” rule, Petitioner argues that it is entitled to a hearing
on the November 20 survey findings because those findings ultimately — if indirectly —
“led to” CMS’s imposing a penalty. Following a subsequent survey, completed April 30,
2008, CMS again determined that the facility was not in substantial compliance, and that
at least one of its deficiencies was at the G-level of scope and severity (isolated instance

' My findings of fact and conclusions of law are set forth, in italics and bold, in
the discussion captions.
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of noncompliance that causes actual harm that is not immediate jeopardy). Based on the
April 2008 survey findings, CMS imposed a remedy ($2500 civil money penalty) without
first affording the facility the opportunity to correct.’ According to Petitioner, but for the
November 2007 survey findings, which included two G-level deficiencies, CMS would
have afforded it an opportunity to correct before imposing any penalty. So (the argument
goes), if Petitioner establishes that the November 2007 G-level deficiencies were
erroneous, CMS would have to give the facility an opportunity to correct before it could
impose any penalty based on the April 2008 survey findings.

As support for its position, Petitioner points to a provision from the Medicare State
Operations Manual (SOM) that requires the imposition of a penalty, without first
affording the opportunity to correct, where, for two consecutive surveys, the State
Agency and/or CMS finds deficiencies of actual harm or worse. SOM, section 7304B1
(Rev. 1, 05-21-04).

But Petitioner’s logic is flawed. That the regulations require imposition of a penalty
when a state agency and/or CMS finds consecutive, exceptionally serious deficiencies
does not mean that they preclude imposition of a penalty in the absence of consecutive,
exceptionally serious deficiencies.

Moreover, Petitioner’s argument ignores the plain language of the statute and regulations,
which give CMS the authority to impose one or more enforcement remedies — including a
CMP - whenever a facility is not in “substantial compliance,” i.e., its deficiencies pose no
actual harm but have the potential for causing more than minimal harm. Social Security
Act § 1819(h); 42 C.F.R. § 488.402; 42 C.F.R. § 488.301; 42 C.F.R. § 488.406. IfI
sustain deficiency findings at the scope and severity level D (isolated instance of
noncompliance that causes no actual harm with the potential for more than minimal harm)
or above, thereby finding a basis for the imposition of remedies, I have no authority to
review CMS’s determination to impose a remedy. 42 C.F.R. § 488.438(e).

Thus, whenever it finds substantial noncompliance, CMS may impose a remedy without
affording the facility an opportunity to correct, notwithstanding its (or a state agency’s)
routine practice of allowing facilities such an opportunity. See 59 Fed. Reg. 56,171 (Nov.
10, 1994)(“[N]either the Act nor the Constitution require that providers have the
opportunity to correct deficiencies before sanctions are imposed.”) See also Beechwood
Sanitarium, DAB No. 1824, at 15 (2002); Guardian Care Nursing & Rehabilitation
Center, DAB CR1858, at 6-7 (2008).

> Petitioner has appealed that determination, and its appeal is pending. Gilroy
Healthcare and Rehabilitation Center, DAB No. C-08-490.
III. Conclusion

Because CMS has rescinded all remedies, Petitioner has no right to an ALJ hearing. I
therefore grant CMS’s motion to dismiss and order this case dismissed. 42 C.F.R.
§ 498.70(b).

/s/
Carolyn Cozad Hughes
Administrative Law Judge