Department of Health and Human Service
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: ) Date: September 02, 2009
)
Community Care Center of Baker )
(CCN: 19-5571), ) Docket No. C-07-624
) Decision No. CR1999
v. )
)
Centers for Medicare & Medicaid Services. )
)
DECISION

Petitioner, Community Care Center of Baker, was not in substantial compliance with
program participation requirements due to violations of 42 C.F.R. §§ 483.25(h)(1),
483.25(h)(2), and 483.75, from January 15 through May 31, 2007. Per instance civil
money penalties (PICMPs) of $3500, $3500, and $3000 for the respective violations are
reasonable.

I. Background

Petitioner, located in Baker, Louisiana, is authorized to participate in Medicare as a
skilled nursing facility (SNF) and in the Medicaid program as a nursing facility (NF).
Petitioner was subject to a survey by the Louisiana Department of Health and Hospitals
(the state agency) completed on May 3, 2007. The Centers for Medicare & Medicaid
Services (CMS) notified Petitioner by letter dated May 31, 2007, that based upon the
deficiencies found by the survey of May 3, 2007, CMS was imposing a PICMP of
$10,000 ($3500 for the alleged violation of 42 C.F.R. § 483.25(h)(1), $3500 for the
alleged violation of 42 C.F.R. § 483.25(h)(2), and $3000 for the alleged violation of 42
C.F.R. § 483.75); a denial of payment for new admissions (DPNA) beginning on June 15,

" References are to the version of the Code of Federal Regulations in effect at the time of
the survey, unless otherwise indicated.
2007, and continuing until Petitioner returned to substantial compliance; and termination
of Petitioner’s provider agreement on November 3, 2007, if Petitioner did not return to
substantial compliance before that date. CMS advised Petitioner by letter dated August
14, 2007, that Petitioner had returned to substantial compliance on an unspecified date
and that the DPNA and termination remedies were rescinded. CMS Exhibit (CMS Ex.)
1; Petitioner Exhibit (P. Ex.) 1.

Petitioner requested a hearing by letter dated July 27, 2007. The request for hearing was
docketed as C-07-624 and assigned to me for hearing and decision on August 6, 2007. A
Notice of Case Assignment and Prehearing Case Development Order (Prehearing Order)
was issued at my direction on August 6, 2007.

A hearing was convened in New Orleans, Louisiana, on February 26 and 27, 2008. CMS
offered and I admitted CMS Exs. 1 through 9. Petitioner offered P. Exs. | through 15. I
admitted P. Exs. 1, 3 through 9, 12, and 14. Petitioner withdrew P. Ex. 10. CMS
presented the testimony of surveyors Barbara Van Lieu, R.N. (Transcript (Tr.) 76-159),
and Sandra Brown, R.N. (Tr. 160-235). Petitioner called as witnesses, Joyce Elaine
Brown, R.N., Petitioner’s Director of Nursing (DON) (Tr. 236-96), Joann Brew, L.P.N.
(Tr. 296-351), and Claudia Thompson, C.N.A. (Tr. 360-411). The parties filed post-
hearing briefs (CMS Br. and P. Br., respectively) and post-hearing reply briefs (CMS
Reply and P. Reply, respectively).

II. Discussion
A. Issues
The issues in this case are:

Whether there is a basis for the imposition of an enforcement
remedy; and,

Whether the remedy imposed is reasonable.
B. Applicable Law

The statutory and regulatory requirements for participation by a long-term care facility
are found at sections 1819 (SNF) and 1919 (NF) of the Social Security Act (Act) and at
42 C.F.R. Part 483. Section 1819(h)(2) of the Act vests the Secretary of Health and
Human Services (Secretary) with authority to impose enforcement remedies against a
SNF for failure to comply substantially with the federal participation requirements

established by sections 1819(b), (c), and (d) of the Act.’ Pursuant to 1819(h)(2)(C), the
Secretary may continue Medicare payments to a SNF not longer than six months after the
date the facility is first found not in compliance with participation requirements.
Pursuant to 1819(h)(2)(D), if a SNF does not return to compliance with participation
requirements within three months, the Secretary must deny payments for all individuals
admitted to the facility after that date - commonly referred to as the mandatory or
statutory DPNA. In addition to the authority to terminate a noncompliant SNF’s
participation in Medicare, the Act grants the Secretary authority to impose other
enforcement remedies, including a discretionary DPNA, civil money penalties (CMPs),
appointment of temporary management, and other remedies such as a directed plan of
correction. Act § 1819(h)(2)(B).

The Secretary has delegated to CMS and the states the authority to impose remedies
against a long-term care facility that is not complying substantially with federal
participation requirements. “Substantial compliance means a level of compliance with
the requirements of participation such that any identified deficiencies pose no greater risk
to resident health or safety than the potential for causing minimal harm.” 42 C.F.R.

§ 488.301 (emphasis in original). A deficiency is a violation of a participation
requirement established by sections 1819(b), (c), and (d) of the Act or the Secretary’s
regulations at 42 C.F.R. Part 483, Subpart B. Facilities that participate in Medicare may
be surveyed on behalf of CMS by state survey agencies in order to determine whether the
facilities are complying with federal participation requirements. 42 C.F.R. §§ 488.10-
488.28, 488.300-488.335. The regulations specify the enforcement remedies that CMS
may impose if a facility is not in substantial compliance with Medicare requirements. 42
C.F.R. § 488.406.

The regulations specify that CMS may impose a CMP for each day a facility is not in
substantial compliance or for each instance of noncompliance. The regulation provides
that a CMP that is imposed against a facility on a per day basis will fall into one of two
ranges of penalties. 42 C.F.R. §§ 488.408, 488.438. The upper range of CMP, $3050 per
day to $10,000 per day, is reserved for deficiencies that pose immediate jeopardy to a
facility’s residents and, in some circumstances, for repeated deficiencies. 42 C.F.R.

§§ 488.438(a)(1)(i), (d)(2). Pursuant to 42 C.F.R. § 488.301, “/i/mmediate 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.” (Emphasis in original.) The lower range of CMP, $50 per day to
$3000 per day, is reserved for deficiencies that do not constitute immediate jeopardy but
either cause actual harm to residents, or cause no actual harm but have the potential for

> Section 1919(h)(2) of the Act gives similar enforcement authority to the states to
ensure that NFs comply with their participation requirements established by section
1919(b), (c), and (d) of the Act.
causing more than minimal harm. 42 C.F.R. § 488.438(a)(1)(ii). CMS is authorized to
impose PICMP from $1000 to $10,000, whether or not immediate jeopardy is identified.
42 CFR. § 488.438(a)(2).

The Act and regulations make a hearing before an administrative law judge (ALJ)
available to a long-term care facility against which CMS has determined to impose an
enforcement remedy. Act § 1128A(c)(2); 1866(h); 42 C.F.R. §§ 488.408(g);
498.3(b)(13). The hearing before an ALJ is a de novo proceeding. Anesthesiologists
Affiliated, et al, DAB CR65 (1990), aff'd, 941 F.2d 678 (8th Cir. 1991); Emerald Oaks,
DAB No. 1800, at 11 (2001); Beechwood Sanitarium, DAB No. 1906 (2004); Cal Turner
Extended Care Pavilion, DAB No. 2030 (2006), The Residence at Salem Woods, DAB
No. 2052 (2006). A facility has a right to appeal a “certification of noncompliance
leading to an enforcement remedy.” 42 C.F.R. § 488.408(g)(1); see also 42 C.F.R. §§
488.330(e) and 498.3. However, the choice of remedies by CMS or the factors CMS
considered when choosing remedies are not subject to review. 42 C.F.R. §
488.408(g)(2). A facility may only challenge the scope and severity level of
noncompliance found by CMS if a successful challenge would affect the range of the
CMP that could be imposed by CMS or impact the facility’s authority to conduct a nurse
aide training and competency evaluation program. 42 C.F.R. §§ 498.3(b)(14) and
(d)(10)(i). The CMS determination as to the level of noncompliance “must be upheld
unless it is clearly erroneous” (42 C.F.R. § 498.60(c)(2)), including the finding o:
immediate jeopardy. Woodstock Care Center, DAB No. 1726, at 9, 38 (2000), aff'd,
Woodstock Care Center v. Thompson, 363 F.3d 583 (6th Cir. 2003). The Departmental
Appeals Board (the Board) has long held that the net effect of the regulations is that a
provider has no right to challenge the scope and severity level assigned to a
noncompliance finding, except in the situation where that finding was the basis for an
immediate jeopardy determination. See e.g., Ridge Terrace, DAB No. 1834 (2002);
Koester Pavilion, DAB No. 1750 (2000). Review of a CMP by an ALJ is subject to 42
C.F.R. § 488.438(e).

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 imposition of an enforcement remedy. Petitioner bears the
burden of persuasion to show by a preponderance of the evidence that it was in
substantial compliance with participation requirements or any affirmative defense. See
Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd, Hillman Rehabilitation Ctr.
v. United States Dep’t of Health and Human Services, Health Care Fin. Admin., No. 98-
3789 (GEB), slip op. at 25 (D.N.J. May 13, 1999); Cross Creek Health Care Center,
DAB No. 1665 (1998); Emerald Oaks, DAB No. 1800; Batavia Nursing and
Convalescent Center, DAB No. 1904 (2004), aff'd, Batavia Nursing & Convalescent Ctr.
v. Thompson, 129 F. App’x 181 (6th Cir. 2005); Batavia Nursing and Convalescent Inn,
DAB No. 1911 (2004).
C. Analysis

My conclusions of law are set forth in bold followed by a statement of the pertinent facts
and my analysis.

1. Petitioner timely requested a hearing and I have jurisdiction.

There is no dispute that Petitioner timely requested a hearing. Petitioner requested a
hearing as to all deficiencies cited by the survey that ended on May 3, 2007, including
alleged violations of 42 C.F.R. §§ 483.20(b), 483.20(d), and 483.20(k). However, CMS
imposed no enforcement remedies based upon those alleged violations and they are not
before me for hearing and decision. Tr. 19-22; 42 C.F.R. § 498.3(b)(13).

CMS presented no evidence related to the revisit survey or the findings of that survey
except that in CMS Ex. 1, at 4 and 5, the CMS notice dated August 14, 2007. The
August 14 notice advised Petitioner that a revisit survey found Petitioner back in
substantial compliance and that CMS had rescinded the proposed remedies of termination
and the DPNA. The August 14, 2007 notice did not specify a date on which CMS found
Petitioner in substantial compliance or, even, the date on which the revisit survey was
conducted. The date Petitioner was found to have returned to substantial compliance was
likely prior to June 15, 2007, the date on which the DPNA was to begin, as that remedy
was never effectuated. Petitioner alleged in its plan of correction that it achieved
substantial compliance as of May 31, 2007, and there is no conflicting evidence. CMS
Ex. 2. I conclude that Petitioner returned to substantial compliance with program
participation requirements not later than May 31, 2007. I note, however, that the PICMPs
proposed by CMS are unaffected by the specific date on which Petitioner actually
returned to substantial compliance.

2. Petitioner violated 42 C.F.R. § 483.25(h)(1) and (2) by failing, after
April 30, 2007, to ensure that the resident environment was as free of
accident hazards as possible and by failing to provide adequate
supervision and assistance devices to prevent accidents with regard to
resident smoking.

a. Facts

Petitioner’s Lighthouse Unit (located on Hall 200 in the facility) is a locked psychiatric
unit that houses 24 residents who are cognitively impaired, with diagnoses such as
dementia or other acute mental disorders, who display poor safety awareness, who are
difficult to manage, aggressive, and who are noncompliant with facility rules. Tr. 79-80,
239-40; P. Ex. 4.
Petitioner had a smoking policy that applied to the Lighthouse Unit. Petitioner’s smoking
policy and regulations state that smoking is a personal matter. However, the policy also
states that smoking is a source of possible fires. Therefore, Petitioner developed policies
and regulations to ensure the safety of its residents, employees and visitors by:
prohibiting residents from smoking in their rooms; prohibiting cigarette lighters and
matches in resident rooms; requiring that resident cigarette lighters and matches be kept
at the nurses’ station; limiting facility personnel to providing matches and lighting
cigarettes only in designated areas set aside for smoking; prohibiting visitors from
smoking in the facility; and designating specific areas as smoking areas, including the
outside patio of the Lighthouse Unit. CMS Ex. 9, at 31.

The surveyors cite examples related to Residents | and 2 as the basis for citing violations
for 42 C.F.R. § 483.25(h)(1) (Tag F323) and (2) (Tag F324). However, the facts related
to Resident 2 are sufficient to establish the violations. CMS Ex. 2, at 9, 17.

Resident 2 was originally admitted to Petitioner’s facility on January 13, 2003. P. Ex. 6,
at 1; CMS Ex. 2, at 9. Resident 2’s diagnoses included schizophrenia, psychogenic
disorder, paranoia, obsessive compulsive disorder, depression, and bipolar disorder. P.
Ex. 6, at 1; CMS Exs. 2, at 9; 8, at 1, 6, 20. Resident 2 resided on the Lighthouse Unit
because his paranoid schizophrenia caused him to be easily agitated throughout the day,
to worry about cigarettes, to be verbally abusive, and to engage in socially inappropriate
and disruptive behavior. CMS Ex. 8, at 20. On January 13, 2003, the day of his
admission to the facility, and on January 13, 2005, Resident 2 signed documents agreeing
that he understood the facility’s smoking policies and regulations.> CMS Ex. 8, at 11, 34;
P. Ex. 6, at 11, 34.

On January 13, 2005, staff completed a resident risk factor for smoking safety form for
Resident 2 that indicated that: Resident 2 was a regular smoker; he was not at risk of
dropping cigarettes; he had not smoked in an inappropriate place for the last 30 days; he
was redirected easily; he did not need supervision to smoke; he had a high cognitive
level; he smoked a pack a day; and he was a low risk. P. Ex. 6, at 10; CMS Ex. 8, at 10.
This is the only assessment in evidence.

Resident 2’s care plan dated May 15, 2006 (updated to reflect goal and target dates of
December 15, 2006, March 13, 2007, and May 8, 2007), states that Resident 2 is a
chronic smoker unable to manage cigarettes appropriately to last throughout the month.
The care plan establishes a goal that the resident will have a sufficient number of

* The only substantive difference between the policy that Petitioner signed in 2003 and
the form he signed in 2005, is that the former prohibits visitors from smoking “in the
facility” and the latter states that visitors cannot smoke in a resident’s room but allows
visitor smoking in designated areas. CMS Ex. 8, at 11, 34; P. Ex. 6, at 11, 34.
cigarettes to last throughout the month. The approach listed is that Resident 2 will be
given all cigarettes every morning to last throughout the day and will be encouraged to
smoke cigarettes in longer intervals, which I construe to be longer intervals between
cigarettes consistent with the stated goal. CMS Ex. 8, at 12; P. Ex. 6, at 12. Resident 2’s
care plan also reflected that he was delusional and depressed and was concerned about
not having enough cigarettes, and that he believed if he had more cigarettes he could
write music and not sleep as much. CMS Ex. 8, at 19; P. Ex. 6, at 19.

The Oak Haven Unit, also located in Petitioner’s facility in the hall adjacent to the
Lighthouse Unit, was a partial-day psychiatric care unit that provided outpatient
psychotherapy treatment to patients, including certain Lighthouse Unit residents. P. Ex.
4; P. Ex. 9, at 2. Resident 2 attended the Oak Haven partial-day program. CMS Ex. 8, at
18; P. Ex. 6, at 18. At Oak Haven, Lighthouse Unit residents, such as Resident 2, had
contact with other patients who did not reside on the Lighthouse Unit and their smoking
materials. P. Ex. 9, at 2.

The first incident involving Resident 2 occurred on January 15, 2007. Prior to January
15, 2007, Lighthouse Unit residents were issued two cigarettes at a time, every two hours
to smoke in the outdoor smoking area. Staff would light residents’ cigarettes and watch
them smoke the cigarettes entirely before allowing them to return to the Lighthouse Unit.
Petitioner’s smoking policy was posted at the nurses’ station and on the door leading to
the Lighthouse Unit. Petitioner’s staff randomly searched suspected residents returning
from Oak Haven or pass by patting down their jackets and pants pockets. Tr. 246-50,
300. Prior to January 15, 2007, Petitioner’s nurses would document in nurses’ notes
problems relating to smoking. P. Ex. 14, at 1; Tr. 267, 365.

On January 15, 2007, at about 8:00 a.m., a smoke detector sounded and Resident 2 was
observed standing in his bathroom with a sheet or clothes ablaze on the floor and flames
shooting up. L.P.N. Brew extinguished the fire. CMS Ex. 8, at 8, 21, 24; P. Ex. 6, at 8,
21, 24; Tr. 301. Due to the smoke, residents of the Lighthouse Unit were evacuated. Tr.
301. Soon after the fire, Resident 2 was allowed to go to Oak Haven. Tr. 301-02. Later
on January 15, 2007, at 1:30 p.m., a smoke detector sounded and Resident 2 was
observed smoking in his room. Nurses confiscated a lighter. CMS Ex. 8, at 8, 21; P. Ex.
6, at 8, 21; Tr. 301. L.P.N. Brew completed an incident report regarding the incidents of
January 15, 2007, which DON Brown and Administrator Jason Lambert signed on
January 16, 2007. CMS Ex. 8, at 21; P. Ex. 12; Tr. 251-56." L.P.N. Brew notified
Resident 2’s treating psychiatrist at Oak Haven, Dr. Robert Blanche, about the fires, and

* Although CMS alleged that DON Brown and Administrator Lambert did not see the
report because the copy given to the surveyors was not signed, I accept the facility’s
explanation that the signed copy was stored elsewhere and that the DON and the
Administrator signed the incident report on January 16, 2007. Tr. 253-57.
Dr. Blanche issued a physician emergency certificate (PEC) the same day that resulted in
Resident 2’s admission to a behavioral or psychiatric hospital for approximately two
weeks. Resident 2 returned to Petitioner’s facility on January 29, 2007. Tr. 302; P. Ex.
6, at 8, 24; CMS Ex. 8, at 8, 24. Petitioner’s care plan does not reflect any revision due to
the January 15, 2007 incidents. CMS Ex. 8, at 12-20; P. Ex. 6, at 12-20; P. Ex. 9, at 3; P.
Ex. 10, at 2; Tr. 83, 142, 166-67, 295.

The evidence does not show that the incidents on January 15, 2007, were addressed by
Petitioner’s quality assurance committee as was done after the April 30, 2007 fire. Tr.
277; CMS Ex. 8, at 22; P. Ex. 6, at 22. DON Brown testified that Petitioner took the
ollowing actions after the January 15, 2007 fire: a second smoke detector was placed in
Resident 2’s room near his bed; staff continued to issue cigarettes but a resident had to
smoke the first before being issued a second; staff inquired more of residents returning
rom Oak Haven; staff did a pat search of all residents returning from Oak Haven; staff
randomly searched rooms of those suspected of possessing smoking materials;° staff
limited family visits to stop smoking materials being passed to residents; and staff
monitored high risk individuals more closely. Tr. 258-60. L.P.N. Brew testified that
Petitioner: installed smoke detectors in every room; staff started issuing one cigarette at a
time which the resident had to smoke before being issued another; staff daily questioned
and searched residents returning from Oak Haven; placed a sign on the door leading into
the Lighthouse Unit that said no cigarettes or lighters beyond that point; and signs were
placed inside the door of the Lighthouse Unit and at the nurses’ station. L.P.N. Brew
testified that she asked Administrator Lambert to talk to Oak Haven staff because the
Lighthouse Unit residents were bringing smoking materials into the Lighthouse Unit after
being at Oak Haven and she talked to Oak Haven staff herself about the issue. L.P.N.
Brew testified that the procedures she described were not written down. Tr. 302-11; P.
Ex. 8, at 2-3. C.N.A. Thompson testified that staff: stopped residents returning from

pass and Oak Haven and patted their pockets; asked Lighthouse Unit residents at
breakfast who had cigarettes and patted them down, checked under hats and in coat
pockets, pulled out coat pockets, and felt socks to see if a resident had smoking materials;
anded residents only one cigarette at a time and made sure (by watching the residents
through a glass door or standing outside with them) that they smoked it outside before
coming back into the Lighthouse Unit and patted them as they came inside; stopped

* C.N.A. Thompson testified that rooms were searched daily for cigarettes and smoking
materials when the rooms were cleaned and that staff would search night stands, closet
drawers, and look under mattresses. DON Brown testified that random room searches
were conducted when residents were suspected of having smoking materials. However,
DON Brown testified that she was not best able to testify how searches were done and
that the nurse on the hall, Ms. Brew, would be able to discuss how searches were done or
residents questioned. As C.N.A. Thompson worked full-time on the Lighthouse Unit, she
also would be more familiar with the activities of that unit. Tr. 259-60, 384.

storing cigarettes on the Lighthouse Unit and left them with the activities coordinator,
who brought them to the Lighthouse Unit in the morning; and initiated room searches for
smoking materials when resident rooms were cleaned. She testified that the procedures
were not written down. Tr. 362-64, 376, 384, 406-07.

After January 15, 2007, if a C.N.A. found (through searches or otherwise) cigarettes or
smoking materials, the C.N.A. would bring the discovery to a nurse’s attention and it
would be documented in the 24-hour nursing report, the jot book (used by C.N.A.s and
nurses to communicate between shifts), and/or in nurses’ notes. Tr. 311-12, 365; P. Ex.
14, at 5, 8, 10. Nursing staff did not document if they did not find cigarettes or smoking
materials following a search. Tr. 267.

The second incident involving Resident 2 occurred on April 30, 2007. On April 28,
2007, Resident 2 returned from being out of the facility on pass with his father. CMS Ex.
8, at 33; P. Ex. 6, at 33. C.N.A. Thompson testified that on April 30, 2007, Resident 2
was observed by C.N.A. Josh Howard on the patio with a pack of matches that C.N.A.
Howard confiscated. Resident 2 then went to his room. C.N.A. Howard followed
Resident 2 and observed Resident 2 standing in his bathroom. C.N.A. Howard left the
room but five minutes later C.N.A. Howard and C.N.A. Thompson smelled something
unny, they heard a noise, saw the bathroom door open only a crack, and when they
opened the bathroom door they saw a sheet on fire by the sink; C.N.A. Howard put out
the fire with water and C.N.A. Thompson reported the fire. Tr. 368-72. Nurses’ notes
rom April 30, 2007, state that Resident 2 set sheets on fire in his room while smoking in
bed and that Dr. Blanche and Dr. Dial were notified, as well as Resident 2’s father (who
stated that he gave Resident 2 a lighter). CMS Ex. 8, at 7; P. Ex. 6, at 7; P. Ex. 11.
Facility staff prepared a form titled Continuous Quality Improvement Corrective Action
Plan dated April 30, 2007. The document stated that Resident 2 had been smoking in
bed; set the sheets on fire; the smoke detector went off; staff was alerted; the fire was
extinguished; there were no injuries; an incident report was completed; Dr. Blanche and
Dr. Dial were notified and would see the resident; and Resident 2’s family was notified.
CMS Ex. 8, at 22; P. Ex. 6, at 22. The recommended plan of action on the continuous
quality improvement corrective action plan dated April 30, 2007, was that “[a]ll residents
returning from pass will be searched before returning to unit, if found with lighter or
matches will recommend PEC [physician order for psychiatric hospitalization], family
informed not to supply matches or lighters.” CMS Ex. 8, at 22; P. Ex. 6, at 22; Tr. 277.
After the April 30, 2007 fire, L.P.N. Brew testified that every resident got a pat down
after their return from Oak Haven; staff paid closer attention to problem residents; and
“Activities” started giving cigarettes to the C.N.A. in the morning and the C.N.A. would
keep the cigarettes on her/his person until they were issued to residents one at a time. Tr.
315. Dr. Blanche did not order psychiatric hospitalization for Resident 2 following the
fire on April 30, 2007. Tr. 272-73, 282. C.N.A. Thompson testified that after the April
30, 2007 fire, staff searched residents more; watched residents more with cigarettes;
emptied residents’ pockets and searched them after they finished smoking on the patio,
when they returned from pass, and any return to the unit. Tr. 372-73, 383. C.N.A.

10

Thompson testified that after April 30, 2007, they increased monitoring of Resident 2 by
having him sit by the nurses after he returned from the Oak Haven site, and gave him
only five to ten minutes alone in his room or bathroom before checking on him. Tr. 373.
L.P.N. Brew testified that closer attention was paid to Resident 2 and four or five other
residents who had a similar problem. Tr. 316.

The third and final incident involving Resident 2 occurred on May 2, 2007. C.N.A.
Thompson testified that in the morning on May 2, she saw Resident 2 on the patio
fidgeting with his pockets. When C.N.A. Thompson asked Resident 2 to give her
whatever he had in his pockets, Resident 2 threw on the ground a pack of cigarettes of a
different brand than that passed out by the facility. Tr. 375-76. C.N.A. Thompson
testified that later that day she observed Resident 2 in his room brushing his hair and then
going out of and into the room. C.N.A. Thompson testified that she searched the room
and found in the closet a butted cigarette that had been smoked. She gave the cigarette
butt to L.P.N. Brew. Tr. 316, 376-77. Shortly thereafter, the smoke detector in Resident
2’s room alarmed. L.P.N. Brew and C.N.A. Thompson smelled cigarette smoke and
searched Resident 2’s room, but found nothing. They called the maintenance supervisor
to help search, but still found nothing. CMS Ex. 6, at 5; CMS Ex. 8, at 9; P. Ex. 6, at 9;
Tr. 316-17; 322-23; 377-78. Approximately five to ten minutes after the search, the
smoke detector alarmed again. C.N.A. Thompson and L.P.N. Brew had to push Resident
2’s bed away from the door, and when they entered the room they saw flames in one
closet. Tr. 316-23, 379-82; CMS Ex. 8, at 9, 23; CMS Ex. 6, at 5; P. Ex. 6, at 9, 23; P.
Ex. 13. The fire was extinguished, the fire department was called, and the Lighthouse
Unit and facility were safely evacuated. CMS Ex. 6.

On May 2, 2007, Resident 2 was discharged to a psychiatric hospital by order of his
treating physician. Tr. 327; CMS Ex. 8, at 9, 23; CMS Ex. 2, at 1; P. Ex. 6, at 9, 23; P.
Ex. 13.

b. Analysis

The general quality of care regulation at 42 C.F.R. § 483.25 requires that each resident
receive, and the participating facility must provide, the necessary care and services to
attain or maintain a resident’s highest practicable physical, mental, and psychosocial
well-being, in accordance with the resident’s comprehensive assessment and plan of care
developed by the resident’s care planning team pursuant to 42 C.F.R. § 483.20. The
general quality of care regulation includes two specific requirements pertaining to
accident hazards and providing supervision and assistance devices to residents to avoid
accidents — both are at issue in this case.

A participating facility must ensure that the resident environment remains as free of
accident hazards as is possible. 42 C.F.R. § 483.25(h)(1). The Board has provided some
guidance for adjudicating alleged violations of the section:
11

The standard in section 483.25(h)(1) itself -- that a facility
“ensure that the environment is as free of accident hazards as
possible” in order to meet the quality of care goal in section
483.25 -- places a continuum of affirmative duties on a
facility. A facility must determine whether any condition
exists in the environment that could endanger a resident's
safety. If so, the facility must remove that condition if
possible, and, when not possible, it must take action to protect
residents from the danger posed by that condition. [Footnote
omitted.] Ifa facility has identified and planned for a hazard
and then failed to follow its own plan, that may be sufficient
to show a lack of compliance with [the] regulatory
requirement. In other cases, an ALJ may need to consider the
actions the facility took to identify, remove, or protect
residents from the hazard. Where a facility alleges (or shows)
that it did not know that a hazard existed, the facility cannot
prevail if it could have reasonably foreseen that an
endangering condition existed either generally or for a
particular resident or residents.

Maine Veterans’ Home — Scarborough, DAB No. 1975, at 6-7 (2005).

A participating facility is also required to ensure that “[e]ach resident receives adequate
supervision and assistance devices to prevent accidents.” 42 C.F.R. § 483.25(h)(2). The
Board has explained the requirements of 42 C.F.R. § 483.25(h)(2) in numerous decisions.
Eastwood Convalescent Center, DAB No. 2088 (2007); Liberty Commons Nursing and
Rehab - Alamance, DAB No. 2070 (2007); Century Care of Crystal Coast, DAB No.
2076 (2007), aff’d, Century Care of the Crystal Coast, 281 F. App’x 180 (4th Cir. 2008);
Golden Age Skilled Nursing & Rehabilitation Center, DAB No. 2026 (2006); Estes
Nursing Facility Civic Center, DAB No. 2000 (2005); Northeastern Ohio Alzheimer's
Research Center, DAB No. 1935 (2004); Woodstock Care Center, DAB No. 1726
(2000), aff'd, Woodstock Care Center v. Thompson, 363 F.3d 583 (6th Cir. 2003).
Section 483.25(h)(2) does not make a facility strictly liable for accidents that occur, but it
does require that a facility take all reasonable steps to ensure that a resident receives
supervision and assistance devices that meet his or her assessed needs and mitigate
foreseeable risks of harm from accidents. Woodstock Care Center v. Thompson, 363
F.3d at 589 (a SNF must take “all reasonable precautions against residents’ accidents”).
A facility is permitted the flexibility to choose the methods of supervision it uses to
prevent accidents, but the chosen methods must be adequate under the circumstances. Id.
Whether supervision is “adequate” depends in part upon the resident’s ability to protect
himself or herself from harm. Jd. Based on the regulation and the cases in this area,
CMS meets its burden to show a prima facie case if the evidence demonstrates that the
facility failed to provide adequate supervision and assistance devices to prevent
accidents, given what was reasonably foreseeable. Alden Town Manor Rehabilitation &
12

HCC, DAB No. 2054, at 5-6, 7-12 (2006) . An “accident” is an unexpected, unintended
event that can cause a resident bodily injury, excluding adverse outcomes associated as a
direct consequence of treatment or care (e.g., drug side effects or reactions). CMS
Publication 100-07, State Operations Manual (SOM), App. PP, Tag F324; Woodstock
Care Center, DAB No. 1726, at 4.

The surveyors alleged that Petitioner violated 42 C.F.R. § 483.25(h)(1) because Petitioner
failed to “ensure that the resident environment remains as free of accident hazards as is
possible by failing to ensure that residents on the locked psychiatric unit did not possess
lighters, lit cigarettes or matches... .” CMS Ex. 2, at 8-9. The surveyors alleged that
immediate jeopardy began on January 15, 2007, when Resident 2 started a fire and that
immediate jeopardy was abated on May 2, 2007, when Resident 2 was sent to a
psychiatric hospital. The surveyors alleged that, even after Resident 2’s transfer, the
deficiency continued. CMS Ex. 2, at 9. The surveyors alleged that Petitioner violated 42
C.F.R. § 483.25(h)(2) because Petitioner “failed to increase supervision of residents after
dsicovering (sic) the residents with matches, lit cigarettes or lighters in their rooms. . . .”
CMS Ex. 2, at 17. The surveyors alleged that the deficiency posed immediate jeopardy
beginning on January 15, 2007, and that immediate jeopardy was abated on May 2, 2007
with Resident 2’s transfer. The surveyors alleged that, even after Resident 2’s transfer,
the deficiency continued. CMS Ex. 2, at 17.

CMS alleges that Petitioner did not implement reasonable interventions to minimize
accident hazards, specifically with regard to resident smoking, and Petitioner failed to
provide adequate supervision to avoid risk of harm to the residents of Petitioner’s facility,
specifically the Lighthouse Unit. Petitioner argues, generally, that it did all it could
reasonably do, given the difficult nature of its resident population and their rights to
smoke and for privacy.

Petitioner’s interventions following the January 15, 2007 fire include: placing more
smoke detectors; having residents smoke a cigarette before being issued a second;
querying residents more about smoking materials and pat searching residents coming
back from Oak Haven and at breakfast; searching rooms; limiting family visiting;
monitoring high risk individuals more closely; placing signs on doors to prevent smoking
materials from coming into the Lighthouse Unit; communicating with Oak Haven Unit
staff to enlist their aid in preventing smoking materials from being given to Lighthouse
Unit residents when they were on the Oak Haven Unit for treatment; and moving
cigarettes off the Lighthouse Unit to be kept with the activities director who would hand
out the cigarettes.

Petitioner implemented the following interventions following the April 30, 2007 fire: a
continuous quality improvement action plan was prepared requiring that all residents
returning from pass would be searched before returning to the Lighthouse Unit and, if
found with a lighter or matches, a psychiatric hospital admission would be recommended
and the family would be advised of this policy and would be informed not to supply
13

matches or lighters; residents were more thoroughly searched and watched when they
smoked; and Resident 2’s monitoring was increased by having him sit by the nurses after
he returned from Oak Haven and staff was to give him only five or ten minutes alone in
his room before checking on him.°

CMS notes that, despite the interventions of Petitioner’s staff, fires continued to occur,
which put residents, staff, and visitors at risk. As Petitioner pointed out at the hearing,
however, this is not the end of the inquiry. Rather, it is necessary to consider whether
Petitioner’s interventions were reasonable and sufficient in light of the known risk of
accidents and whether its residents were adequately supervised to prevent accidents.

In fact, there is no question and no real dispute that Resident 2 was the accident hazard at
Petitioner’s facility. The fact that he was an accident hazard was clearly known to
Petitioner as of the January 15, 2007 fire. On that date, a smoke detector sounded and
Resident 2 was observed standing in his bathroom with a sheet or clothes ablaze on the
floor and flames shooting up. The fire was apparently ignited by Resident 2 in his room
with a cigarette or a lighter or matches he secreted to his room. Later the same day it was
discovered that he was smoking in his room. Both parties focus primarily in this case on
the availability of smoking materials and matches or lighters and Petitioner’s efforts to
control access to these materials on the Lighthouse Unit in order to prevent the hazards
associated with smoking and smoking materials. The evidence does not support a finding
that Resident 2 or any other resident in Petitioner’s facility, including Resident 1, was a
pyromaniac, and the real risk seems to have been Resident 2’s careless smoking and his
need to hide his smoking materials from Petitioner’s staff.

Petitioner’s interventions following the January 15, 2007 fire and smoking incident were
apparently successful, as no other fire is reported between January 15, 2007 and April 30,
2007. The success of Petitioner’s surveillance is demonstrated by the fact that staff
continued to find and seize contraband smoking materials, matches, and lighters,
including those seized from Resident 1. P. Ex. 14. Although Petitioner’s interventions
were mostly not documented, there is no requirement that a smoking monitoring policy

° T note there is an inconsistency between the affidavit of Administrator Lambert and the
testimony of C.N.A. Thompson and L.P.N. Brew regarding the interventions instituted.
Administrator Lambert states only that residents were questioned when coming back
from Oak Haven and states that Resident 2 was subjected to a higher level of monitoring
and more intensive questioning only upon his return from Oak Haven. Administrator
Lambert did not mention pat downs or other preventive interventions. P. Ex. 9; see CMS
Br. at 11. However, I give the testimony of C.N.A. Thompson and L.P.N. Brew, who
were on the Lighthouse Unit each day and testified subject to cross-examination, greater
probative value than the affidavit of the Administrator.
14

be documented, as acknowledged by Surveyors Van Lieu and Brown (Tr. 132, 212). I
find the testimony of C.N.A. Thompson and L.P.N. Brew credible.’ I conclude that their
testimony; the nurses’ notes and other documents presented reflecting Petitioner’s actions
following the January 15, 2007 fire; and the fact that no fires occurred from January 15,
2007 to April 30, 2007, demonstrate substantial compliance with the participation
requirements at 42 C.F.R. § 483.25(h)(1) and (2).

On April 30, 2007, Resident 2 started another fire. Resident 2 was apparently smoking in
bed, as staff found a sheet on fire by the sink in his bathroom. There is no dispute that
Resident 2 had been out on furlough with his father and that his father gave him the
lighter used to set the fire. CMS legitimately questions how, with increased monitoring
after the January 15, 2007 fire, Petitioner’s staff failed to find the lighter before Resident
2 used it to light smoking material that ignited his sheet. Resident 2’s return from pass
with a lighter in his possession, whether or not he used the lighter to start the fire on April
30, 2007, shows that Petitioner’s interventions were not effective on April 30, 2007.
Although the testimony of C.N.A. Thompson and L.P.N. Brew was that they increased
their monitoring of Resident 2 following the April 30, 2007 fire, the monitoring
implemented was clearly insufficient for on May 2, 2007, Resident 2 caused another fire
that required evacuation of the facility, a call to the fire department, and substantial
damage to Resident 2’s room. It is self-evident that any fire poses significant risk of
great harm or death to Resident 2, other residents, staff, and visitors.

I conclude that Petitioner’s interventions following the April 30, 2007 fire were not
reasonable to mitigate the foreseeable risk of harm posed by Resident 2. Petitioner’s
interventions after April 30, 2007, were not reasonable as that fire demonstrated that
Resident 2 could set another fire despite staff's supervision and that staff's supervision

’ Taccept staff's testimony as credible and sufficient to establish that interventions were
implemented as they testified. Although Petitioner is correct that the regulations do not
specify what supervision is required and the regulations do not specifically require
documentation that supervision was provided, being correct on this point represents no
victory for Petitioner. While no specific documentation is required, the absence of
documentation would normally support an inference that no interventions were devised
or implemented. Thus, when it is necessary for Petitioner to prove what it did to
eliminate or mitigate a foreseeable risk to its residents, the absence of documentation
makes it difficult at best for Petitioner to establish what reasonable steps it took to
mitigate the risk. Further, even with credible testimony from staff, the absence of
documentation makes it difficult, for example, for Petitioner to prove the level,
consistency, and quality of supervision provided to Resident 2 given the limitations of
human memories. Petitioner was not charged by the surveyors under 42 C.F.R.

§ 483.25(h) with inadequate documentation; rather, Petitioner loses in this case due to the
inadequacy of its interventions after the April 30, 2007 fire.

15

was inadequate to mitigate the foreseeable risk. The fact that Resident 2’s physician did
not order admission to a psychiatric hospital following the April 30, 2007 fire, as he did
following the January 15, 2007 fire, is no defense for Petitioner. P. Brief at 28; P. Reply
at 2-4. The physician’s decision, or lack thereof, left Resident 2 in Petitioner’s
supervision and Petitioner remained responsible for the safety of Resident 2 and its other
residents. The evidence shows that, after the April 30, 2007 fire, Resident 2 needed
constant supervision until such time as other interventions or his transfer to a more
appropriate facility could be accomplished. After two fires, Resident 2 should not have
been permitted to go to his room and close a door unsupervised, given the foreseeable
risk that Resident 2’s illicit smoking could accidentally cause a fire.

The April 30, 2007 fire showed that Petitioner was not able to control Resident 2 without
an intervention such as constant supervision. Petitioner argues that such supervision is
not reasonable. However, whether an intervention is reasonable must be judged by
weighing Petitioner’s duty to protect its residents and staff from harm against the cost of
staff constantly monitoring Resident 2. Petitioner argues that the situation in this case is
similar to that in Northeast Center for Special Care, DAB CR1237 (2004 WL 2378302)
(2004). P. Brief at 20-21, 27. However, Petitioner’s reliance on my prior decision is
misplaced because, unlike Petitioner, the Northeast Center for Special Care had imposed
close visual observation for each of the three residents in that case. Id. at 55-56 (2004
WL 2378302, at 35). Petitioner’s argument that one-on-one constant supervision would
violate Resident 2’s privacy rights is also not persuasive. P. Brief at 27. Both the
regulations and the Louisiana Bill of Rights alluded to by Petitioner subject a resident’s
privacy rights to limitations based on medial contraindication and consideration of
resident safety. 42 C.F.R. § 483.15(e)(1); La. Rev. Stat. § 40:2010.8(8).8 The risk of fire

* The Louisiana statute requires each resident will be assured of the following:

The right to have privacy in treatment and in caring for
personal needs; to have closed room doors, and to have
facility personnel knock before entering the room, except in
case of an emergency or unless medically contraindicated; to
have confidentiality in the treatment of personal and medical
records; and to be secure in storing and using personal
possessions, subject to applicable state and federal health and
safety regulations and the rights of other residents. Privacy of
the resident's body shall be maintained during but not limited
to toileting, bathing, and other activities of personal hygiene,
except as needed for resident safety or assistance.

La. Rev. Stat. § 40:2010.8(8).
16

in a long-term care facility is self-evident, as was the danger to Resident 2, other
residents, facility staff, and visitors given Resident 2’s behaviors.

Resident 2 was the foreseeable accident hazard that Petitioner did not take reasonable
steps to mitigate by adequate supervision after April 30, 2007. Thus, violations of both
42 C.F.R. § 483.25(h)(1) and (2) are well-founded in this case.”

3. Petitioner violated 42 C.F.R. § 483.75 because management failed to
ensure that interventions to protect Petitioner’s residents were devised,
implemented, reassessed, and monitored.

a. Facts

Reference is made to the forgoing statement of facts related to Resident 2 under
Conclusion of Law 2. The following additional facts related to Resident 1 are also
pertinent to the violation of 42 C.F.R. § 483.75.

Resident | resided in the Lighthouse Unit, and his diagnoses included brain injury and
anxiety. CMS Ex. 2, at 15; CMS Ex. 7, at 1; P. Ex. 5, at 1. Resident 1’s cognitive status
was documented on his quarterly assessment as moderately impaired. CMS Ex. 2, at 15;
CMS Ex. 7, at 3; P. Ex. 5. Resident 1’s care plan showed he was anxious on a daily basis
and worried about, among other things, cigarettes. CMS Ex. 7, at 8; P. Ex. 5, at 8.
Resident 1’s care plan notes as a behavior problem that he smokes and is frequently

found with a lighter he refuses to relinquish. Approaches listed on the care plan to deal
with the problem included: resident to smoke in designated areas only; discourage
smoking outside of designated areas; confiscate personal lighters as able and discourage
personal lighters; lighters to be kept by staff and provided at smoking time; and cigarettes
to be passed out every two hours as the resident can afford. CMS Ex. 7, at 9; P. Ex. 5, at

° Petitioner also argues that the survey was flawed with the surveyors misconstruing both
the facts and the law. P. Brief at 9-18. I am not bound by the surveyors’ findings and
conclusions but rather conduct a de novo review to determine whether there exists a basis
for imposition of an enforcement remedy. Whether the surveyors misconstrued the facts
and law, is not an issue I need to resolve in this case. My review of the SOD (CMS Ex.
2) reveals that it was sufficient to place Petitioner on notice as to the alleged deficiencies
and Petitioner has had an adequate opportunity to present its defenses for my
consideration. Petitioner does not allege that the SOD did not provide adequate notice.
Petitioner points to no evidence that the surveyors were personally biased against
Petitioner or its management officials. Even if I concluded that the surveyors’
performance was inadequate in some respect, inadequate survey performance would not
relieve Petitioner of its duty to meet program participation requirements or invalidate
adequately documented deficiencies. 42 C.F.R. § 488.318(b).
17

9. Resident 1’s care plan also identified him as a chronic smoker, unable to manage his
cigarettes to last through the month, and that he tended to dig in ashtrays for butts. The
stated goal was to manage his cigarettes to last through the month. Approaches were that
Resident 1 was to be given two cigarettes every two hours by the activities director and
he was to be monitored for digging in the ashtrays and redirected if he tried. CMS Ex. 7,
at 13; P. Ex. 5, at 13. Resident 1 signed the form that sets forth Petitioner’s smoking
policy on May 30, 2002. CMS Ex. 7, at 14; P. Ex. 5, at 14. He was assessed on January
13, 2005, as being a regular smoker with no risk of dropping cigarettes, as not smoking in
an inappropriate place within the past 30 days, as being easily redirected, as not requiring
supervision for smoking, as having a medium cognitive level, and as being at “low risk.”
CMS Ex. 7, at 16; P. Ex. 5, at 16.

Resident 1 was found smoking in his room on January 15, 2007, the same day that
Resident 2 started a fire. The incident was reported to the nurse at Oak Haven, where Dr.
Blanche was on site. CMS Ex. 7, at 5; P. Ex. 5, at 5. On January 16, 2007, a lighter was
confiscated from Resident 1. CMS Ex. 7, at 5; P. Ex. 5, at 5. On April 13, 2007, a pack
of cigarettes and a lighter were confiscated from Resident 1, who stated that his family
gave them to him. P. Ex. 14, at 10. On May 1, 2007, a cigarette lighter was confiscated
from the pocket of Resident 1’s shirt. P. Ex. 14, at 10.

b. Analysis

The regulation requires that “[a] facility 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 parties agreed at hearing that the alleged violation of 42 C.F.R. § 483.75 (Tag F490)
was derivative of the alleged violations of 42 C.F.R. § 483.25(h). Tr. 13-14. However,
my review of the allegations under Tag F490 reveals that the alleged violation is not truly
derivative, at least not in the sense that if I find 42 C.F.R. § 483.25(h) was violated, then I
should also find that 42 C.F.R. § 483.75 was violated. The surveyors allege in the SOD
that the violation occurred because: (1) Administrator Lambert failed to have a system in
place to ensure that approaches were implemented, once the facility identified an accident
hazard; (2) the Administrator and DON failed to ensure that Resident 2 was supervised
and monitored; (3) Resident 2 was not immediately reassessed following the fire on
January 15, 2007; and (4) even after Resident 2 was transferred on May 2, 2007,
Petitioner remained deficient, albeit not at the level of immediate jeopardy, as
management had not implemented a system to immediately reassess and increase
monitoring of residents who exhibited inappropriate behavior. CMS Ex. 2, at 26. I find
that the surveyors’ allegations are well-founded.

18

The evidence clearly establishes that Petitioner had undertaken a difficult task of housing,
serving, treating, and safeguarding the residents of the Lighthouse Unit. Petitioner’s
records and the testimony of the staff show that Petitioner had a significant problem
controlling the smoking behaviors of the residents on the Lighthouse Unit, and Residents
1 and 2 exemplify the problem. As of January 15, 2007, Petitioner was clearly on notice
that it had the additional problem that Resident 2 had started a fire inside the facility with
his smoking and, absent evidence to the contrary such as improvement in his condition
evidenced, for example, by a proper assessment, he could potentially cause another fire.
A fire in a facility is a significant event and one should expect that management would
undertake efforts to learn the cause of the fire and identify steps to avoid future fires.
Even when the cause of the fire is known, as it was in this case, management should take
steps to ensure that the threat of future fires is minimized, if not eliminated.

Petitioner may rightly claim that there is no specific requirement for a documented
investigation and analysis of cause, or documentation of the interventions devised and
adopted to minimize the threat or prevent future fires. However, the absence of
documentation makes it difficult for Petitioner to establish that management acte
responsibly to ensure that the facility is able 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. In this case, there is no evidence that
management ensured that Residents 1 and 2 were reassessed on or after January 15, 2007,
in an effort to determine the magnitude of the risk they posed to themselves and the
population of the Lighthouse Unit. Staff credibly testified to implementing many
interventions, though it is admitted by Petitioner that the interventions were largely not
documented. The evidence does not show that management was involved in assessing
risk or devising and adopting interventions to safeguard its residents, staff, and facilities.
The evidence does not show that management was involved in assessing the effectiveness
of interventions, including the consistency of their implementation. The evidence does
not show that after the April 30, 2007 fire management assessed the effectiveness of prior
interventions or made a determination that simply doing the prior interventions more
aggressively or intensely was adequate. The evidence does not reflect a management
decision that Resident 2 did not need close observation or one-on-one supervision after
the fire on April 30, 2007. The evidence does not show that management supervised the
implementation of interventions at anytime. The evidence does not show that
management intervened with the physician on April 30, 2007, when the physician failed
to order psychiatric hospitalization. Unfortunately, the evidence does not show that
management recognized Resident 2 as a risk or that management ever engaged in the
decision-making necessary to safeguard Resident 2 and other facility residents. A
significant risk for serious injury or death existed due to management’s lack of action
throughout the period January 15, 2007 to Resident 2’s transfer on May 2, 2007.

Accordingly, I conclude that Petitioner violated 42 C.F.R. § 483.75 (Tag F490).
19

4. The alleged scope and severity of the deficiencies is not subject to
my review, as the scope and severity of the deficiencies has no effect on
the range of the PICMPs that may be imposed. 42 C.F.R.

§§ 488.438(a)(2), 488.438(e), 498.3(b)(14), 498.3(d)(10)(ii).

5. Petitioner’s regulatory violations provide a basis for the imposition
of three PICMPs, and the PICMPs imposed, totaling $10,000, are
reasonable.

Ifa facility is not in substantial compliance with program requirements, CMS has the
authority to impose one or more of the enforcement remedies listed in 42 C.F.R.

§ 488.406, including imposing a DPNA and a CMP. CMS may impose a CMP for the
number of days that the facility is not in compliance or for each instance that a facility is
not in substantial compliance. 42 C.F.R. § 488.430(a). In this case, CMS has imposed
PICMPs totaling $10,000, consisting of $3500 each for the violations of 42 C.F.R.

§ 483.25(h)(1) and (2) and $3000 for the violation of 42 C.F.R. § 483.75.

In determining whether the amount of the PICMP is reasonable, the following factors
specified at 42 C.F.R. § 488.438(f) must be considered: (1) the facility’s history of
noncompliance, including repeated deficiencies; (2) the facility’s financial condition; (3)
the seriousness of the deficiencies as set forth at 42 C.F.R. § 488.404; and (4) the
facility’s degree of culpability, i.e., neglect, indifference, or disregard for resident care,
comfort, or safety. The CMS decision regarding the scope and severity of the
deficiencies is not subject to my review, as the scope and severity of a deficiency has no
effect on the range of PICMP which may be imposed. 42 C.F.R. §§ 498.3(b)(14),
488.438(a)(2); see 42 C.F.R. §§ 498.3(d)(10)(ii), 488.438(e).

I have no evidence concerning the facility’s history of noncompliance or its financial
condition. However, the deficiencies are serious, because a resident who is able to set a
fire seriously endangers all residents, him or herself, staff, and visitors. In light of the
potential for harm, the PICMPs imposed are reasonable. I further conclude that the
absence of evidence that management actively undertook to mitigate or eliminate the risk
of fire, indicates at least indifference or disregard for resident safety.

II. Conclusion

For the foregoing reasons I conclude that Petitioner violated 42 C.F.R. §§ 483.25(h)(1)
and (2) and 483.75 and that PICMPs totaling $10,000 are reasonable.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Centers for Medicare &
Medicaid Services.

In the Case of: )
)
South Salem Rehabilitation, LLC d/b/a)
Avamere Rehabilitation of Salem, )
) Date: September 01, 2009
Petitioner, )
) Docket No. C-09-176
-Vv.- ) Decision No. CR1998
)
)
)
)

DECISION GRANTING SUMMARY DISPOSITION
TO CENTERS FOR MEDICARE & MEDICAID SERVICES

I grant the motion for summary judgment by the Centers for Medicare & Medicaid
Services (CMS). I deny the motion for summary judgment by Petitioner, South Salem
Rehabilitation, L.L.C. In granting CMS’s motion I sustain imposition of remedies
against Petitioner consisting of two per-instance civil money penalties each in the amount
of $3,500.

I. Background

Petitioner is a skilled nursing facility in the State of Oregon. It participates in Medicare
and its participation in that program is governed by sections 1819 and 1866 of the Social
Security Act (Act) and by implementing regulations at 42 C.F.R. Parts 483 and 488. Its
right to a hearing in this case is governed by regulations at 42 C.F.R. Part 498.

CMS determined to impose against Petitioner the remedies that I discuss in the opening
paragraph of this decision.’ CMS based its remedy determination on noncompliance

' In September 2008 CMS threatened to impose an additional remedy against Petitioner,
(...continued)
findings that were made at a survey of Petitioner’s facility completed on August 7, 2008
(August survey). Petitioner requested a hearing and the case was assigned to me for a
hearing and a decision. The parties completed pre-hearing exchanges. Then, Petitioner
moved for summary disposition and CMS cross-moved for summary disposition.

CMS filed 24 proposed exhibits with its pre-hearing exchange which it designated as
CMS Ex. 1 — CMS Ex. 24. Petitioner filed no proposed exhibits. I receive CMS Ex. | —
CMS Ex. 24 into the record of this case and I cite to some of them in this decision for
purposes of illustration. However, I base my decision to impose summary disposition in
favor of CMS on the undisputed facts and I make no evidentiary findings based on the
exhibits.

IL. Issues, findings of fact and conclusions of law

A. Issues
CMS imposed the two per-instance penalties to remedy specific deficiencies that were
identified at the August survey consisting of failures of Petitioner to comply with the
requirements of: 42 C.F.R. §§ 483.20(d) and 483.20(k)(1); and 42 C.F.R.
§§ 483.25(h)(1) and (2).” The issues that I decide are whether:

1. The undisputed material facts establish that Petitioner failed to comply
substantially with these regulatory requirements; and

2. CMS’s penalty determinations are reasonable.
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.

‘(continued...)

a denial of payment for new Medicare admissions effective November 7, 2008, if
Petitioner did not attain compliance by that date. Petitioner attained compliance prior to
November 7 and the remedy was not imposed.

> There was a third finding of noncompliance made at the August survey consisting of a
failure by Petitioner’s management to comply with the requirements of 42 C.F.R.

§ 483.75. CMS does not assert that it imposed remedies based on this noncompliance
finding, and, therefore, it is unnecessary that I make any findings about it.
I. The undisputed material facts establish that Petitioner failed to
comply substantially with the requirements of 42 C.F.R. §§ 483.20(d)
and 483.20(k)(1); and 42 C.F.R. §§ 483.25(h)(1) and (2).

a. Petitioner failed to comply substantially with the
requirements of 42 C.F.R. §§ 483.20(d) and 483.20(k)(1).

The regulations that are at issue here require in pertinent part that a skilled nursing
facility use the results of comprehensive assessments of each resident’s condition to
develop, review, and revise that resident’s plan of care. They require additionally that
each resident’s comprehensive plan of care include measurable objectives and timetables
to meet the resident’s medical, nursing, and mental and psychosocial needs that are
identified in the comprehensive assessment.

CMS asserts that Petitioner failed to comply with these requirements in providing care to
two of its residents who are identified as Resident # 13 and Resident # 14 in the report of
the August survey. With respect to Resident # 13, the undisputed facts are that the
resident had problems with his balance and a history of falls. Additionally, Petitioner’s
staff assessed the resident to be an elopement risk. However, the facts offered by CMS
show that Petitioner failed to update Resident # 13’s plan of care to address the resident’s
falls and elopement risks. CMS Ex. 1, at 17; CMS Ex. 24, at 3 § 16. Nor did the care
plan contain interventions that addressed the possibility that the resident might attempt to
elope Petitioner’s facility despite the fact that Petitioner’s staff had identified the resident
as being an elopement risk. CMS Ex. 1, at 17; CMS Ex. 24, at 6 § 31.

CMS contends that Resident # 14 had problems that were similar to those manifested by
Resident # 13. The resident had experienced a series of falls. CMS Ex. 1, at 18. On July
20, 2008, the resident fell and was found lying on the floor of Petitioner’s facility. CMS
Ex. 24, at 12 ] 61. The resident was also a known eloper. The staff knew that he had a
history of wandering. CMS Ex. 14, at 4; CMS Ex. 24, at 12 § 62. Petitioner’s staff
recorded the resident’s name in a document known as a “Code Green Book” which
identified those residents who were at risk for eloping the premises. In February 2008 the
resident eloped the facility and was found near the entrance to a cemetery across the
street from the premises.

However, Petitioner’s staff failed to update Resident # 14’s care plan to provide
interventions that addressed either the resident’s evident risk for falling or his propensity
to elope. Indeed, the staff acknowledged that it failed to update instructions in the plan
which elaborated on the supervision that the staff would give the resident. CMS Ex. 24,
at 12 § 62; CMS Ex. 13, at 8.
Petitioner has not offered any facts or argument to challenge the facts alleged by CMS. It
attempts to minimize the possibility of harm that resulted from the staff’s failures to
comprehensively plan the residents’ care by asserting that these failures comprised
merely “administrative failings” which, when viewed either individually or collectively,
did not show that there was a likelihood of serious injury or harm to Petitioner’s
residents. Petitioner’s pre-hearing brief at 9.°

I disagree with Petitioner’s characterization. The problems manifested by Residents #s
13 and 14 were serious and they called for serious interventions by Petitioner’s staff.
Both of these individuals were at risk for serious injury from falling. The knowledge of
that risk imposed on Petitioner’s staff the burden of planning and implementing
interventions that would protect the resident. Similarly, both of these residents were
known elopement risks and the dangers to these residents posed by their propensity to
elope should have been obvious to Petitioner’s staff. If nothing else, the residents’ risks
of falling while unsupervised made it imperative that Petitioner’s staff know the
residents’ locations at all times. Elopement by falls prone residents such as these two
greatly increased the risk of injury or harm. Yet, the undisputed facts offered by CMS
show that Petitioner failed to respond to either of these residents’ needs for
comprehensive planning to address their problems.

b. _ Petitioner failed to comply substantially with the
requirements of 42 C.F.R. §§ 483.25(h)(1) and (2).

The applicable regulatory sections require that a skilled nursing facility ensure that its
residents’ environment remains as free of accident hazards as is possible and that each
resident receives adequate supervision and assistance devices to prevent accidents. The
regulation imposes several distinct duties on a skilled nursing facility. First, the facility
must assess its premises and each resident individually in order to identify all known and
knowable risks of accidents. Second, the facility must adopt plans to eliminate all
identified risks. And, finally, the facility must implement that which it has planned.

The residents’ conditions and their environment change over time and a facility must
therefore adapt to all changes that are encountered. Assessment of risks and hazards,
planning to deal with such risks and hazards, and implementation of plans must be
updated on an ongoing basis by a facility if it is to anticipate and address effectively the
risks and hazards which its residents face.

> It is not entirely clear whether Petitioner means by this argument to challenge the
finding of noncompliance or whether it concedes noncompliance but challenges only the
finding of immediate jeopardy that CMS made in assessing scope and severity.
CMS argues that Petitioner failed to perform its duty to protect its residents. It relies on
the following fact contentions:

e Several of Petitioner’s residents, including Resident # 13 and Resident # 14,
whose conditions I describe above, were known elopement risks. Petitioner
allowed these residents unsupervised access to a patio on the exterior of
Petitioner’s premises. CMS Ex. 1, at 25. On July 30, 2008, the lock which
secured the patio gate and which was supposed to restrict residents’ access to the
exterior of Petitioner’s facility, was unlocked. CMS Ex. 24, at 7 4 36; CMS Ex.
16, at 29; CMS Ex. 1, at 24. Residents who were not supervised, including those
who were elopement risks, thus had access to the exterior of Petitioner’s premises.

e During the August survey the call button on the doorway to Petitioner’s patio was
missing. CMS Ex. 1, at 37. This increased the possibilities that residents might
egress Petitioner’s facility while unsupervised or that, if they fell, response by
Petitioner’s staff would be delayed.

¢ On July 30, 2008, Resident # 13 fell while unsupervised on Petitioner’s patio.

If not disputed, these facts strongly support a conclusion that Petitioner failed adequately
to protect its residents against accident hazards and to provide them with necessary
supervision. The patio gate, if unlocked, was an obvious hazard. Indeed, the fact that
Petitioner’s staff found it necessary to put a lock on the gate underscores the risks
resulting from leaving the gate unlocked. The gate provided residents of Petitioner’s
facility with direct access to the exterior of the premises and several of these residents
had been identified as elopement risks. Under the circumstances, it was absolutely
imperative that Petitioner’s staff keep the gate locked at all times except when the
residents were under their direct supervision. The fact that the lock was unlocked was
obvious negligence on the part of the staff.

Similarly, the failure to supervise closely elopement and falls prone residents while they
were on the patio was an invitation to disaster. Petitioner’s staff should have known that
there were obvious dangers associated with leaving these residents unsupervised.

Petitioner does not deny any of the facts relied on by CMS. It attempts to minimize the
significance of the unlocked patio gate by asserting that this was a “one-time failure on
the part of someone to re-engage the lock after passing through the gate.” Petitioner’s
pre-hearing brief at 11. Petitioner argues that such error could occur at any time and
cannot, in and of itself, constitute a hazard to residents. Id.
I disagree. Whether the failure was an isolated incident or something that happened more
requently doesn’t answer the question of whether leaving the patio gate unlocked posed
a risk to resident safety. Whether the failure was isolated or not, it was egregious and
posed a great risk of harm to residents. Leaving the gate unlocked created precisely the
type of hazard a facility must anticipate and address in order to comply with the
requirements of 42 C.F.R. § 483.25(h)(1).

Petitioner also argues that the regulation does not impose a standard of strict liability on a
acility but merely requires that a facility keep its premises as free from accidents as
possible. Petitioner’s pre-hearing brief at 11. Petitioner contends that CMS’s
determination of noncompliance effectively imposes a strict liability standard because it
implies that any accidental failure by a facility to leave a door or gate locked would
always constitute a deficiency. Petitioner’s pre-hearing brief at 11-12.

However, I do not base my finding of noncompliance solely on the fact that Petitioner’s
staff left the patio gate unlocked. The failure here lies not so much in the fact that the
gate was unlocked but in the failure by the staff to police the gate and to detect that the
gate was unlocked.

The undisputed facts of this case are that the staff knew that the gate potentially could
allow egress from the facility of elopement prone residents and that the staff knew also
that such residents were allowed to congregate on a patio which abutted the gate without
close supervision. That knowledge imposed on the staff the duty to assure that the gate
remained locked whenever residents were given access to the patio.

Petitioner also attempts to minimize the fact that the call button was missing by asserting
hat any call button, including the one in question, could be subject to acts of vandalism.
Petitioner’s pre-hearing brief at 12. According to Petitioner, there was no deficiency
associated with the missing call button because the button was repaired by Petitioner’s
maintenance personnel as soon as its absence was brought to Petitioner’s attention. Id.

ct

his argument is not persuasive because it fails to address the question of why
Petitioner’s staff was unaware that the call button was missing prior to the surveyors
calling its absence to the staffs attention. Obviously, the call button was a necessary
safety device because it was in an area that was frequented by falls prone residents.
Without one-to-one supervision by facility staff, the call button served as a lifeline for
residents who might find themselves at risk while alone on the patio. It was imperative,
therefore, that a functioning call button be in place at all times and staff had a duty to be
constantly aware of any problems that might be associated with vandalism or
malfunctions. It is no excuse to say that the staff repaired the button promptly after its
absence was brought to their attention.

Petitioner asserts that, in fact, it adequately supervised its residents, including those falls
and elopement prone residents who had access to Petitioner’s patio. To support this
assertion, it lists the various interventions that the staff had implemented in order to
address the elopement risks posed by three of its residents (Residents #s 6, 13, and 14).
Petitioner’s pre-hearing brief at 13-15.

I do not dispute that Petitioner implemented these interventions. But that begs the
question. The issue here is not what other interventions Petitioner may have
implemented but what it did to protect those residents who it allowed to have access to its
patio. And, here, there is no dispute whatsoever that these residents were allowed
unsupervised access to the patio, thus increasing the risk that those who were falls prone
might fall without being observed and those who were elopement prone would have
increased opportunities to escape the premises if other security and safety measures (i.e.,
the patio gate and the call button) failed. The seriousness of Petitioner’s noncompliance
is measured not simply by the fact that its residents were allowed to go out on the patio
unsupervised but by the failure of Petitioner’s staff to assure that the patio was secure
despite knowing that a very serious hazard would exist if the patio gate was not securely
locked and the call button was not operating.

2. A finding of immediate jeopardy is not a prerequisite to sustaining a
per-instance civil money penalty of more than $3,050.

Petitioner argues that the two $3,500 per-instance civil money penalties that CMS
determined to impose could not be imposed lawfully in the absence of a finding of
immediate jeopardy. That argument is incorrect as a matter of law. CMS is authorized to
impose per-instance penalties of up to $10,000 without regard to whether immediate
jeopardy exists.

The authority for CMS to impose civil money penalties for noncompliance with nursing
home regulations is stated at 42 C.F.R. § 488.438(a). The regulation describes three
types of civil money penalties which include daily penalties of between $50 and $3,000
for non-immediate jeopardy level deficiencies, daily penalties of between $3,050 and
$10,000 for immediate jeopardy level deficiencies, and per-instance penalties of between
$1,000 and $10,000 that CMS may impose for specific instances of noncompliance. 42
C.F.R. §§ 488.438(a)(1)(i),(ii); (2).

Nothing in this regulation or in the Act links a per-instance civil money penalty amount
to a finding of immediate jeopardy. There simply is no requirement in the Act or in the
regulations that immediate jeopardy be present as a prerequisite for imposing a per-
instance civil money penalty of $3,050 or higher.*

+ The Act does not use the term “immediate jeopardy.” It states only that the Secretary
(...continued)
Petitioner argues also that the presence of immediate jeopardy is a necessary prerequisite
to sustaining per-instance civil money penalties of more than $3,050 because, in this case,
CMS allegedly predicated its remedy determinations on the presence of immediate
jeopardy. Petitioner’s reply brief at 2. Petitioner asserts that CMS never would have
imposed the remedies that are at issue in this case but for findings of immediate jeopardy.
Therefore, according to Petitioner, the civil money penalties that are at issue here cannot
be sustained absent findings of immediate jeopardy.

Petitioner’s argument is incorrect. My authority to conduct a hearing in this case is not
limited to a quasi-appellate review of CMS’s actions. I have de novo authority to decide
both the issues of noncompliance and remedy. I make my decision as to what is
appropriate as civil money penalties based on an independent review of the evidence.
Therefore, I am in no sense constrained by the way in which CMS may have evaluated
that evidence.

Petitioner also argues that the remedies that CMS determined to impose are in effect
“category 3” remedies and not “category 2” remedies. Petitioner’s reply brief at 4.
Petitioner predicates this argument on 42 C.F.R. § 488.408, which, it contends,
establishes the procedures for CMS’s selection of remedies. Petitioner argues that to
sustain the penalties that CMS determined to impose absent a finding of immediate
jeopardy would contravene the regulatory framework for selecting remedies, thereby
invalidating the penalty determinations.

This argument is also incorrect because, as with Petitioner’s previous argument, it rests
on a conception of my authority that is completely at odds with the law. Petitioner seems
to believe that my authority is limited to reviewing CMS’s actions for propriety. In fact,
and as I have explained, my hearing and decision authority is de novo. Consequently,
whether the noncompliance should be described as “category 2” or “category 3” is simply
irrelevant. The issue before me is simply whether the noncompliance justifies the remedy
amount based on the criteria that I explain below, at Finding 3.

4(continued...)

may impose a civil money penalty not to exceed $10,000 for each day of a skilled nursing
facility’s noncompliance with Medicare requirements. Act, section 1819(h)(2)(B)(ii).
Consequently, the Secretary’s determination to allow per-instance penalties of up to
$10,000 without regard to whether there is immediate jeopardy is entirely consistent with
the Act and within her discretion.
3. The penalty amounts are reasonable.

The regulations establish a framework for deciding whether a penalty amount is
reasonable. Factors which may be considered include the seriousness of a facility’s
noncompliance, its compliance history, and its financial condition. 42 C.F.R.

§§ 488.438(f)(1) — (4); 488.404 (incorporated by reference into 42 C.F.R.

§ 488.438(f)(3)).

Here, the undisputed material facts provide ample support for CMS’s determination to
impose two $3,500 per-instance penalties against Petitioner. First, the undisputed facts of
this case clearly support a finding of immediate jeopardy level noncompliance even if it

is not necessary that I find immediate jeopardy in this case in order to sustain CMS’s
penalty determinations.

The likelihood of serious injury, harm, or worse for residents created by Petitioner’s
noncompliance was evident in Petitioner’s failures to plan the care of two of its residents
(Resident # 13 and Resident # 14) despite its staff’s knowledge that these residents were
at risk for injuries from falls and were elopement prone. Indeed, Petitioner failed to
develop additional interventions to protect Resident # 14 against elopement even after the
resident eloped and was found near the entrance to a cemetery across the street from the
facility.

The likelihood of serious injury, harm, or death was also evident in Petitioner’s failure to
protect its residents, including Resident # 13 and Resident # 14, from obvious hazards.
Allowing these residents and other falls and elopement prone residents unrestricted and
unsupervised access to an exterior patio was an invitation to disaster. Not assuring that
the patio gate remained locked and that the patio call button was functioning properly
compounded the risks to these residents.

Petitioner has adduced no facts that, assuming they are true, would establish CMS’s
immediate jeopardy determination to be clearly erroneous. Essentially, Petitioner’s
argument in opposition to a finding of immediate jeopardy boils down to asserting that
there was no actual harm to any resident caused by Petitioner’s noncompliance. But
actual harm is not a prerequisite for a finding of immediate jeopardy. Immediate
jeopardy is present whenever there is a likelihood of serious injury, harm, or death to a
resident and Petitioner has done nothing to rebut those facts which establish that
likelihood.

Furthermore, whether or not Petitioner’s noncompliance was at the immediate jeopardy
level, it was egregious and put Petitioner’s residents at grave risk for injury or worse.
Penalties in the amount determined by CMS are made reasonable by the seriousness of
Petitioner’s noncompliance even if immediate jeopardy is not established.
10

The penalties that CMS determined to impose are, in fact, minimal when measured
against the noncompliance that is established by the undisputed facts of this case.
Petitioner’s noncompliance clearly predated the August survey. The failure by its staff to
plan residents’ care and to supervise residents was an ongoing problem and not
something that occurred only during a few moments on the date of the survey. The
undisputed facts of this case establish that CMS would have been justified in imposing
very substantial daily civil money penalties for the duration of Petitioner’s
noncompliance. Had CMS done so, the total penalty amounts would have dwarfed what
CMS actually determined to impose, and the two per-instance penalties at issue here
would have been a pittance compared to what CMS might legitimately have imposed.
Thus, the remedies in this case are actually extremely modest and well-supported by the
undisputed material facts.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Social Security Administration, ) Date: August 25, 2009

)
Petitioner, )
)

-V.- ) Docket No. C-09-132

) Decision No. CR1996
Ron Adams, )
)
Respondent. )
)

RECOMMENDED DECISION

I recommend that the determination by the Social Security Administration Inspector
General (SSA LG.) to impose civil money penalties totaling $15,000 against Respondent
Ron Adams be sustained. I issue this recommended decision based on the unopposed
evidence offered by the SSA I.G. showing that Respondent lied repeatedly to the Social
Security Administration (SSA) about his work activities in connection with his
applications for disability insurance benefits.

I. Background
On October 15, 2008, the SSA LG. sent a notice to Respondent advising him that he was

proposing to impose $15,000 in civil money penalties against him. Respondent requested
a hearing and the case was assigned to me for a hearing and a decision.

I held a pre-hearing conference and issued an order which established a schedule for the
conduct of discovery and for pre-hearing exchanges of proposed exhibits and briefs. The
SSA LG. complied with my order, timely serving a discovery request on Respondent and
filing a pre-hearing exchange.
However, Respondent has failed to participate in this case from its inception. He
provided nothing in response to the SSA I.G.’s discovery request, stating only that he
possessed nothing responsive to the request. He failed to file a pre-hearing exchange
despite the fact that I repeatedly directed him to do so. He filed no response to an Order
to Show Cause which I issued on July 20, 2009.! Thus, the SSA I.G.’s evidence is
unopposed by Respondent.

The SSA LG. filed 20 proposed exhibits with his pre-hearing exchange, which he
identified as SSA LG. Ex. 1 - SSA LG. Ex. 20. I receive these exhibits into evidence.

II. Issues, findings of fact and conclusions of law
A. Issues

Respondent failed to provide any evidence or argument despite my repeatedly directing
him to do so. I could dismiss his hearing request for abandonment and/or as a sanction
for his refusal to comply with my pre-hearing orders. 20 C.F.R. §§ 498.202(f)(2);
498.214(a)(1), (2), (b)(5). However, I am electing instead to issue a recommended
decision that addresses the merits of this case in light of the overwhelming and
unopposed evidence offered by the SSA LG.

The issues are whether:

1. Respondent made willfully false or misleading statements to SSA in
connection with his applications for disability benefits; and if so,
whether

2. Civil money penalties totaling $15,000 are reasonable.

B. Findings of fact and conclusions of law

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

I. Respondent lied to SSA about his work activities in connection with
his applications for disability insurance benefits.

This case is brought pursuant to section 1129(a)(1) of the Social Security Act (Act). In
relevant part the section provides that any person who knowingly makes or causes to be
made a false statement in connection with a benefits application shall be subject to a civil
money penalty of not more than $5,000 for each such false statement.

' The history of Respondent’s non-cooperation is recited in the Order to Show
Cause.
Respondent is a landscaper by profession and has run a tree removal service. He filed
applications for disability and Supplemental Security Income (SSI) benefits with SSA in
December 2007 and January 2008. In his applications he asserted that he was unable to
work due to various medical conditions. These applications included forms which were
filed on Respondent’s behalf via the Internet in which it was alleged that he: (1) could

not stand for long periods and could not do
beginning on January 1, 2001 due to his alle
since 2001 due to his alleged impairments.”
was with a firm known as Adams Tree Lan
1970 throug!

On February 12, 2008, an adjudicator with t

(DDS) spoke with Respondent by telephone.

was working, remarking to Respondent that

eavy lifting; became unable to work

ged impairments; and (3) had not worked
He also contended that his last employment
scaping and that this work lasted from June

January 2001. SSA I.G. Ex. 4; SSA I.G. Ex. 5.

1 State Disability Determination Service
The adjudicator asked Respondent if he
he could hear noises over the telephone that

sounded as if Respondent was at a job site. SSA LLG. Ex. 9. Respondent denied that he
was working and told the DDS adjudicator that he had not worked for years due to a
bulging disc in his spine. Jd.

The unopposed evidence introduced by the I.G. shows that the Respondent made
statements in his disability applications and in subsequent communications with SSA or
the DDS which were false. The DDS adjudicator found that, as of February 2008,
Respondent had a current business listing in the local yellow pages, giving his business
address and phone numbers as the same address and phone numbers as were shown in
Respondent’s disability applications. SSA LG. Ex. 9. A claims representative in the
Warner Robins, Georgia SSA field office reported that he had seen Respondent working
from time to time and using a work truck while working. Jd.

Notwithstanding Respondent’s claim that he wasn’t working, he filed an application for
an Occupational Tax License in January 2008. SSA LG. Ex. 12. He was also
photographed on multiple occasions while working for his landscaping business. SSA
1.G. Ex. 13. In December 2007, Respondent visited the Houston Medical Center and,
during that visit, he asserted that he ran a tree service and that he drove a new Bobcat.*
SSA LG. Ex. 7.

> Respondent signed an appointment of representative form in which he clearly
acknowledged that he was giving the representative authority to make all statements on
his behalf. SSA LG. Ex. 3. Statements made on Respondent’s behalf by the
representative must be imputed directly to Respondent in the absence of any evidence
establishing that the representative exceeded her authority.

> T take notice that a Bobcat is a small, tractor-like vehicle that can be used for
landscaping work.
In March 2008 Respondent was involved in an altercation with one of his employees over
disputed wages which resulted in the employee calling the police. SSA I.G. Ex. 14, at 5-
6. On March 6, 2008, a report was filed with the police alleging that Respondent had
committed insurance fraud. /d. at 7-9. The police reports and related documents list
Respondent’s employer as Adams Tree and Heavy Equipment (Owner). Jd. at 5-13. In
February 2008 Respondent signed a contract proposal and an invoice in his capacity as
owner of Adams Tree and Heavy Equipment. Id. at 35-36.

The unopposed evidence not only belies Respondent’s several assertions that he had not
worked since January 2001, but it establishes that he lied, brazenly and systematically,
about his work activity. There is no possibility here that Respondent could have made a
statement that was false in fact but honest in purpose. The persistence with which
Respondent denied working in the face of overwhelming evidence that Respondent not
only continued to work but that he actively owned and managed a business enterprise
leaves no doubt as to his intent.

Furthermore, Respondent’s lies about his work activity were material to his applications
for disability benefits. Had Respondent reported his work activities honestly to SSA he
would have been determined not to be eligible for either disability benefits or SSI. Not
working is a necessary element of disability entitlement. An individual who works is not
entitled to disability benefits no matter the severity of that individual’s medical
impairments. Not working is also a necessary element of SSI eligibility based on
disability.

2. Civil money penalties totaling $15,000 are reasonable.

Section 1129(a)(1) of the Act authorizes the imposition of a civil money penalty of up to
$5,000 for each statement that is willfully and materially false. In this case the SSA I.G.
determined to impose penalties totaling $15,000.

The unopposed evidence amply justifies the penalties that the SSA LG. determined to
impose. First, Respondent lied on multiple occasions:

e He lied in his December 2007 application for disability and SSI benefits
and in associated documents filed via the Internet when he asserted that he
was unable to work due to medical impairments.

e He lied a second time in that application when he stated that he hadn’t
worked since 2001. He lied a third time when he asserted that he last
worked for Adams Tree Landscaping in January 2001.
e Respondent repeated these lies in his January 2008 application for disability
and SSI benefits and in associated documents filed via the Internet.

e He lied on February 12, 2008 when he told the DDS adjudicator that he
hadn’t worked in years due to a bulging disc in his spine.

Had the SSA I.G. determined to impose civil money penalties for each of these many lies,
the number of penalties and the amount imposed — assuming that amount was the
maximum of $5,000 for each false statement — would have greatly exceeded the $15,000
that the SSA L.G. determined to impose in this case. Consequently, the penalties the SSA
1.G. determined to impose against Petitioner, are in fact, modest given the persistence
with which Petitioner lied to SSA and the DDS.

Second, the amount of the penalties is reasonable when measured against regulatory
factors that are established for determining civil money penalty amounts.

Civil money penalty amounts are governed by factors that are set forth at 20 C.F.R. §
498.106(a)(1)-(5). These factors include: (1) the nature of the false statements and the
circumstances under which they were made; (2) the degree of the individual’s culpability;
(3) the individual’s financial condition; (4) the individual’s history of prior offenses; and
(5) such other matters that justice may require. The unopposed evidence shows that
Respondent’s false statements were highly material, blatant, and brazen. Respondent
willfully and deliberately lied in order to fraudulently obtain benefits to which he had no
entitlement at all. The character of Respondent’s fraud and his obviously high level of
culpability strongly support imposition of the full amount determined by the SSA LG.

Moreover, Respondent has offered nothing to show that penalties of $15,000 are
unreasonable. He has offered no evidence to establish that he would suffer an
unreasonable financial hardship as a consequence of these penalties being imposed.’ Nor
has he offered any evidence about other circumstances that might compel reduction of the
penalty amounts.

/s/
Steven T. Kessel
Administrative Law Judge

* In connection with this case the SSA I.G. sent Respondent a financial disclosure
form in order to determine whether he lacked the wherewithal to pay penalties totaling
$15,000. SSA I.G. Ex. 2. Respondent did not complete and submit the form.