Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2015-H-3344)

Complainant,
v.

Fort Ave Investments, LLC
d/b/a Garden Restaurant and Lounge,

Respondent.
Docket No. C-15-4137
Decision No. CR4572

Date: April 7, 2016

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Fort Ave Investments, LLC d/b/a Garden Restaurant and
Lounge, at 1501 Light Street, Baltimore, Maryland 21230, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Garden Restaurant and Lounge impermissibly
sold cigarettes to minors, on two separate occasions, thereby violating the Federal Food,
Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seg., and its implementing regulations,
21 C.F.R. pt. 1140. CTP seeks to impose a $250 civil money penalty against Respondent
Garden Restaurant and Lounge. During the hearing process, Respondent failed to
comply with two judicial directions regarding discovery requests. I therefore strike
Respondent’s answer and issue this decision of default judgment.
I. Procedural History

Respondent timely answered CTP’s complaint. Administrative Law Judge

Margaret G. Brakebusch issued an Acknowledgement and Prehearing Order (APHO)
that set deadlines for parties’ submissions, including the December 31, 2015 deadline to
request that the opposing party provide copies of documents relevant to this case.
Additionally, the APHO stated that a party receiving such a request must provide the
requested documents no later than 30 days after the request.

CTP served Respondent with its request for documents on December 30, 2015. On
February 4, 2016, CTP filed a motion to compel discovery indicating that CTP had not
received a response to its request. See 21 C.F.R. § 17.23(a). On February 4, 2016, CTP
also filed a motion to extend deadlines. On January 27, 2016, the case was reassigned to
Administrative Law Judge Steven T. Kessel. Pursuant to Judge Kessel’s direction, a
February 19, 2016 letter allowed Respondent until March 4, 2016 to file a response to
CTP’s motion to compel discovery. On February 19, 2016, Judge Kessel also issued an
Order that extended the parties’ pre-hearing exchange deadlines.

On March 9, 2016, CTP filed an updated status report requesting that its motion to
compel discovery be granted and that deadlines applicable to CTP be extended. The
updated status report stated that Respondent had not objected to CTP’s motion to compel
discovery or produced any documents responsive to CTP’s request for production of
documents.

On March 10, 2016, Judge Kessel issued an Order that granted CTP’s motion to compel
discovery. In that Order, Judge Kessel stated that Respondent shall comply with CTP’s
request for production of documents by March 30, 2016. Judge Kessel further stated that:

Failure to do so may result in sanctions, including the issuance of an Initial
Decision and Default Judgment finding Respondent liable for the violations
listed in the Complaint and imposing a civil money penalty. Within five (5)
days of Respondent’s deadline to comply with discovery, CTP must file a
status report notifying me whether Respondent has complied with
discovery.

The March 10, 2016 Order also further extended the parties’ pre-hearing exchange
deadlines.

On April 1, 2016, CTP filed a motion to extend deadlines. On April 1, 2016, CTP also
filed a status report and a motion to impose sanctions advising that Respondent had not
complied with Judge Kessel’s March 10, 2016 Order and asking that Respondent’s
answer be stricken and that a default judgment be issued in this case. On April 4, 2016,
this case was reassigned to me.
I. Striking Respondent’s Answer

Respondent has failed to comply with the Acknowledgment and Pre-Hearing Order that
required a timely response to discovery requests, and Respondent has failed to comply
with the Order compelling discovery responses to be provided by March 30, 2016.
Respondent did not comply with any of CTP’s discovery requests. In addition,
Respondent did not respond to CTP’s motion to compel, despite being given the
opportunity to do so. Respondent has not made any contact with this court since October
28, 2015, the date Respondent timely filed its answer. Respondent’s failure to effectively
prosecute and defend actions taken over the course of the proceedings have interfered
with the orderly and speedy processing of this case, further warranting imposition of
sanctions. See 21 C.F.R. § 17.35(a) (1)(2) and (3).

Due to Respondent’s failure to comply with the Acknowledgment and Pre-Hearing
Order, and Respondent’s failure to comply with the Order compelling discovery
responses, I am striking Respondent’s Answer, issuing this default decision, and
assuming the facts alleged in CTP’s complaint to be true. See 21 C.F.R. § 17.35(c) (3),
17.11(a).' The harshness of the sanctions I impose upon either party must relate to the
nature and severity of the misconduct or failure to comply, and I find the failure to
comply here sufficiently egregious to warrant striking the answer and issuing a decision
without further proceedings. See 21 C.F.R. § 17.35(b). Respondent did not comply with
the order nor did it provide any adequate justification for not doing so.

Ill. Default Decision

Striking Respondent’s Answer leaves the Complaint unanswered. Therefore, I am
required to issue an initial decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must determine whether the allegations in
the Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true and
conclude the default judgment is merited based on the allegations of the Complaint and
the sanctions imposed on Respondent for failure to comply with the orders. 21 C.F.R.
§ 17.11. Specifically:

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on September 28, 2015, CTP served the
complaint on Respondent Garden Restaurant and Lounge by United Parcel Service.

' As 1am issuing a default decision, it is unnecessary to rule on CTP’s April 1, 2016
motion to extend deadlines.
e At approximately 12:31 p.m. on January 16, 2015, at Respondent’s business
establishment, 1501 Light Street, Baltimore, Maryland 21230, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Newport Box 100s cigarettes to a person younger than 18 years of age;

e Ina warning letter dated March 6, 2015, CTP informed Respondent of the
inspector’s January 16, 2015 observation, and that such action violates federal law,
21 C.F.R. § 1140.14(a). The letter further warned that Respondent’s failure to
correct its violation could result in a civil money penalty or other regulatory
action;

e At approximately 12:48 p.m. on May 20, 2015, at Respondent’s business
establishment, 1501 Light Street, Baltimore, Maryland 21230, an
FDA-commissioned inspector documented Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age.

These facts establish Respondent Garden Restaurant and Lounge’s liability under the Act.
The Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco
product is misbranded if sold or distributed in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R.
§ 1140.1(b). The Secretary of the U.S. Department of Health and Human Services issued
the regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C.

§ 387a-1; see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010).
Under

21 C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18
years of age.

A $250 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $250 against Respondent
Fort Ave Investments, LLC d/b/a Garden Restaurant and Lounge. Pursuant to 21 C.F.R.
§ 17.11(b), this order becomes final and binding upon both parties after 30 days of the
date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Sharon Guei a/k/a Sharon Wells

(OI File No. H-15-42530-9),

Petitioner,

The Inspector General,
Department of Health and Human Services.

Docket No. C-16-68
Decision No. CR4571
Date: April 6, 2016

DECISION

Petitioner, Sharon Guei, is excluded from participating in Medicare, Medicaid, and all
federal health care programs pursuant to section 1128(a)(1) of the Social Security Act
(Act) (42 U.S.C. § 1320a-7(a)(1)), effective October 20, 2015. Petitioner’s exclusion for
a minimum period of five years is required by section 1128(c)(3)(B) of the Act (42
U.S.C. § 1320a-7(c)(3)(B)).!

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
I. Background

The Inspector General (I.G.) for the United States Department of Health and Human
Services notified Petitioner by letter dated September 30, 2015,” that she was being
excluded from participation in Medicare, Medicaid, and all federal health care programs
for a period of five years. The IG. cited section 1128(a)(1) of the Act as the basis for
Petitioner’s exclusion and stated that the exclusion was based upon her conviction in the
Court of Common Pleas in Franklin County, Ohio, of a criminal offense related to the
delivery of an item or service under Medicare or a state health care program. Ct. Ex. 1.°

Petitioner timely requested a hearing on October 6, 2015 (RFH). On November 6, 2015,
the case was assigned to me to hear and decide. A prehearing conference was convened

by telephone on November 30, 2015, the substance of w!

ich is memorialized in my

Prehearing Conference Order an

Schedule for Filing Briefs and Documentary Evidence

(Prehearing Order) issued November 30, 2015. Petitioner mailed several documents that
were received at my office on January 8, 2016. DAB E-File Item #5. The documents
were not marked as exhibits and, on January 12, 2016, I issued an order rejecting
Petitioner’s documents because they did not comply with Civil Remedies Division

> The L.G. notice of exclusion was uploaded to the Departmental Appeals Board
Electronic Filing System (DAB E-File) under Item #1, described as “Originating Case
Decision.” I treat this document as if marked Court Exhibit (Ct. Ex.) 1. There are two
dates stamped on Ct. Ex. 1. One stamp is September 30, 2015, and the other is October
13, 2015. The parties agreed during a prehearing conference that the I.G.’s exclusion
notice letter was dated September 30, 2015. Furthermore, Petitioner mailed her request
for hearing on October 6, 2015. Therefore, I infer that the October 13, 2015, stamp is the
date that Ct. Ex. 1 was received by my administrative staff in the mail.

> Neither party offered the I.G.’ exclusion notice dated September 30, 2015 as evidence.
Petitioner submitted a copy of the letter with her request for hearing and all references are
to that copy, which is treated as if marked Ct. Ex. 1. The parties do not dispute the
authenticity of the notice letter dated September 30, 2015, which Petitioner filed with her
request for hearing. No issue has been raised as to the adequacy of the notice or that
notice was received by Petitioner. Ct. Ex. 1 is admitted as evidence. Generally, the LG.
has the burden to prove that it complied with notice requirements of the regulations at

42 CFR. §§ 1001.2001-.2003, 1005.2(c), 1005.15(b)(2) and therefore the I.G. should
generally offer the notice as evidence. Because there is no dispute as to the adequacy of
the notice or that it was actually served, the I.G. suffers no consequence as the result of
this oversight.

Procedures (CRDP) § 14. I notified Petitioner that she could properly label and resubmit
the documents for consideration no later than March 1, 2016, the date her prehearing
exchange was due.

On January 14, 2016, the LG. filed a motion for summary judgment and supporting brief
(.G. Br.) with four exhibits marked as I.G. Exs. | through 4. On February 9, 2016,
Petitioner filed a response letter which she marked “S.G. Ex. 1” with five additional
exhibits marked “S.G. Ex. 2,” “S.G. Ex. 3,” “S.G. Ex. 4,” and “S.G. Ex. 5.” Petitioner
filed two documents marked “‘S.G. Ex. 5”; one is a two-page court document titled
“Sentencing Entry,” and the other document is one page of a letter from Petitioner’s
attorney in an overtime rights lawsuit against Petitioner’s former employer. I treat the
letter from Petitioner’s attorney as being marked P. Ex. 6. In this decision, I refer to
Petitioner’s submissions as follows: S.G. Ex. | is referred to as P. Br., S.G. exhibits 2
through 5 are referred to as P. Exs. 2 through 5, respectively. The I.G. filed a notice on
March 16, 2016, that he elected not to file a reply brief.

Petitioner has not objected to my consideration of I.G. Exs. 1 through 4 and they are
admitted as evidence. The I.G. did not object to my consideration of Petitioner’s
proposed exhibits. Nevertheless, the regulations require that I exclude “irrelevant or
immaterial evidence.” 42 C.F.R. § 1005.17(c).* Petitioner’s written argument (marked
S.G. Ex. 1) is not admitted as evidence. P. Ex. 2 is a January 2, 2013 determination by
the Ohio Office of Unemployment Compensation allowing Petitioner’s claim for
unemployment compensation beginning December 9, 2012. P. Ex. 2 is not relevant to the
issue before me, which is whether she was convicted of a criminal offense related to the
delivery of an item or service under Medicare or a state health care program. 42 C.F.R.
§ 1001.2007(a)(1)-(2). The unemployment benefits determination may tend to show that
Petitioner’s criminal conduct lasted through June 2013, but that issue is not properly
before me in this case. 42 C.F.R. § 1001.2007(a)(2), (d). Therefore, P. Ex. 2 is not
admitted. P. Ex. 3 consists of seven separate W-2 tax documents for Petitioner from her
prior employer, Maxim Healthcare Services. The documents in P. Ex. 3 are minimally
relevant to show Petitioner was employed at Maxim Healthcare Services between 2005
and 2012, where she engaged in the unlawful activity that led to her conviction.
Accordingly, P. Ex. 3 is admitted. P. Ex. 4 is an undated excerpt from a listing of
sanctions imposed by the Nevada State Health Division’s Bureau of Licensure and
Certification. Petitioner’s, maiden name, is listed under the sanction of “Findings of guilt
for Abuse, Neglect, or Misappropriation placed on the Certified Nursing Assistant
Registry.” The administrative sanction in Nevada is not cited by the I.G. as a basis for

* Citations are to the 2014 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
exclusion or an aggravating factor in this case. Therefore, P. Ex. 4 is not relevant to the
issue before me and it is not admitted. P. Ex. 5 contains two pages of a court document
that is duplicative of I.G. Ex. 1 at 2-3, except for the markings added by the parties. The
document need not be admitted as evidence twice and P. Ex. 5 is not admitted. P. Ex. 6 is
not relevant and not admitted because Petitioner’s involvement in a labor dispute against
her former employer has no tendency to make the existence of a basis for Petitioner’s
exclusion more or less likely. Fed. R. Evid. 401.

II. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of
the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation
in any federal health care program any individual convicted under federal or state law of
a criminal offense related to the delivery of an item or service under Medicare or a state
health care program. The Secretary has promulgated regulations implementing this
provision of the Act. 42 C.F.R. § 1001.101(a).

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act will be for a period of not less than five years. 42 C.F.R.

§ 1001.102(a). Pursuant to 42 C.F.R. § 1001.102(b), the period of exclusion may be
extended based on the presence of specified aggravating factors. Only if the aggravating
factors justify an exclusion of longer than five years are mitigating factors considered as a
basis for reducing the period of exclusion to no less than five years. 42 C.F.R.

§ 1001.102(c).

The standard of proof is a preponderance of the evidence, and there may be no collateral
attack of the conviction that provides the basis of the exclusion. 42 C.F.R.

§ 1001.2007(c), (d). Petitioner bears the burden of proof and the burden of persuasion on
any affirmative defenses or mitigating factors, and the I.G. bears the burden on all other
issues. 42 C.F.R. § 1005.15(b).

B. Issues
The Secretary has by regulation limited my scope of review to two issues:
Whether the I.G. has a basis for excluding an individual or entity from

participating in Medicare, Medicaid, and all other federal health care programs;
and
Whether the length of the proposed exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1). If the 1.G. imposes the minimum period of exclusion
authorized for a mandatory exclusion under section 1128(a)(1) of the Act, then there is no
issue of whether the period of exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(2).
Here, the I.G. has proposed to exclude Petitioner for the minimum authorized exclusion
period, so the length of the proposed exclusion is not at issue. Jd.; Ct. Ex. 1.

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

My conclusions of law are set forth in bold followed by the pertinent findings of fact and
analysis.

1. Petitioner timely filed her request for hearing and I have
jurisdiction.

2. Summary judgment is appropriate.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction
pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to hearing before an ALJ, and both the
sanctioned party and the LG. have a right to participate in the hearing. 42 C.F.R.

§§ 1005.2-.3. Either or both parties may choose to waive appearance at an oral hearing
and to submit only documentary evidence and written argument for my consideration.
42 C.F.R. § 1005.6(b)(5). An ALJ may also resolve a case, in whole or in part, by
summary judgment. 42 C.F.R. § 1005.4(b)(12).

Summary judgment is appropriate, and no hearing is required where either: there are no
disputed issues of material fact and the only questions that must be decided involve
application of law to the undisputed facts; or the moving party prevails as a matter of law
even if all disputed facts are resolved in favor of the party against whom the motion is
made. A party opposing summary judgment must allege facts which, if true, would
refute the facts relied upon by the moving party. See, e.g., Fed. R. Civ. P. 56(c); Garden
City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No. 1628, at
3 (1997) (holding in-person hearing required where non-movant shows there are material
facts in dispute that require testimony); Thelma Walley, DAB No. 1367 (1992); see also
New Millennium CMHC, DAB CR672 (2000); New Life Plus Ctr., DAB CR700 (2000).
There are no genuine issues of material fact in dispute in this case. Petitioner does not
deny that: she entered into a plea agreement with the advice and assistance of counsel;
the trial court accepted her guilty plea and found her guilty of theft by deception; and the
court ordered Petitioner to pay $1,221.50 in restitution to the Ohio Department of
Medicaid. RFH; P. Br. at 2; 1.G. Exs. 1-2. Petitioner argues that her prior employer
reported her to the Medicaid fraud unit as retaliation for her joining a lawsuit against the
employer seeking unpaid overtime wages. P. Br. at 1. She also claims that she pled
guilty only to avoid being in jail while she awaited trial. P. Br. at 2. But the issues that
Petitioner raises are not material facts, do not negate her conviction, and are collateral
attacks on her conviction that are not subject to review in this proceeding. 42 C.F.R.

§ 1001.2007(d). This case can be decided by applying the applicable law to the
undisputed facts and summary judgment is appropriate.

3. Section 1128(a)(1) of the Act requires Petitioner’s exclusion from
participation in Medicare, Medicaid, and all other federal health
care programs.

a. Facts

The material facts of this case are undisputed. On September 16, 2014, an indictment
was filed against Petitioner, charging her with one count of theft by deception from
August 5, 2006 to June 24, 2013, of more than $7,500 but less than $150,000, with the
purpose of depriving the Ohio Department of Medicaid of money. LG. Ex. 3 at 1. The
charged offense is a fourth-degree felony in Ohio. Ohio Rev. Code § 2913.02(A)(3).

On April 13, 2015, Petitioner entered a guilty plea to “the lesser included offense of Theft
by Deception, in violation of [Ohio Revised Code] 2913.02(A)(3), a misdemeanor of the
first degree.” I.G. Ex. 2. The trial court accepted the guilty plea and found Petitioner
guilty of the agreed lesser included offense. I.G. Ex 1 at 1. On April 15, 2015, the court
sentenced Petitioner to 180 days in jail, but suspended execution of that sentence. The
court also sentenced Petitioner to one year of probation and to pay restitution of
$1,221.50 to the Ohio Department of Medicaid. I.G. Ex. | at 1-2.

b. Analysis

The LG. cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:

(a) MANDATORY EXCLUSION. — The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):
(1) Conviction of program-related crimes. — Any individual
or entity that has been convicted of a criminal offense related
to the delivery of an item or service under title XVIII or under
any State health care program.

Act § 1128(a)(1). Thus, the plain language of section 1128(a)(1) of the Act requires that
the Secretary exclude from participation in Medicare, Medicaid, and all federal health
care programs, any individual or entity: (1) convicted of a criminal offense; (2) where
the offense is related to the delivery of an item or service; and (3) the delivery of the item
or service was under Medicare or any state health care program. The definition of a
“[s]tate health care program” includes state Medicaid plans. Act § 1128(h) (42 U.S.C.

§ 1320a-7(h)).

For an exclusion pursuant to section 1128(a), an individual or entity is considered to have
been “convicted” of an offense if, among other things, “a plea of guilty or nolo contendre
by the individual or entity has been accepted by a Federal, State, or local court.” Act

§ 1128(4)(3) (42 U.S.C. § 1320a-7(i)(3)). Here, the trial court accepted Petitioner’s guilty
plea to a misdemeanor offense of theft by deception from the Ohio Medicaid program.
1.G. Ex. 1 at 1; LG. Ex. 2. The court’s acceptance of Petitioner’s guilty plea establishes
that Petitioner was “convicted” of that offense for purposes of her exclusion under
section 1128(a)(1) of the Act. Act § 1128(i)(2), (4).

Petitioner now argues that she pled guilty because she would have been confined to jail
while she awaited trial had she not agreed to plead guilty. P. Br. at 2. I have no reason to
doubt Petitioner’s claim, but the reasons that motivated her to plead guilty cannot be
considered in this proceeding. Petitioner’s assertions about why she pled guilty and the
corollary argument of whether she was actually guilty of the offense to which she pled
guilty amount to collateral attacks that are prohibited by regulation. 42 C.F.R.

§ 1001.2007(d).

Petitioner does not dispute that her conviction for theft by deception from the Ohio
Medicaid program was related to the delivery of a health care item or service under the
Medicare or Medicaid programs. There can be no doubt that it was. Petitioner was
charged with the theft of money from the Ohio Department of Medicaid. I.G. Ex. 3.
Petitioner pled guilty to that offense, albeit as a misdemeanor rather than as a felony, as
originally charged. I.G. Ex. 2. By pleading guilty to the lesser included offense of that
charged, Petitioner admitted that she unlawfully obtained money from the Ohio Medicaid
program. In addition, Petitioner was ordered to pay restitution to the Ohio Department of
Medicaid. I.G. Ex. 1 at 2. The only reasonable conclusion that one may draw from the
order directing Petitioner to make restitution to the Ohio Medicaid program is that the
offense to which Petitioner pled guilty resulted in a loss to the Ohio Medicaid program.
A crime resulting in financial loss to a Medicaid program is necessarily related to the
delivery of items or services under that Medicaid program because it diverts money from
necessary health care services and functions of the program. Burton Siegel, D.O., DAB
No. 1467 at 6-7 (1994) (concluding that a petitioner’s facilitation of theft conviction
involving misappropriation of Medicaid funds was related to the delivery of a health care
item or service under a state health care program). Accordingly, I conclude that all three
elements of section 1128(a)(1) of the Act have been met and there is a basis for
Petitioner’s exclusion.

4. Section 1128(c)(3)(B) of the Act requires a minimum exclusion
period of five years for any exclusion action pursuant to section
1128(a) of the Act.

5. Petitioner’s exclusion for five years is not unreasonable as a matter
of law.

Congress established five years as the minimum period of exclusion for exclusions
required pursuant to section 1128(a). Act § 1128(c)(3)(B). Pursuant to 42 C.F.R.

§ 1001.2007(a)(2), when the IG. imposes an exclusion pursuant to section 1128(a) of the
Act for the statutory minimum period of five years, there is no issue of whether or not the
period is unreasonable. Accordingly, I conclude that Petitioner’s exclusion for a period
of five years is not unreasonable as a matter of law.

Petitioner argues that exclusion for five years is unfair because she has already been
punished. However, the I.G., the Secretary and I have no discretion to reduce the period
of exclusion below that mandated by Congress in section 1128(c)(3)(B) of the Act.

II. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all other federal health care programs for the minimum statutory period of
five years, effective October 20, 2015.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Gerald W. Jones
(O.1 File No. H-15-41965-9),

Petitioner,
v.

The Inspector General,
Department of Health and Human Services.

Docket No. C-16-74
Decision No. CR4570

Date: April 5, 2016

DECISION

Petitioner, Gerald W. Jones, is excluded from participation in Medicare, Medicaid, and
all federal health care programs pursuant to section 1128(a)(1) of the Social Security Act
(Act) (42 U.S.C. § 1320a-7(a)(1)), effective September 20, 2015. Petitioner’s exclusion
for the minimum period of five years is required by section 1128(c)(3)(B) of the Act

(42 U.S.C. § 1320a-7(c)(3)(B)).!

I. Background

The Inspector General (I.G.) notified Petitioner by letter dated August 31, 2015, that he
was excluded from participation in Medicare, Medicaid, and all federal health care
programs for a period of five years. The I.G. cited section 1128(a)(1) of the Act as the
basis for Petitioner’s exclusion and stated that the exclusion was based on his conviction

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
in the Superior Court of the State of Delaware, New Castle County, of a criminal offense
related to the delivery of an item or service under Medicare or a state health care
program. I.G. Exhibit (Ex.) 1.

Petitioner timely requested a hearing (RFH) on October 30, 2015. The case was assigned
to me on November 4, 2015, for hearing and decision. A prehearing telephone
conference was convened on November 19, 2015. The substance of the conference is
memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and
Documentary Evidence dated November 19, 2015 (Prehearing Order). Petitioner did not
waive an oral hearing during the prehearing conference. The IG. requested to file a
motion for summary judgment and I set a briefing schedule.

The LG. filed a motion for summary judgment and supporting brief (1.G. Br.) on January
4, 2016, with I.G. Exs. 1 through 8. Petitioner filed a response to the I.G. motion

(P. Response) on February 17, 2016, with no exhibits. The LG. filed a reply brief on
March 3, 2016. Petitioner did not object to my consideration of I.G. exhibits 1 through 8
and they are admitted as evidence.

IL. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of
the Secretary of Health and Human Services (the Secretary).

The Secretary must exclude from participation in any federal health care program any
individual convicted under federal or state law of a felony or misdemeanor criminal
offense related to the delivery of an item or service under Medicare or a state health care
program. Act § 1128(a)(1). The Secretary has promulgated regulations implementing
these provisions of the Act. 42 C.F.R. § 1001.101(a).*

Pursuant to section 1128(i) of the Act, an individual is convicted of a criminal offense
when: (1) a judgment of conviction has been entered by a federal, state, or local court
whether or not an appeal is pending or the record has been expunged; (2) there is a
finding of guilt in a court; (3) a plea of guilty or no contest is accepted by a court; or
(4) the individual has entered into any arrangement or program where judgment of
conviction has been withheld. 42 U.S.C. § 1320a-7(i)(1)-(4); 42 C.F.R. § 1001.2.

> References are to the 2014 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act will be for a period of not less than five years. 42 C.F.R.

§ 1001.102(a). The Secretary has published regulations that establish aggravating factors
the I.G. may consider to extend the period of exclusion beyond the minimum five-year
period, as well as mitigating factors that may be considered only if the I.G. proposes to
impose an exclusion greater than five years. 42 C.F.R. § 1001.102(b), (c).

The standard of proof is a preponderance of the evidence and there may be no collateral
attack of the conviction that provides the basis of the exclusion. 42 C.F.R.
§ 1001.2007(c), (d). Petitioner bears the burden of proof and the burden of persuasion on
any affirmative defenses or mitigating factors, and the I.G. bears the burden on all other
issues. 42 C.F.R. § 1005.15(b).

B. Issues

The Secretary has by regulation limited my scope of review to two issues:

Whether the I.G. has a basis for excluding Petitioner from participation in
Medicare, Medicaid, and all federal health care programs; and

Whether the length of the proposed period of exclusion is unreasonable.
42 C.F.R. § 1001.2007(a)(1).
If, as in this case, the I.G. imposes the minimum authorized five-year period of exclusion
under section 1128(a) of the Act, there is no issue as to whether the period of exclusion is
unreasonable. 42 C.F.R. § 1001.2007(a)(2).

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

My conclusions of law are set forth in bold followed by the pertinent findings of fact and
analysis.

1. Petitioner’s request for hearing was timely and I have jurisdiction.
2. Summary judgment is appropriate.

There is no dispute that Petitioner’s request for hearing was timely and I have jurisdiction
pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

Petitioner has not waived an oral hearing and the I.G. has moved for summary judgment.
Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to hearing before an ALJ and both the
sanctioned party and the LG. have a right to participate in the hearing. 42 C.F.R.

§§ 1005.2 -.3. Either or both parties may choose to waive appearance at an oral hearing
and to submit only documentary evidence and written argument for my consideration.
42 CFR. § 1005.6(b)(5).

An ALJ may also resolve a case, in whole or in part, by summary judgment. 42 C.F.R.

§ 1005.4(b)(12). Summary judgment is appropriate and no hearing is required where
either: there are no genuine disputes of material fact and the only questions that must be
decided involve application of law to the undisputed facts; or the moving party prevails
as a matter of law even if all disputed facts are resolved in favor of the party against
whom the motion is made. A party opposing summary judgment must allege facts which,
if true, would refute the facts relied upon by the moving party. See, e.g., Fed. R. Civ. P.
56(c); Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr.,
DAB No. 1628, at 3 (1997) (holding in-person hearing is required where the non-movant
shows there are material facts in dispute that require testimony); Thelma Walley, DAB
No. 1367 (1992).

Summary judgment is appropriate in this case. As discussed hereafter, Petitioner does
not identify any genuine dispute as to a material fact necessary to establish a basis for his
exclusion; to rebut the I.G.’s prima facie case; or to establish an affirmative defense. The
reasonableness of the period of exclusion is not at issue and is reasonable as a matter of
law. I may resolve this case by applying the law to the undisputed facts.

3. Petitioner’s exclusion is required by section 1128(a)(1) of the Act.

Petitioner does not dispute that he was convicted of a criminal offense. Petitioner argues,
however, that the offense of which he was convicted does not trigger section 1128(a)(1)
of the Act. The facts are not disputed; the issue to be resolved is whether the facts trigger
section 1128(a)(1), a question of law.

a. Facts

On April 14, 2015, in the Superior Court of the State of Delaware, New Castle County,
Petitioner pleaded guilty to two misdemeanor counts of falsifying business records
between December 30, 2010 and November 30, 2012 and February 2010 and July 19,
2012, in violation of Delaware law. Petitioner’s guilty pleas were accepted and a
judgment of guilty was entered. Petitioner was sentenced to unsupervised probation, to
pay a fine, to pay the costs of investigation, to make a contribution to the Delaware
Victim Compensation Assistance Program, to perform community service, and to pay
restitution of $13,739 to Delaware Medicaid and Medical Assistance. I.G. Exs. 3, 6, 7, 8;
P. Response at 4.
During the proceedings before the trial court, counsel for Petitioner, who also represents
Petitioner in this proceeding stated as follows:

MR. BALICK: Your Honor. I may take a couple of minutes
longer than you might expect for a misdemeanor sentencing
but I want to explain a little bit about the circumstances. I
want to talk a little bit about Wes [Petitioner], I want to talk
lot will bit [sic] about the impact on his career. Let me talk
first about what happened here.

Wes [Petitioner] was working under a program called
Delaware Horseman’s Assistance Funds providing counseling
service to employees, workers at the racetrack. He had a
contract with that fund that paid him for bunch of services,
some administrative, but also counseling services. The
people that were seen by Wes [Petitioner], counseled by Wes
[Petitioner], and for whom Wes [Petitioner] billed
Medicaid, were all seen. They were all Medicaid
beneficiaries. The issue in this case is that because Medicaid
is the payor of last resort and because Wes [Petitioner], part
of his compensation covered counseling services, there was
an overlap. And under Medicaid’s rules, you can’t bill for
services for which you have already been paid.

So that’s what Wes [Petitioner] did. He did this for about two
years before learning that he couldn’t do it, at which point he
stopped. The total amount billed and paid by Medicaid
during the period of time was just under $14,000, and as
you heard from the agreement, Wes [Petitioner] is
prepared to reimburse Medicaid for that loss.

1.G. Ex. 8 at 9-10(emphasis added). Although counsel was not testifying under oath, his
statements to the trial judge in open court in the criminal proceedings are treated as
admissions of Petitioner. Counsel also had a duty of candor toward the tribunal, that is,
he was prohibited from knowingly making a false statement of fact to the trial court
under Rule 3.3(a) and (d) of the Delaware Lawyers’ Rules of Professional Conduct.
Counsel’s statements on the record in open court are treated as admissions of fact that are
binding upon Petitioner.

b. Analysis

The LG. cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:
(a) MANDATORY EXCLUSION.—The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):

(1) Conviction of program-related crimes. — Any individual
or entity that has been convicted of a criminal offense related
to the delivery of an item or service under title XVIII
[Medicare] or under any State health care program.

Act § 1128(a)(1)(emphasis added). The statute requires that the Secretary exclude from
participation any individual or entity: (1) convicted of a criminal offense (whether felony
or misdemeanor); (2) where the offense is related to the delivery of an item or service;
and (3) the delivery of the item or service was under Medicare or a state health care
program. Section 1128(a)(1) includes no language that requires conviction of a felony
offense.

Petitioner does not dispute that he was convicted of a criminal offense within the
meaning of section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)). RFH; P. Response at 3-
4. Petitioner concedes that on April 14, 2015, Petitioner pleaded guilty to two
misdemeanor counts of falsifying business records; his guilty pleas were accepted and he
was found guilty based on his plea. The trial court issued a judgment of conviction and
sentenced Petitioner for the offense of which he was convicted. P. Response at 4. I
conclude that Petitioner was convicted of a criminal offense within the meaning of
section 1128(i) of the Act.

The statute requires that Petitioner be excluded if he was convicted of an offense related
to the delivery of an item or service under Medicare or a state health care program. Act
§ 1128(a)(1). Petitioner argues before me that the offenses of which he was convicted
were not program related, that is, they were not related to the delivery of an item or
service under Medicare or a state health care program. RFH; P. Response. Petitioner’s
arguments are meritless.

Appellate panels of the Departmental Appeals Board (the Board) have long held that the
statutory terms of an offense do not control whether that offense is “related to” the
delivery of a health care item or service under Medicare or a state health care program for
purposes of an exclusion pursuant to section 1128(a)(1) of the Act. See, e.g., Dewayne
Franzen, DAB No. 1165 (1990) (inquiry is whether conviction is related to Medicaid
fraud, not whether the petitioner was convicted of Medicaid fraud). Rather, an ALJ must
examine whether there is a “common sense connection or nexus between the offense and
the delivery of an item or service under the program.” Scott D. Augustine, DAB No.
2043 at 5-6 (2006) (citations omitted). To determine whether there is such a nexus or
common-sense connection, “evidence as to the nature of an offense may be considered,”
including “facts upon which the conviction was predicated.” Jd. at 6-7. An ALJ may
also use extrinsic evidence to “[fill] in the circumstances surrounding the events which
formed the basis for the offense of which Petitioner was convicted.” Narendra M. Patel,
M.D., DAB No. 1736 at 7 (2000).

Petitioner argues that the I.G. failed to establish by a preponderance of the evidence that
Petitioner’s conviction was “related to the delivery of an item or services under a Federal
health care program” or a “state health care program.” P. Response at 4-5. Petitioner
argues that summary judgment is not appropriate because there remains a genuine dispute
as to whether Petitioner conviction was for an offense related to the delivery of a health
care item or service under the Delaware Medicaid program. P. Response at 5.

The LG. has presented the transcript of the criminal court proceedings during which
Petitioner’s counsel admitted that Petitioner’s offenses were related to the Delaware
Medicaid program. I.G. Ex. 8 at 9-10. The transcript is credible and weighty evidence
and sufficient to establish that it is more likely than not that Petitioner’s offenses were
related to the Delaware Medicaid program. Petitioner asserts and argues, however, that
the references to Medicaid by his counsel during the plea colloquy before the trial court
were “careless shorthand for Medicaid Managed Care Organization.” P. Response at 6.
Petitioner asserts that in making the statement set forth above to the trial court, counsel
did not believe that the claims involved were billed and paid by Medicaid, rather they
were filed with and paid by “private entities acting as managed care organizations.”

P. Response at 6. Petitioner cannot defeat an adequately supported motion for summary
judgment — which the I.G.’s motion is — by relying upon mere assertions. The I.G. has
presented credible and weighty evidence, actually Petitioner’s admissions in open court
by his counsel, that show the nexus between Petitioner’s offenses and Delaware
Medicaid. Therefore, the burden is upon Petitioner to present some credible evidence,
not mere assertions, to show that there is a genuine dispute as to whether the managed
care organization Petitioner asserts were involved, were related to or administering the
Delaware Medicaid program. Petitioner has offered no evidence to support the
implication of his argument that the “managed care organizations” to which he refers in
is response were not administering the Medicaid program for the State of Delaware.
The phrase “state health care program” as used in section 1128(a)(1) of the Act, includes
a state program approved under title XIX of the Act, which includes state Medicaid
programs. Act § 1128(h). Medicaid specifically provides for the use of Medicaid
managed care organizations and there is a nexus or common sense connection between
Medicaid and the managed care organizations that states are authorized to use on a
contractual basis in administering state Medicaid funds. Act § 1903(m), 1932.

The LG. also presented evidence that Petitioner agreed to pay restitution to the Delaware
Medicaid program. IG. Ex. 7 at 1; 1.G. Ex. 8 at 4. Petitioner argues that the Delaware
Attorney General insisted upon that provision as part of the plea agreement without
explanation for why restitution should be made to Delaware Medicaid. P. Response at 6.
Petitioner argues that he assumed that the restitution would be distributed to the
appropriate parties. P. Response at 6. The fact that Petitioner agreed to pay restitution to
the Delaware Medicaid program is good evidence that there was a nexus between
Delaware Medicaid and Petitioner’s offenses. Petitioner does not by mere assertions
show the existence of a genuine dispute that Delaware Medicaid was entitled to the
restitution, even if I accept as true that Petitioner’s claims were filed with and paid by
“Medicaid Managed Care Organizations” as alleged by Petitioner in his brief.

P. Response at 6. Petitioner has failed to offer an affidavit, declaration, or other evidence
that the Medicaid Managed Care Organizations were not administering the Delaware
Medicaid program as authorized by section 1932 of the Act.

Petitioner’s reliance upon the decision in Catherine L. Dodd, R.N., DAB CR814 (1992),
aff'd, DAB No. 1345 (1992), is misplaced. P. Response at 8-9. In Dodd the I.G. lost due
to the absence of evidence that Dodd’s conviction was for an offense that was related to
any Medicare or Medicaid-entitled individual or that otherwise affected either program.
In this case, Petitioner admitted through counsel during the criminal trial and again before
me that his offenses related to Medicaid beneficiaries and Medicaid Managed Care
Organizations. I.G. Ex. 8 at 9-10; P. Response.

The two essential elements necessary to support an exclusion based on section 1128(a)(1)
of the Act are satisfied in this case and there is no showing of a genuine dispute of
material fact. Petitioner was convicted of a misdemeanor criminal offense and the
conduct that formed the basis of his conviction was related to the delivery of a health care
item or service under the Delaware Medicaid program. Accordingly, I conclude that
there is a basis for Petitioner’s exclusion. I further conclude that exclusion is mandated
by section 1128(a)(1) of the Act.

4. Five years is the minimum authorized period of exclusion pursuant
to section 1128(a) of the Act.

5. Petitioner’s exclusion for five years is not unreasonable as a matter
of law.

I have concluded that there is a basis to exclude Petitioner pursuant to section 1128(a)(1)
of the Act. Therefore, Petitioner must be excluded for a minimum period of five years
pursuant to section 1128(c)(3)(B) of the Act.

Exclusion is effective 20 days from the date of the I.G.’s written notice of exclusion to
the affected individual or entity. 42 C.F.R. § 1001.2002(b).
III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs for the minimum statutory period of five
years, effective September 20, 2015.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Oceanview Healthcare & Rehabilitation Center,
(CCN: 67-5743),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-789
Decision No. CR4569

Date: April 4, 2016

DECISION

Oceanview Healthcare & Rehabilitation Center (Oceanview or Petitioner) challenges the
Centers for Medicare & Medicaid Services’ (CMS) determination that it was not in
substantial compliance with the Medicare program participation requirements that a
skilled nursing facility (SNF) immediately consult with a resident’s physician when the
resident experiences a significant change in his physical condition, and provide necessary
care and services to the resident. 42 C.F.R. §§ 483.20(b)(11), 483.25. Oceanview also
challenges the imposition of two per-instance civil money penalties (CMPs) totaling
$6,000, and the denial of payment for new admissions (DPNA) effective November 8,
2014, through January 8, 2015. For the reasons discussed below, I affirm CMS’s
determination.

I. Background

The Social Security Act (Act) sets forth requirements for an SNF’s participation in the
Medicare program and authorizes the Secretary of Health and Human Services (the
Secretary) to promulgate regulations implementing those statutory provisions. 42 U.S.C.
§ 1395i-3. The Secretary’s regulations are found at 42 C.F.R. Parts 483 and 488. To
participate in the Medicare program, an SNF must maintain substantial compliance with
program participation requirements. To be in substantial compliance, an SNF’s
deficiencies may “pose no greater risk to resident health or safety than the potential for
causing minimal harm.” 42 C.F.R. § 488.301. “Noncompliance” means “any deficiency
that causes a facility to not be in substantial compliance.” 42 C.F.R. § 488.301.

The Secretary contracts with state agencies to conduct periodic surveys to determine
whether SNFs are in substantial compliance. 42 U.S.C. § 1395aa(a); 42 C.F.R. § 488.10.
The Act also authorizes the Secretary to impose enforcement remedies against SNFs that
are not in substantial compliance with the program participation requirements. 42 U.S.C.
§ 1395i-3(h)(2). The regulations specify the enforcement remedies that CMS may
impose. 42 C.F.R. § 488.406. Among other enforcement remedies, CMS may impose a
per-day CMP for the number of days an SNF is not in substantial compliance or a per-
instance CMP for each instance of the SNF’s noncompliance. 42 C.F.R. § 488.430(a).
A per-day CMP may range from either $50 to $3,000 per day for less serious
noncompliance, or $3,050 to $10,000 per day for more serious noncompliance that poses
immediate jeopardy to the health and safety of residents. 42 C.F.R. § 488.438(a)(2).
“Immediate jeopardy” exists when “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.” 42 C.F.R. § 488.301. The authorized range for a
per-instance CMP is $1,000 to $10,000. 42 C.F.R. § 488.438(a)(2).

If CMS imposes a CMP based on a noncompliance determination, then the facility may
request a hearing before an Administrative Law Judge (ALJ) to challenge the
noncompliance finding and enforcement remedy. 42 U.S.C. §§ 1320a-7a(c)(2),
1395i(h)(2)(B)(ii)); 42 C.F.R. §§ 488.408(g), 488.434(a)(2)(viii), 498.3(b)(13).

Oceanview is an SNF located in Texas City, Texas that participates in the Medicare and
Medicaid programs. The Texas Department of Aging and Disability Services (survey
agency) completed a combined recertification and complaint investigation survey at
Petitioner’s facility on October 11, 2014. CMS Exhibit (Ex.) 4. In an October 29, 2014
initial determination, CMS stated that, based on the October 11, 2014 survey, it found
Petitioner was not in substantial compliance with seven program requirements, four of
which were cited at a scope and severity level of “J,” constituting immediate jeopardy to
resident health and safety.! CMS Ex. 3 at 7. CMS determined that immediate jeopardy

' Scope and severity levels are used by CMS and state survey agencies when selecting
remedies. The scope and severity level is designated by letters A through L, selected by
CMS or the state agency from the scope and severity matrix published in the State
Operations Manual, chap. 7, § 7400.5 (Sep. 10, 2010). A scope and severity level of A,
B, or C indicates a deficiency that presents no actual harm but has the potential for
minimal harm, which is an insufficient basis for imposing an enforcement remedy.
Facilities with deficiencies of a level no greater than C remain in substantial compliance.
42 C.F.R. § 488.301. A scope and severity level of D, E, or F indicates a deficiency that
had been abated, but that Petitioner remained out of substantial compliance. The
deficiencies cited were as follows:

1. 42 C.F.R. § 483.10(b)(11), F157 (Physician Consultation and Notification) at
scope and severity (s/s) level J (immediate jeopardy);

2. 42 C.F.R. § 483.20(b)(2)(iii), F275 (Comprehensive Assessments) at s/s level
D (no actual harm with the potential for more than minimal harm);

3. 42 C.F.R. § 483.20(g)-(j), F278 (Assessment Accuracy/Coordination/
Certification/Penalty for Falsification) at s/s level D;

4. 42 C.F.R. § 483.20(k)(3)(i), F281 (Comprehensive Care Plans) at s/s level J;

5. 42 C.F.R. § 483.25, F309 (Quality of Care) at s/s level J;

6. 42 C.F.R. § 483.70(h), F465 (Physical Environment) at s/s level E (no
actual harm with the potential for more than minimal harm);

7. 42 C.F.R. § 483.75, F490 (Administration) at s/s level J.

CMS Ex. 3 at 7. CMS also found that Petitioner was out of compliance with the National
Fire Protection Association’s Life Safety Code, citing deficiencies under K021 (s/s level
F, no actual harm with the potential for more than minimal harm), K025 (s/s level E),
K038 (s/s level D), K067 (s/s level F), and K076 (s/s level D), which are violations of

42 C.F.R. § 483.70(a). CMS Ex. 3 at 7.

CMS advised Petitioner that it was imposing the following enforcement remedies:
termination of Petitioner’s provider agreement and participation in Medicare effective
April 11, 2015, if Petitioner did not return to substantial compliance prior to that date; a
per-instance CMP of $4,000 for the deficiency under 42 C.F.R. § 483.25; a per-instance
CMP of $2,000 for the deficiency under 42 C.F.R. § 483.10(b)(11); a per-instance CMP
of $2,000 for the deficiency under 42 C.F.R. § 483.20(k)(3)(i); and a DPNA effective
November 8, 2014. CMS Ex. 3 at 7-9.

presents no actual harm but has the potential for more than minimal harm that does not
amount to immediate jeopardy. A scope and severity level of G, H, or I indicates a
deficiency that involves actual harm that does not amount to immediate jeopardy. Scope
and severity levels J, K, and L are deficiencies that constitute immediate jeopardy to
resident health or safety. The matrix, which is based on 42 C.F.R. § 488.408, specifies
which remedies are required and optional at each level based upon the frequency of the
deficiency.
In a December 23, 2014 letter, CMS rescinded the $2,000 per-instance CMP for the
alleged deficiency under 42 C.F.R. § 483.20(k)(3)(i). CMS also stated that the other
remedies stated in the October 29, 2014 letter remained unchanged. CMS Ex. 3 at 14.

The survey agency completed a follow-up survey on December 18, 2014. CMS Ex. 37.
By letter dated January 21, 2015, CMS notified Petitioner that CMS found Petitioner out
of substantial compliance with 42 C.F.R. § 483.35(i) (F371, s/s level E) and 42 C.F.R.

§ 483.65 (F441, s/s level D). CMS advised Petitioner that the enforcement remedies
remained unchanged. CMS Ex. 3 at 17.

By letter dated February 18, 2015, CMS notified Petitioner that it had returned to
substantial compliance on January 9, 2015. CMS stated that it had revised the
enforcement remedies as follows: the termination of Petitioner’s provider agreement was
rescinded; a DPNA was effective November 8, 2014, through January 8, 2015; a per-
instance CMP remained imposed in the total amount of $6,000 (consisting of a per-
instance CMP of $4,000 for the alleged deficiency under 42 C.F.R. § 483.25 and a per-
instance CMP of $2,000 for the alleged deficiency under 42 C.F.R. § 483.10(b)(11), both
from the October 11, 2014 survey). CMS Ex. 3 at 2.

On December 24, 2014, Petitioner requested a hearing to dispute CMS’s finding that it
was not in substantial compliance with program participation requirements and the
imposition of remedies. Petitioner did not appeal the deficiencies cited from the
December 18, 2014 revisit survey. See CMS Ex. 3 at 17. In response, I issued an
Acknowledgment and Pre-hearing Order (Pre-hearing Order) establishing a schedule for
filing briefs and pre-hearing exchanges.

In compliance with my pre-hearing order, the parties filed their pre-hearing exchanges.
CMS submitted a pre-hearing brief (CMS Br.), accompanied by 38 proposed exhibits
(CMS Exs. 1-38). Petitioner submitted a pre-hearing brief (P. Br.), accompanied by
18 exhibits (P. Exs. 1-18).

II. Decision on the Record

I admit all of the parties’ proposed exhibits because neither party objected to any of them.
Pre-hearing Order 4 7.

My Pre-hearing Order advised the parties that they needed to submit written direct
testimony for any proposed witnesses. Pre-hearing Order 8. CMS offered the written
direct testimony of four proposed witnesses: Misty Crawford, RN, a surveyor for the
survey agency (CMS Ex. 32); Patricia O’Connor-Breaux, LBSW, a surveyor for the
survey agency (CMS Ex. 33); Erin Smith, RD, a surveyor for the survey agency (CMS
Ex. 34); and Susan LeBlanc, RN, a nurse consultant for CMS (CMS Ex. 35). Petitioner
offered the written direct testimony of one proposed witness, Tim Burningham,
Petitioner’s Administrator (P. Ex. 18). Although Mr. Burningham’s declaration indicates
that an Exhibit 1 was attached to it, no such document was attached. P. Ex. 18 at 3-4.

My Pre-hearing Order also advised that if an opposing party wanted to cross-examine a
witness or witnesses for whom written direct testimony had been submitted, the opposing
party had to affirmatively request to cross-examine the witness or witnesses. Pre-hearing
Order § 9. However, neither party requested to cross-examine any of the witnesses. As a
earing for the purpose of cross-examining witnesses “will be necessary only if a party
files admissible, written direct testimony, and the opposing party asks to cross-examine,”
I issue this decision based on the written record. Pre-hearing Order §J 10, 13.

III. Issues

The issues presented are:

1. Whether Petitioner failed to be in substantial compliance with the Medicare
program participation requirements at 42 C.F.R. §§ 483.10(b)(11) and 483.25.

2. Ifso, whether the $2,000 per-instance CMP for violating 42 C.F.R.
§ 483.10(b)(11) and the $4,000 per-instance CMP for violating 42 C.F.R.
§ 483.25 are reasonable, and whether CMS had a legitimate basis for imposing
a DPNA from November 8, 2014, through January 8, 2015.

Although CMS and Petitioner both present arguments as to whether Petitioner was in
substantial compliance with various deficiencies identified by CMS following the survey
and follow-up survey, CMS ultimately only imposed CMPs based on deficiencies under
42 C.F.R. §§ 483.10(b)(11) and 483.25 (CMS Ex. 3). An SNF has a right to a hearing
before an administrative law judge when CMS has “made an adverse ‘initial
determination’ of a kind specified in 42 C.F.R. § 498.3(b)”; however, it is only after CMS
makes a finding that an SNF is noncompliant and imposes a remedy under 42 C.F.R.

§ 488.406, that the SNF has received an initial determination subject to further review.
42 C.F.R. § 498.3(b)(13); Columbus Park Nursing and Rehab. Ctr., DAB No. 2316, at 6
(2010); see also 42 C.F.R. §§ 488.330(e)(3), 488.408(g)(1), 498.3(a)(1), 498.3(a)(3)(ii).
Consistent with this, an SNF “has no right to an ALJ hearing to contest survey deficiency
findings where CMS has not imposed any of the remedies specified in section 488.406
based on those findings, or where CMS imposed, but subsequently rescinded, any such
remedies.” Columbus Park, DAB No. 2316, at 7. Therefore, I only have jurisdiction to
adjudicate the alleged violations of 42 C.F.R. §§ 483.10(b)(11) and 483.25 from the
October 11, 2014 survey because they are the only deficiencies for which CMS proposed
enforcement remedies. Further, while CMS imposed a DPNA in this case without
specifying a particular deficiency on which the DPNA was based, as explained below,
any failure on Petitioner’s part to be in substantial compliance is a basis for imposing a
DPNA. Because I conclude below that Petitioner was not in substantial compliance with
42 C.F.R. §§ 483.10(b)(11) and 483.25, CMS had a legitimate basis for imposing the
DPNA. Therefore, it is unnecessary for me to consider any other deficiencies. Perry
Cty. Nursing Ctr. v. U.S. Dep’t of Health & Human Servs., 603 F. App’x 265, 271 (5th
Cir. 2015); Claiborne-Hughes Health Ctr. v. Sebelius, 609 F.3d 839, 847 (6th Cir. 2010).

IV. Findings of Fact

1.

Resident 17 was an 84-year-old male at the time of the October 2014 survey.
P. Ex. 2.

Resident 17 was admitted to Petitioner’s facility on October 18, 2012, and was
readmitted on June 6, 2014, from a hospital stay. P. Exs. 2, 3; CMS Ex. 5.

In 2014, Resident 17’s diagnosed ailments included, among other things,
muscular wasting and disuse atrophy, history of fall, depression, senile
dementia with delusional features, hypertension, hyperlipidemia, coronary
atherosclerosis, lack of coordination, atrial fibrillation, and Alzheimer’s
disease. P. Ex. 1 at 1; CMS Ex. 5 at 15-16.

Resident 17 was prescribed several medications, including Coumadin® and
Plavix® as anticoagulant therapy, to address his atrial fibrillation and coronary
atherosclerosis. P. Ex. 1 at 3; CMS Ex. 9 at 3-4; CMS Ex. 14 at 1, 3-4, 8.

. Resident 17 was significantly limited in his mobility, used a wheelchair, and

required extensive assistance with almost all activities of daily living. CMS
Ex. 5 at 12, 13.

Resident 17 had a fall in the month prior to his readmission and had two falls
since his readmission, but had not experienced any injuries. CMS Ex. 5 at 19.

At the time of Resident 17’s re-admission, Petitioner’s staff initiated a fall risk
evaluation and determined that he was at “high risk” for falls. P. Ex. 5 at 1. A
care plan document initiated on October 31, 2013, noted that he was at risk for
falls related to his impaired mobility and dementia. P. Ex. 4 at 6. His care
plan contained the following interventions to prevent fall or injury: have
commonly used articles within easy reach; transfer and change positions
slowly; reinforce the need to call for assistance; proper and nonslip footwear;
two side rails up at all times/when in bed for safety; ensure environment is free
of clutter; pay attention to his attempt to communicate needs; and orient
resident to his environment each time changes are made. P. Ex. 4 at 6.
8. Resident 17 fell on August 30 and 31, 2014. P. Ex. 6 at 1,3. On both
occasions, he denied having any pain and an examination revealed that he had
no injuries. The nurse notified the nurse practitioner of his falls via telephone;
no new orders were given. P. Ex. 6 at 1,3. After Resident 17’s falls,
Petitioner’s staff updated his care plan on September 2, 2014, and included the
following interventions: put to bed as soon as possible after meals to prevent
self-transferring; put bed in the lowest position; perform neuro-checks as
ordered; and continue interventions on the at-risk plan. P. Ex. 4 at 2.

9. Just prior to September 20, 2014, Resident 17’s daily dose of 3 mg
Coumadin® had been on placed on hold for five days per his physician’s
orders. CMS Ex. 11 at 2-3; see CMS Ex. 14 at 1, 3.

10. On September 20, 2014, around 7:00 p.m., a nurse found Resident 17 lying on
the floor next to his bed with approximately 60 cc of dark red fluid on the
floor. P. Ex. 6 at 7-8; CMS Ex. 10; CMS Ex. 15 at 5.2 There were no
witnesses to describe what occurred. Resident 17 sustained a 1 cm x 1 cm by 1
cm laceration above his right eyebrow. He was alert, oriented, and able to
communicate; he denied being in pain. When asked what happened, the
resident stated that “[he] was trying to get up.” The nursing staff assessed
Resident 17 and obtained his vital signs; cleaned, dried, and dressed the
laceration; and assisted him back to bed. Neurological checks were initiated.
Staff notified Resident 17’s physician and the nurse practitioner of the fall, and
they received new orders for the placement of a low bed, bed alarm, floor mat,
and to continue to hold Coumadin®.* P. Ex. 6 at 8; CMS Ex. 10; see CMS Ex.

> P. Ex. 6 at 7-8 and CMS Ex. at 15 at 5 are the same progress note documenting
Resident 17’s fall on September 20, 2014, and the treatment provided to Resident 17.
Although the progress note is dated “9/21/2014” at “05:13,” it is evident that the note
relates to Resident 17’s September 20, 2014 fall incident.

> There appears to be conflicting information in the record as to whether Petitioner’s
staff contacted Resident 17’s physician after the resident fell. According to the SOD,
when interviewed by the surveyor, the nurse stated that she reported the fall to the nurse
practitioner, who did not order that the resident be sent to the hospital. CMS Ex. 4 at 4-5.
The nurse did not state that she notified the resident’s physician. However, Petitioner’s
progress note pertaining to the fall incident states “Dr. Alkarra [Resident 17’s physician],
NP Erin notified N.O. [new order] for low bed bed [sic] alarm and floormat and continue
to hold coumadin resident resting stable... .” P. Ex. 6 at 8. The report prepared by
Petitioner’s staff following Resident 17’s fall also indicated that the physician had been
notified. CMS Ex. 10 at 1. It is not necessary for me to resolve this inconsistency in the
record because whether or not Petitioner’s staff notified Resident 17’s physician after he
fell on September 20, 2014, is not in issue.
14 at 3. Staff also notified Resident 17’s relative, who was his durable power
of attorney, of the incident. P. Ex. 6 at 8; CMS Ex. 10.

11. Throughout the night, Petitioner’s nursing staff monitored Resident 17 and
conducted neurological checks, documenting the findings on a neurological
assessment form. P. Ex. 9 at 1; CMS Ex. 13. In addition to noting Resident
17’s vital signs, the nurse documented the following as part of the assessment:
level of consciousness, movement, hand grasps, pupil size, pupil reaction, and
speech. P. Ex. 9 at 1; CMS Ex. 13. The nurse conducted the first neurological
check at 7:00 p.m., and thereafter, conducted checks at 7:15 p.m., 7:30 p.m.,
7:45 p.m., 8:15 p.m., 8:45 p.m., 9:15 p.m., 9:45 p.m., 10:45 p.m., 11:45 p.m.,
12:45 a.m. (September 21, 2014), 4:45 a.m., 8:45 a.m., and 12:45 p.m.* P. Ex.
9 at 1; CMS Ex. 13.

12. From 7:00 p.m. on September 20, 2014 through 4:45 a.m. on September 21,
2014, the nurse documented that Resident 17’s neurological checks were
normal — he was fully conscious, able to move all extremities, his hand grasps
were strong, his speech was clear, and pupil reaction in both eyes was brisk.
The nurse noted that, in both eyes, the pupils measured 3 mm. P. Ex. 9 at 1;
CMS Ex. 13. At 8:45 a.m. on September 21, 2014, the nurse documented that
Resident 17’s pupils measured 4 mm. The resident did not exhibit any other
neurological changes. The nurse did not notify Resident 17’s physician of the
increase in the resident’s pupil size. Four hours later, at 12:45 p.m., the nurse
again documented that Resident 17’s pupils measured 4 mm. The resident did
not exhibit any other neurological changes. Neither the nurse nor anyone else
on Petitioner’s staff notified Resident 17’s physician of the increase in the
resident’s pupil size. P. Ex. 9 at 1; CMS Ex. 13.

13. Around 3:51 p.m., staff found Resident 17 unresponsive in his room.* P. Ex. 6
at 6; CMS Ex. 15 at 1, 12; see CMS Ex. 12. The resident did not respond to a

* On the neurological assessment form, Petitioner’s staff continued to write in the date
“9/20” instead of writing “9/21” beginning with the 12:45 a.m. neurological check. P.
Ex. 9 at 1; CMS Ex. 13. Both a nurse and the Director of Nursing (DON), when
questioned by the surveyors, stated that the date should have been changed to “9/21.”
CMS Ex. 4 at 7, 48.

> Petitioner’s records show that its staff found Resident 17 unresponsive at 3:51 p.m. on
September 21, 2014. CMS Ex. 15 at 1, 12. However, the record also shows that
Resident 17’s physician gave the verbal order for Resident 17 to be sent to the hospital at
3:34 p.m. on September 21, 2014. CMS Ex. 7 at 7. Given that both parties consistently
sternum rub. Because he was gurgling, staff turned him on his right side.
Resident 17 vomited a large amount of brown fluid with two small blood clots.
Staff notified the resident’s physician, who ordered that the resident be sent out
via 911. EMS arrived and transported Resident 17 to the local hospital. P. Ex.
6 at 6; CMS Ex. 15 at 1, 12; see CMS Ex. 7 at 7; CMS Ex. 12. Staff also
notified the resident’s responsible party. P. Ex. 6 at 6; CMS Ex. 15 at 1.

14. Resident 17 died on September 23, 2014. His primary cause of death was
“intracranial hemorrhage/subdural hematoma” and the secondary cause of
death was “coagulopathy related to Coumadin.” CMS Ex. 4 at 4, 22; P. Br. at
7; see CMS Ex. 26.

15.On September 22, 2014, at 1:55 p.m., Petitioner’s DON notified the survey
agency of Resident 17’s fall and unresponsive state, and completed a Provider
Investigation Report on September 24, 2014. CMS Ex. 11.

16. The DON indicated in the report that Resident 17 had suffered an unwitnessed
injury of unknown origin at 7:00 p.m. on September 20, 2014. CMS Ex. 11 at
1. She notes that the resident had minimal functional ability; required no
special supervision; was not independently ambulatory; was interviewable; did
not have the capacity to make informed decisions; and was not wearing a
Wanderguard at the time of the incident. CMS Ex. 11 at 1. The report states
further that the resident was found unresponsive on September 21, 2014, at
3:51 p.m. and was transferred that day to the emergency room of the local
hospital. CMS Ex. 11 at 2. The DON’s description of what occurred on
September 20 and September 21 and of Resident 17’s condition is consistent
with that given in the progress notes described above. CMS Ex. 11 at 2,5. In
listing the actions the facility took post-investigation, the report states that staff
were “in-serviced to transfer residents on anticoagulant therapy to the
emergency room for evaluation” and were “in-serviced to call 911 for acute
changes in resident’s condition.” CMS Ex. 11 at 3.

V. Conclusions of Law and Analysis

1. Petitioner was not in substantial compliance with 42 C.F.R. § 483.10(b)(11)
because Petitioner failed to immediately consult with Resident 17’s physician
when Resident 17 experienced a significant change in his neurological status
in the hours following a fall.

reference “3:51 p.m.” as the time the resident was found unresponsive, it is not necessary
for me to reconcile any discrepancy regarding the times.
10

CMS asserts that Petitioner failed to be in substantial compliance with 42 C.F.R.

§ 483.10(b)(11) with regard to Resident 17. Specifically, CMS claims that, based on
interviews and record review, Petitioner failed to consult with Resident 17’s physician
regarding the resident’s anticoagulant and antiplatelet medications when he fell and
injured himself on September 20, 2014. CMS also alleges that Petitioner failed to consult
the physician when the resident had a change in condition at 8:45 a.m. the next morning,
September 21, 2014. CMS Ex. 4 at 2.

The regulation entitled “Resident rights” requires:

(b)(11) Notification of changes. (i) A facility must
immediately inform the resident; consult with the resident’s
physician; and if known, notify the resident’s legal
respresentative (sic) or an interested family member when
there is —

(A) An accident involving the resident which results in
injury and has the potential for requiring physician
intervention;

(B) A significant change in the resident’s physical,
mental, or psychosocial status (i.e., a deterioration in
health, mental, or psychosocial status in either life-
threatening conditions or clinical complications);

(C) A need to alter treatment significantly (i.e., a need to
discontinue an existing form of treatment due to adverse
consequences, or to commence a new form of treatment);
or

(D) A decision to transfer or discharge the resident from
the facility as specified in § 483.12(a).

42 CFR. § 483.10(b)(11)(i).

The requirement to consult with a resident’s physician is not discretionary and requires
more than merely informing or notifying the physician. The preamble to the final rule
reflects the Secretary’s intention that the facility should “inform” the resident of the
changes that have occurred but must “consult with the physician about actions that are
needed.” 56 Fed. Reg. 48,826, 48,833 (Sept. 26, 1991). Consultation implies the
requirement for a dialogue with and a responsive directive from the resident’s physician
as to what actions are needed. The use of the term “immediately” in the regulation
indicates that consultation is expected to be done as soon as the change is detected,
without any intervening interval of time. The preamble to the final rule indicates that
originally the proposed rule granted the facility up to 24 hours in which to consult with
the resident’s physician and to notify the legal representative or family. However, after
11

the receipt of comments stating that time is of the essence in such circumstances, the final
rule amended that provision to require that the physician be consulted and the legal
representative or family be notified immediately. 56 Fed. Reg. at 48,833. The point of
using the word “immediately” recognized that in such situations a delay could result in a
situation where a resident is beyond recovery or dies. Consultation with a physician must
occur immediately, that is, without delay, after a significant change is detected or
observed. See Magnolia Estates Skilled Care, DAB No. 2228, at 9 (2009).

Petitioner does not deny that its nursing staff did not immediately consult Resident 17’s
physician after discovering during an assessment that the resident’s pupils had increased
in size. P. Br. at 6, 13. In its defense, Petitioner argues that its staff properly monitored
Resident 17’s neurological condition in accordance with its policy and procedure for
neurological evaluations following an incident involving head trauma. Moreover,
Petitioner questions whether the increase in the resident’s pupil size actually constituted a
significant change in condition that triggered the consultation requirement of 42 C.F.R.

§ 483.10(b)(11)(i). P. Br. at 13. Petitioner argues that, because the resident did not
exhibit other signs or symptoms of neurological or clinical compromise, the fact that his
pupils slightly increased in size did not constitute a significant change in his status.

Petitioner’s policy and procedure for neurological evaluations following an incident
involving head trauma required staff to conduct a comprehensive neurological assessment
for a minimum of 72 hours and document all observations on a neurological assessment
form. CMS Ex. 18. The policy stated that “[t]he first examination of the resident is
important to establish a baseline for future assessments. Any resident having an injury
involving the head or an unobserved fall will have neuro checks and vital signs taken at
least every eight (8) hours for twenty-four (24) hours or per specific facility, policy or
physician’s order.” CMS Ex. 18. Petitioner’s policy required staff to conduct
assessments at specified intervals and document vital signs, responsiveness, level of
consciousness, speech ability, motor ability, pupil signs, changes in condition, and any
other pertinent observations. CMS Ex. 18. With respect to pupil signs, the policy stated:

A. Look at pupils and compare size and equality.

B. [U]sing an overhead light, simultaneously compare the size of the pupils and
their reaction to light.

C. Ifa flashlight is used, shine directly into eye being examined while other eye is
covered.

CMS Ex. 18 at 2. Petitioner’s staff documented all observations from Resident 17’s
neurological checks on a neurological assessment form, as required by Petitioner’s
policy. Although Petitioner’s policy does not state when a resident’s physician should be
consulted, the neurological assessment addresses this with an emphatic directive at the
bottom of the form: “Notify MD IMMEDIATELY of signs and symptoms of Intracranial
Pressure!!!” CMS Ex. 13. This is consistent with Petitioner’s policy on the subject of
12

“Monitoring for Significant Change in Condition.” CMS Ex. 19. Among the directives,
the policy instructs “[p]hysician, resident, and responsible party will be notified of the
significant change.” CMS Ex. 19 at 2.

After Resident 17 fell on September 20, 2014, Petitioner’s nurse conducted the first
neurological check at 7:00 p.m. At that time, Petitioner’s nurse documented that both of
his pupils measured 3 mm in size. Because these measurements were taken during the
initial neurological check, they became part of Petitioner’s “baseline for future
assessments.” See CMS Ex. 18 at 1. From 7:00 p.m. on September 20, 2014, through
4:45 a.m. on September 21, 2014, the neurological checks conducted by Petitioner’s
nurse showed that Resident 17 did not exhibit any abnormal neurological signs and his
pupils remained at 3 mm. However, at 8:45 a.m. on September 21, 2014, the nurse
documented that Resident 17’s pupils measured 4 mm. P. Ex. 9 at 1; CMS Ex. 13. Four
hours later, at 12:45 p.m., the nurse again noted that Resident 17’s pupils measured
4mm. P. Ex. 9 at 1; CMS Ex. 13. Despite documenting the increased pupil size during
two separate assessments, the nurse did not consult Resident 17’s physician regarding
this change in his neurological status. It was not until Petitioner’s staff found the resident
unresponsive in his room around 3:51 p.m. that they finally consulted his physician, who
ordered that the resident be sent to the hospital.

Petitioner’s defense that Resident 17’s increased pupil size, without other signs or
symptoms of neurological compromise, did not constitute a significant change in
condition is without merit. The objective behind performing the neurological checks was
so that staff could monitor Resident 17 at regular intervals for any signs of deterioration
in his condition. Any deviations from his baseline measurements, including changes in
pupil size and reaction, could be an indication of a potentially life-threatening condition.
Even in the absence of other clinical changes, the increase in Resident 17’s pupil size, in
and of itself, was a possible sign that he was no longer within normal limits
neurologically, specifically, that he may be experiencing intracranial pressure. In the
SOD, the relationship between pupil size and intracranial pressure is stated as follows:

Changes in pupil size, equality, and reaction to light, and
extraocular movements are indicative of compression of the
third, fourth, and sixth cranial nerves. Assessment of these
changes should be as accurate and objective as possible.
Unilateral and bilateral evaluations are important and usally
[sic] are recorded by a drawing of the actual size of each
pupil or by precise measurements using a small metric ruler.

CMS Ex. 4 at 7, quoting http://medical-dictionary.thefreedictionary.com. Susan
LeBlanc, RN, a nurse with over 30 years of experience, testified consistent with this
definition that “[i]ntracranial pressure is manifested by change in pupil size, equality and
reaction to light.” CMS Ex. 35 at 1, 3.
13

Although Petitioner argues that an online dictionary should not be considered as valid
authority on the topic of intracranial pressure, it did not offer any other authoritative texts
or medical expert testimony on the topic. In fact, in its pre-hearing brief, Petitioner
concedes that “a 1 mm change in pupil size may be a sign consistent with intracranial
pressure.” P. Br. at 13-14 (emphasis in original). Further, Petitioner’s policy on
neurological assessments specifically tells its staff to “[1]ook at pupils and compare size
and equality,” showing that Petitioner understood the importance in changes in pupil size
as described in the excerpt from the on-line medical dictionary quoted in the SOD. CMS
Ex. 18 at 2. Consistent with this understanding, Petitioner’s DON admitted, in an
interview with a surveyor, that Resident 17’s change in pupil size from 3 mm to 4 mm
warranted physician notification. CMS Ex. 4 at 7. Implicit in the DON’s statement is the
recognition, consistent with Petitioner’s own admission, that the resident’s increased
pupil size should not have been ignored because it was possibly indicative of a serious
neurological complication.

Moreover, in attempting to minimize the change in Resident 17’s pupil size as isolated
and insignificant, Petitioner fails to take into account that Resident 17 had fallen around
7:00 p.m. the previous evening and hit his head, and that Resident 17 was taking Plavix®
therapy (75 mg. daily) at the time of his fall, which increased his risk of developing
possible complications. CMS Ex. 14 at 8. In fact, following the fall, Petitioner continued
to administer Plavix®; however, as Misty Crawford, RN testified, doing so “is
contraindicated when someone has an intracranial hemorrhage and increases the risk of
bleeding.” CMS Ex. 32 at 3. Further, Resident 17’s physician had ordered that his
Coumadin® be held from September 15 through September 20, 2014 because of his
elevated PT/INR (prothrombin time/international normalized ratio) lab results. CMS Ex.
7, at 8, 9, 20, 22; CMS Ex. 14, at 1, 3; see CMS Ex. 8 at 1, 2. CMS notes, and Petitioner
does not dispute, that the PT/INR test evaluates the ability of blood to clot properly.
CMS Br. at 3 nn.2-3. Therefore, the fall and Resident 17’s medication history, which
presented the possibility that Resident 17 could not properly clot, should have resulted in
extreme vigilance for an intracranial bleed. See CMS Ex. 35 at 3 (“The resident’s
primary [care] physician was also the facility Medical Director who stated ‘if a resident
hit their head and had a high INR (international normalized ratio — a measurement of
Coumadin effectiveness) he should have been sent out. That’s the standard.””); Cf.
Autumn Care of Norfolk, DAB CR1017 (2003) (quoting testimony of a physician stating
that “[t]he Coumadin really is a signal . . . to physicians and nursing staff that any, even
slight fall, could result in a significant and possibly fatal intracranial bleed.”). Based on
the total picture presented by these facts, it is clear that Resident 17’s increased pupil size
was potentially an indicator of a life-threatening complication that warranted immediate
physician consultation and intervention. Without immediate physician intervention,
Petitioner’s staff had no way of knowing with any certainty whether Resident 17’s
increased pupil size was as insignificant as it claims it was.
14

I note further that neither Petitioner’s policy on neurological evaluations nor its
neurological assessment form contains any requirement that staff must first identify a
combination of symptoms before consulting a physician of a change in condition. That
the observation of even a single change in condition was sufficient to trigger Petitioner’s
duty to immediately consult the resident’s physician is underscored by Petitioner’s
directive to its staff: “Notify MD IMMEDIATELY of signs and symptoms of
Intracranial Pressure!!!” CMS Ex. 13.

When the nurse discovered that Resident 17’s pupils had increased by 1 mm at 8:45 a.m.
on September 21, 2014, this significant change in condition should have triggered the
staff’s duty to immediately notify and consult with his physician. Under 42 C.F.R.

§ 483.10(b)(11), a facility has the obligation to consult immediately with a resident’s
physician in any situation where “there is a chance that physician intervention is needed.”
Claiborne-Hughes Health Ctr. v. Sebelius, 609 F.3d 839, 844 (2010). However, rather
than notifying Resident 17’s physician immediately, Petitioner’s nursing staff failed to
recognize or chose to ignore this potentially life-threatening change in his condition for
hours. After seven hours had elapsed from the time his increased pupil size was first
discovered at 8:45 a.m., Resident 17 became unresponsive. It took such an obvious
indication to move Petitioner’s staff to action. However, by this point, it was too late.
Petitioner thus failed to fulfill its regulatory duty to immediately consult Resident 17’s
physician when, based on all of the facts surrounding this case, Petitioner identified a
significant change in Resident 17’s neurological condition.

The SOD makes the additional allegation that Petitioner contravened the physician
notification requirement when it “failed to consult with the physician regarding
anticoagulant and antiplatelet use when Resident #17 had a fall with injury on 9/20/14.”
CMS Ex. 4 at 2. According to the SOD, a nurse failed to review all of Resident 17’s
medications with his physician after his fall incident to determine whether the resident’s
Plavix® should be held. CMS Ex. 4 at 3. Petitioner asserts that it was not necessary for
Petitioner’s nursing staff to specifically consult with Resident 17’s physician on the
matter of whether Plavix® should have been held because the physician would have
known what medications he had prescribed for Resident 17. P. Br. at 12-13. However,
CMS did not include an argument in its brief to support this additional allegation as an
independent basis to uphold a violation of 42 C.F.R. § 483.10(b)(11)(i). CMS Br. at 3-4,
7. Therefore, I consider CMS to have abandoned that allegation from the SOD in this
proceeding.

2. Petitioner was not in substantial compliance with 42 C.F.R. § 483.25
because, based on its failure to immediately consult with Resident 17’s
physician when the resident experienced a significant change in condition,
Petitioner failed to provide the necessary care and services to Resident 17.
15

In the SOD, the allegations of Petitioner’s noncompliance with 42 C.F.R. § 483.25 are
based on the same facts relating to Resident 17 discussed above regarding the violation of
42 C.F.R. § 483.10(b)(11). CMS Ex. 4 at 42-63. CMS contends that Petitioner failed to
provide the necessary care and services to Resident 17 by failing to notify his physician
immediately when he exhibited a change in condition on September 21, 2014, and by
failing to review his medications with his physician after his September 20, 2014 fall to
letermine if his Plavix® should be held. CMS Ex. 4 at 43.

The quality of care regulation at 42 C.F.R. § 483.25 requires that “[e]ach resident must
receive and the facility must provide the necessary care and services to attain or maintain
the highest practicable physical, mental, and psychosocial well-being, in accordance with
the comprehensive assessment and plan of care.” An SNF’s failure to provide necessary
care and services under 42 C.F.R. § 483.25 can be evidenced by a facility’s failure to
immediately notify a resident’s physician when the resident has experienced a significant
ange in condition. Magnolia Estates, DAB No. 2228, at 19-21 (“Failure to notify a
physician about a clinical condition that required immediate physician consultation and
intervention in order to mitigate a risk of infection and more serious physical injury is
clearly a failure to provide ‘necessary care and services’ to ensure that a resident attains
or maintains her highest practicable well-being.”).

fe)

As previously discussed in detail above, Resident 17 experienced a significant change in
his neurological condition on the morning of September 21, 2014, when a neurological
check showed that his pupils had increased in size from his baseline measurement of

3 mm to 4mm. However, Petitioner’s staff failed to immediately notify Resident 17’s
physician about this change in his status, which was a possible sign of intracranial
pressure. When Resident 17 continued to exhibit increased pupil size four hours later,
Petitioner’s staff again failed to properly respond to this change in his condition and
failed to notify his physician. As the record shows, it was not until Resident 17 was
found unresponsive in his room over seven hours later that his physician was finally
notified, and the resident was sent to the hospital.

In order to carry out its regulatory duty to provide the necessary care and services to
Resident 17, it was crucial for Petitioner’s staff to monitor him for any significant clinical
changes after he fell and consult immediately with his physician upon the discovery of
any such signs. Petitioner’s failure to immediately notify Resident 17’s physician about
the resident’s increased pupil size deprived him of potentially life-saving care and
services, in violation of 42 C.F.R. § 483.25.

As for CMS’s allegation that Petitioner’s staff did not review all his medications with
Resident 17’s physician after his fall, CMS did not argue this point in its brief and, as
explained above, I consider that allegation to have been abandoned as a basis for a
violation of 42 C.F.R. § 483.25. CMS Br. at 3-4, 6.
16

3. CMS’s finding of immediate jeopardy is not reviewable in this forum.

Petitioner has challenged CMS’s determination that the deficiencies cited under

42 C.F.R. §§ 483.10(b)(11)(i) and 483.25 placed Resident 17 in immediate jeopardy.
However, because CMS has imposed only per-instance CMPs in this case, I have no
authority to review CMS’s immediate jeopardy determination.

An ALJ may review CMS’s scope and severity findings (which includes a finding of
immediate jeopardy) only if a successful challenge would affect: (1) the range of the
CMP amounts that CMS could collect; or (2) a finding of substandard quality of care that
results in the loss of approval of a facility’s nurse aide training program. 42 C.F.R.

§ 498.3(b)(14), (d)(10)(i)-(ii).° Petitioner’s challenge meets neither of these regulatory
criteria.

In this case, CMS imposed two per-instance CMPs. Unlike per-day CMPs, under the
regulations, there is only a single range for a per-instance CMP, which is $1,000 to
$10,000, and this range applies to both immediate jeopardy and non-immediate jeopardy
level deficiencies. Compare 42 C.F.R. § 488.438(a)(1) with 42 C.F.R. § 488.438(a)(2).
Consequently, because CMS only imposed per-instance CMPs against Petitioner, a
successful challenge to the immediate jeopardy finding would not affect the range of
CMP amounts that CMS could collect. NMS Healthcare of Hagerstown, DAB No. 2603,
at 6-7 (2014). Moreover, Petitioner has not shown that it operates a nurse aide training
program that could be affected. For these reasons, Petitioner has no right to appeal the
immediate jeopardy determination.

4. A per-instance CMP of $2,000 is a reasonable enforcement remedy for
Petitioner’s noncompliance with 42 C.F.R. § 483.10(b)(11) and a per-
instance CMP of $4,000 is a reasonable enforcement remedy for Petitioner’s
noncompliance with 42 C.F.R. § 483.25.

Ihave concluded that Petitioner violated 42 C.F.R. §§ 483.10(b)(11) and 483.25. 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 a CMP. Here, CMS has chosen to impose two per-instance CMPs

° “Substandard quality of care” is identified by the situation where there are one or more
deficiencies related to participation requirements under 42 C.F.R. §§ 483.13 (Resident
Behavior and Facility Practices), 483.15 (Quality of Life), or 483.25 (Quality of Care),
which constitute either immediate jeopardy to resident health or safety; a pattern of or
widespread actual harm that is not immediate jeopardy; or a widespread potential for
more than minimal harm, but less than immediate jeopardy, with no actual harm. 42
CF.R. § 488.301.
17

based on its failure to be in compliance with each of the program participation
requirements identified above. As discussed below, I find the CMP amounts to be
reasonable.

In determining whether the per-instance CMP amounts imposed against Petitioner are
reasonable, I apply the factors listed in 42 C.F.R. § 488.438(f). 42 C.F.R.

§ 488.438(e)(3). These factors include: (1) the facility’s history of compliance; (2) the
facility’s financial condition; (3) the factors specified at 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 at 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 proposed a per-instance CMP of $2,000 for the noncompliance with 42 C.F.R.

§ 483.10(b)(11) (F157) and a per-instance CMP of $4,000 for the noncompliance with 42
C.F.R. § 483.25 (F309). Petitioner challenged the reasonableness of the proposed CMP
amounts in its hearing request.

I have received no evidence of prior noncompliance, and Petitioner has not offered any
evidence showing an inability to pay the relatively small per-instance CMPs. Unless a
facility contends that a particular regulatory factor does not support the CMP amount, an
ALJ must sustain it. Coguina Ctr., DAB No. 1860 (2002).

In examining the seriousness of the deficiency, I find that Petitioner’s failure to consult
Resident 17’s physician when he exhibited a significant change in his neurological status
placed him at risk for serious harm. It was Petitioner’s duty to monitor Resident 17’s
neurological status following his fall, and immediately consult his physician if he showed
any significant change in his condition. Petitioner’s staff, however, failed to recognize or
ignored Resident 17’s increased pupil size, which was a sign of a potentially life-
threatening condition, and made no attempt to notify his physician until over seven hours
later, when the resident was found unresponsive. Petitioner is thus culpable for its staff’s
inaction and its failure to provide the necessary care and services that Resident 17
required. I conclude based on my review of all the required factors, that the per-instance
CMPs, which are in the lower half of the per-instance CMP range, are reasonable for
Petitioner’s noncompliance with Medicare requirements. See 42 C.F.R.

§§ 488.408(d)(iv), 488.438(a)(2).

5. CMS had a legitimate basis to impose a DPNA from November 8, 2014
through January 8, 2015, because Petitioner was noncompliant with
42 C.F.R. §§ 483.10(b)(11) and 483.25, and I do not have authority to
reverse that decision.
18

Petitioner asserts that CMS had no basis to impose a DPNA in this case. However, CMS
may impose a DPNA any time there is a breach of substantial compliance. 42 C.F.R.

§ 488.417(a); see Ridgecrest Healthcare, DAB No. 2598 (2014) (holding that “42
C.F.R. § 488.417(a)[] authoriz[es] a DPNA when a facility is not in substantial
compliance with the participation requirements”). Petitioner did not appeal the
deficiencies cited from the December 18, 2014 revisit survey. See CMS Ex. 3 at 17.
Therefore, I conclude that Petitioner has waived any dispute of the deficiencies cited
from that survey. Petitioner has otherwise offered no evidence to establish that it
returned to substantial compliance with program participation requirements prior to
January 9, 2015, the date determined by CMS. Based on the violations of 42 C.F.R.

§§ 483.10(b)(11) and 483.25, CMS had a legitimate basis to impose a DPNA, and I have
no authority to reverse that discretionary decision. 42 C.F.R. § 498.3(c)(13).

6. Other issues raised by Petitioner are without merit in this case.

Petitioner notes that the survey agency conducted a survey of its facility on September
23, 2014, which focused on Resident 17 and his fall event of September 20, 2014, and
found no deficiencies. Petitioner argues that CMS is thus procedurally precluded from
revisiting those same facts and circumstances at the October 11, 2014 survey and
concluding that immediate jeopardy existed based on “the same patient, the same fall,
and the same Facility practices which were reviewed previously . . . on September 23,
2014.” P. Br. at 9.”

I am not persuaded by Petitioner’s argument. Petitioner cites no law or regulation in
support of its position that CMS was prohibited from finding deficiencies related to the
care of Resident 17 at the October 11, 2014 survey because the same information had
been reviewed and resulted in no citations at the September 20 survey. Contrary to what
Petitioner argues, nothing in the regulations precludes CMS or the state from re-
evaluating information during a survey that may have already been reviewed at a prior
survey. Nor do the regulations prohibit CMS from arriving at a different conclusion at a
later survey as to Petitioner’s noncompliance based upon its revisiting of a facility’s
records. Further, I find that the SOD from the October 11, 2014 survey adequately
notified Petitioner of the factual bases for the deficiencies under F157 and F309, and

7 The record shows that the survey agency received two separate complaints regarding
the care and services provided to Resident 17, both of which related to his September 20,
2014 fall, and, in response to these complaints, the survey agency conducted a survey on
September 23, 2014, and a survey on October 11, 2014 (which was part of the annual
survey). CMS Exs. 31, 38. Although no deficiencies were cited at the September 23,
2014 survey, the October 11, 2014 survey resulted in citations at the immediate jeopardy
level relating to Petitioner’s care of Resident 17.
19

thus, Petitioner had adequate notice of what to defend. Even were I to agree with
Petitioner that CMS’s actions were “inconsistent” (P. Br. at 9), the evidence would still
support my conclusion that Petitioner was not in substantial compliance with 42 C.F.R.
§§ 483.10(b)(11) and 483.25.

VI. Conclusion

For the foregoing reasons, I conclude that Petitioner was not in substantial compliance
with 42 C.F.R. §§ 483.10(b)(11) (F157) and 483.25 (F309). Further, I conclude that a
per-instance CMP of $2,000 for noncompliance with 42 C.F.R. § 483.10(b)(11); a per-
instance CMP of $4,000 for noncompliance with 42 C.F.R. § 483.25; and a DPNA
effective November 8, 2014 through January 8, 2015, are reasonable enforcement
remedies.

/s/
Scott Anderson
Administrative Law Judge