Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

Shady Grove Adventist Hospital
Emergency Center at Germantown,
(CCN: 21-0057),

Date: May 8, 2008

Decision No. CR1783

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) Docket No. C-07-371
Petitioner, )
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Centers for Medicare & Medicaid Services.

DECISION

Petitioner, Shady Grove Adventist Hospital (Petitioner or Shady Grove), and the Shady
Grove Adventist Hospital Emergency Center at Germantown (Germantown Emergency
Center),' met the requirements for provider-based status established by 42 C.F.R.

§ 413.65(d)(1), as of the time of Petitioner’s application or provider-based attestation on
July 27, 2006.

I. Background

On April 11, 2007, Petitioner requested a hearing by an administrative law judge (ALJ)
to challenge the March 1, 2007 reconsideration decision of the Centers for Medicare &
Medicaid Services (CMS) to deny Petitioner provider-based status. The case was
assigned to me for hearing and decision on April 24, 2007. I held a hearing in
Washington, D.C., on December 11, 2007, and the proceedings are recorded in a
transcript (Tr.) with pages numbered 1-101. The parties offered, and I admitted as
evidence, CMS Exhibits (CMS Exs.) 1-19, and Petitioner’s Exhibits (P. Exs.) 1-19. Tr. at
12-15. CMS called no witnesses. Petitioner elicited testimony from: Robert Jepson,
Associate Vice President for Government Relations and Public Policy at Adventist

' The real party in interest in this case is Shady Grove Adventist Hospital, which
seeks provider-based status for the Germantown Emergency Center.
2

Healthcare (Tr. 40-54); Rebecca Vasse, Nursing Director of Emergency Services at
Petitioner and Germantown Emergency Center (Tr. 54-74); Angelo Falcone, M.D., CEO
of Montgomery Emergency Physicians (Tr. 75-86); and John Cook, Ph.D., former chief
rate analyst for the Maryland Health Services Cost Review Commission (HSCRC) ( Tr.
87-97). Both parties submitted pre-hearing briefs, post-hearing briefs, and post-hearing
reply briefs.’

II. Discussion
A. Findings of Fact

The following findings of fact are based upon the joint stipulations of fact of the parties
dated August 6, 2007, the transcript of the hearing, and the exhibits admitted. Where
pertinent, citations to exhibit numbers related to each finding of fact may be found in the
Analysis section of this decision if not indicated here.

1. Shady Grove Adventist Hospital, Medicare provider number 21-0057, is the
correct Petitioner and the main provider in this case.

2. On July 27, 2006, Shady Grove submitted a provider-based attestation to CMS for
the Germantown Emergency Center, which was a newly-constructed facility that
the hospital was opening in Germantown, Maryland. CMS Ex. 2.

3. Shady Grove is located at 9901 Medical Center Drive, Rockville, Maryland 20850.

4. The Germantown Emergency Center is located at 19735 Germantown Road,
Germantown, Maryland 20874, approximately nine miles from the campus of
Shady Grove.

5. On November 6, 2006, Shady Grove was notified of CMS’s decision denying the
hospital’s request for provider-based status for the Germantown Emergency
Center. CMS Ex. 3, at 28-31.

? Petitioner requests in its post-hearing brief that I take judicial or administrative
notice of a January 15, 2008 article in the Washington Post. Petitioner Post-Hearing Brief
(P. Brief) at 7n.5. The request is denied. CMS has not denied that there was a need for a
facility to provide emergency care in the area as asserted by Petitioner.
3

CMS advised Shady Grove that its request for provider-based status was denied
based on CMS’s determination that the Germantown Emergency Center failed to
meet the requirements of the provider-based regulation at 42 C.F.R.

§ 413.65(d)(1). CMS Ex. 3, at 28.

Shady Grove filed a request for reconsideration of CMS’s denial of provider-based
status on December 28, 2006. CMS Ex. 3.

CMS advised Petitioner by letter dated March 1, 2007, that it affirmed the
November 6, 2006 decision denying provider-based status for the Germantown
Emergency Center. CMS Ex. 4.

The State of Maryland contracted with the Social Security Administration in 1977
and thereafter to have Medicare reimburse its hospitals under a waiver of the usual
Medicare hospital reimbursement system, as currently authorized by section
1814(b)(3) of the Social Security Act (Act).? CMS Exs. 5-11, 14-16; CMS Post-
Hearing Brief (CMS Brief) at 2.

Maryland hospitals are reimbursed for the inpatient and outpatient services they
provide to Medicare beneficiaries under rates established by a state rate-setting
authority, the HSCRC. CMS Exs. 5-11; CMS Brief at 2.

No state other than Maryland has opted out of the national Medicare hospital
reimbursement system in favor of a reimbursement scheme developed by a state.
CMS Brief at 2.

CMS determined that, at the time of its application, the Germantown Emergency
Center met all requirements at 42 C.F.R. § 413.65 for provider-based status as a
remote location of Petitioner, except for the requirement contained in the last
sentence of 42 C.F.R. § 413.65(d)(1), which states that, “[i]f a State health
facilities’ cost review commission or other agency that has authority to regulate the
rates charged by hospitals or other providers in a State finds that a particular
facility or organization is not part of a provider, CMS will determine that the
facility or organization does not have provider-based status.” CMS Ex. 4; Tr. 37-
38.

> Effective July 1, 1985, the arrangement changed from a demonstration project

reimbursement system governed by a contract between the state and the federal agency to
a waiver of application of the national payment system pursuant to section 1814(b)(3) of
the Act. CMS Ex. 10.
4

CMS denied the Germantown Emergency Center provider-based status based upon
its determination that the Maryland HSCRC did not consider the Germantown
Emergency Center part of Shady Grove, the main provider, for state rate-setting
purposes. CMS Ex. 4, at 1; Tr. 23-24.

In 2005, Maryland law was amended to recognize freestanding medical facilities
that are physically separate from a hospital or hospital grounds but that are an
administrative part of a hospital or related institution, including facilities that
provide emergency care. MD. Code Ann., Health-Gen. §§ 19-3A-01-19-3A-03
(2007); P. Ex. 12.

The jurisdiction of the Maryland HSCRC is established by MD. Code Ann.,
Health-Gen. § 19-211 (1999).

The HSCRC determined that its rate-setting authority over outpatient services
provided by a hospital is limited to such services provided “at the hospital,” citing
MD. Code Ann., Health-Gen. § 19-201(d). P. Ex. 12; CMS Ex. 18.

The HSCRC determined that because the Germantown Emergency Center is not
physically located at Shady Grove or on its campus, the HSCRC had no authority
under its enabling act to regulate rates paid to the facility. P. Ex. 12; CMS Ex. 18.

The HSCRC specifically made no finding as to whether or not the Germantown
Emergency Center was “part of’ Shady Grove within the meaning of the federal
regulation. P. Ex. 12; CMS Ex. 18.

On June 5, 2007, the HSCRC advised CMS that the HSCRC makes findings as to
its jurisdiction over outpatient services in accordance with Maryland law and that
the HSCRC takes no position on whether a facility is “provider-based” under
federal regulations. CMS Ex. 18.

B. Conclusions of Law
Petitioner timely requested a hearing and I have jurisdiction.

The Maryland HSCRC determined that it did not have jurisdiction or authority to
set rates to be charged by the Germantown Emergency Center.

The Maryland HSCRC did not determine that the Germantown Emergency Center
was not a part of Petitioner, Shady Grove, as it had no jurisdiction or authority to
do so.
5

4. The Germantown Emergency Center is administratively a part of Petitioner, Shady
Grove, as a matter of Maryland law, thus precluding a Maryland HSCRC decision
to the contrary even if the HSCRC had jurisdiction. MD. Code Ann., Health-Gen.
§§ 19-3A-01-19-3A-03 (2007).

5. CMS erred in denying provider-based status for the Germantown Emergency
Center based upon the last sentence of 42 C.F.R. § 413.65(d)(1) and the action of
the Maryland HSCRC.

6. Petitioner met the requirements for provider-based status for the Germantown
Emergency Center as of the date of its application.

C. Issues

The only issue in this case is whether Petitioner met the requirements for provider-based
status established by 42 C.F.R. § 413.65(d)(1).

D. Analysis

Petitioner seeks a determination that its Germantown Emergency Center has “provider-
based status.” Although generalizations are dangerous in so complicated a system as
Medicare, the parties attempted to explain simply for me at hearing their perspective upon
why obtaining provider-based status is important to Petitioner. Counsel for CMS
explained that if it is determined that there is provider-based status between Petitioner and
the Germantown Emergency Center, Petitioner can recover some overhead costs through
Medicare that would not be recovered if the Germantown Emergency Center is not
treated as provider-based but rather as a “free-standing facility,” such as a physicians’
office building.’ Tr. 20-21. Pursuant to the applicable regulation, a “free-standing

+ T agree with counsel for CMS that whether or not an entity or facility recoups
more or less through Medicare based upon whether it is characterized as “free-standing”
or “provider-based” is not material to the determination of the appropriate status of the
facility or entity — at least not in this case. CMS Brief at 5-6 n.3. Of course, the same
might be said when considering whether Petitioner can recoup more under the Maryland
reimbursement scheme authorized under the waiver of section 1814(b)(3) or the federal
scheme under section1814(b)(1) and (2) — both are authorized by Congress. I also note
that CMS arguments that the Germantown Emergency Center might be entitled to recoup
some overhead expenses from Medicare under other provisions of the Act (CMS Brief at
5-6 n.3) or that Petitioner could ask the Maryland legislature to change the jurisdiction of
the HSCRC (CMS Reply Brief (CMS Reply) at 2) are also not material to the
determination I am required to make in this case regarding whether or not the
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facility” is an “entity that furnishes health care services to Medicare beneficiaries and that
is not integrated with any other entity as a main provider, a department of a provider,
remote location of a hospital, satellite facility, or a provider-based entity.” 42 C.F.R.

§ 413.65(a)(2). A “main provider” is a provider of services “that either creates, or
acquires ownership of, another entity to deliver additional health care services under its
name, ownership, and financial and administrative control.” Jd. A “provider-based
entity” is a provider of services created or acquired by a “main provider” to deliver health
care services of a different type from the main provider but under the ownership,
administrative, and financial control of the main provider. Jd. The regulation specifies
that a “provider-based entity” includes the physical facility and the personnel and
equipment needed to deliver the services at the facility. “Provider-based status” is the
relationship between the main provider and the provider-based entity. /d. Petitioner is
the “main provider” in this case. Petitioner seeks recognition of provider-based status
with the Germantown Emergency Center.

There is no dispute that Petitioner built, staffed, and equipped the Germantown
Emergency Center. Petitioner argues that the Germantown Emergency Center should be
treated as a “provider-based entity,” with “provider-based status” between Petitioner and
the Germantown Emergency Center being recognized by CMS. Petitioner states that, if
provider-based status is not recognized, overhead costs associated with the Germantown
Emergency Center operating every day, all day, cannot be recouped from Medicare (P.
Brief at 2 n.2, and 10; Tr. 24-26); that if Petitioner cannot recover the substantial
overhead expense associated with operating the Germantown Emergency Center it may
not be economically viable to continue to offer emergency services at that facility (Tr. 26;
P. Brief at 22); and that if emergency services are no longer offered at the Germantown
Emergency Center, the community will be deprived of undisputedly necessary emergency
ealth care (Tr. 26-29).

Petitioner filed its application or attestation of provider-based status on July 27, 2006.
CMS Ex. 2; P. Ex. 1. The first notice to Petitioner that provider-based status would not
e recognized between Petitioner and the Germantown Emergency Center was the notice
from the CMS fiscal intermediary, Highmark. The Highmark-notice advised Petitioner
that provider-based status would not be recognized because the Maryland HSCRC “does
not consider a facility which is not physically adjacent to a hospital to be part of the
ospital.” CMS Ex. 3, at 28. Highmark noted that a facility not considered by the
HSCRC to be part of the hospital is not eligible to be paid under the Maryland system for
Medicare reimbursement. The Highmark notice goes on to state that “CMS has
concluded that the Commission has found that the facility is not providing ‘hospital’

Germantown Emergency Center qualifies for provider-based status.
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services and therefore it does not meet the 42 CFR § 413.65(d)(1) requirement.”* In its
March 1, 2007 notice denying Petitioner’s request for reconsideration of the denial from
Highmark, CMS states:

It has long been the position of CMS that it would be inappropriate for a
facility to be considered separate from the main provider, i.e. not provider-
based, for state rate-setting purposes in those states that have a cost review
commission or other agency that has the authority to regulate facility
reimbursement while, at the same time, claiming provider-based status for
Medicare purposes.

CMS Ex. 4, at 1. My translation of this statement by CMS in the terms of 42 C.F.R.

§ 413.65(a)(2), is that CMS considers it inappropriate for a “main provider” to receive
Medicare reimbursement for services provided to Medicare eligible beneficiaries based
upon a state rate scheme, while the “provider-based entity” with which the “main
provider” has “provider-based status” receives reimbursement for services provided to
Medicare eligible beneficiaries under the federal rate scheme. CMS states in its notice
that authorizing such a practice would permit providers to adjust their structure to obtain
the most advantageous rate of reimbursement. CMS does not state in its notice that it
determined that Petitioner in this case was attempting to maximize its return in this way.
CMS also does not state that maximizing return violates the Act or the regulations, but,
rather, the CMS rationale is that it wants to avoid increasing costs to Medicare without
benefit to Medicare beneficiaries or the Medicare system. CMS Ex. 4, at 1.

Although not specifically stated in either the Highmark notice or the March 1, 2007 CMS
reconsideration denial, the intermediary and CMS decisions apparently turned on a
September 15, 2005 letter from Robert Murray, the Executive Director for the Maryland
HSCRC, that was included in Petitioner’s application for provider-based status.° CMS

* Unless read quickly, the Highmark notice makes little sense. The notice states as
grounds for denial of recognition of provider-based status that: (1) the HSCRC
determined that the Germantown Emergency Center was not part of the hospital because
it was not adjacent; and (2) that the Germantown Emergency Center was not providing
“hospital” services. Highmark does not cite the evidence it relied upon. Neither ground
cited by Highmark is pursued by CMS before me.

® | note with passing interest that Highmark initially recommended that
Petitioner’s application for provider-based status be granted. However, by letter dated
November 2, 2006 (P. Ex. 2), CMS notified Highmark that its recommendation was not
accepted and provider-based status would not be granted. In its letter, CMS states that
“Tw]e have been in contact with the Maryland Heath (sic) Services Cost Review
Commission and they have advised us that they do not consider the Emergency Center
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Brief at 2. The September 15, 2005 letter from Robert Murray to Petitioner states it is in
response to Petitioner’s inquiry to the HSCRC regarding the status of the Germantown
Emergency Center. The letter advised Petitioner that in 2005 the Maryland legislature
authorized the establishment of an “emergency care” facility that is physically separate
from a hospital and the hospital grounds but that is an administrative part of the hospital.
Mr. Murray stated his understanding that CMS would not grant provider-based status if
the HSCRC finds that a particular facility is not part of a provider. Mr. Murray also
stated that pursuant to Maryland law the HSCRC’s rate-setting authority extended only to
hospital outpatient services furnished at the hospital and, therefore, the HSCRC would not
regulate rates paid to the facility.’ Mr. Murray stated that the HSCRC made no finding
that the Germantown Emergency Center is “not part of” Petitioner within the meaning of
the federal regulations. P. Ex. 12, at 1.

In his June 5, 2007 letter to CMS, Mr. Murray attempted to explain the determination of
the Maryland HSCRC that it had no jurisdiction to set rates for the Germantown
Emergency Center:

facility to be part of the Shady Grove Adventist Hospital for purposes of rate regulation . .
..” P. Ex. 2, at 2. CMS did not disclose in its letter to Highmark who was involved in its
contact with the Maryland HSCRC or when the contact occurred. CMS presents no
evidence to me of such a contact. The only evidence CMS relies upon regarding the
position of the Maryland HSCRC are the two letters at P. Ex. 12 and CMS Ex. 18.

7 [note that “hospital services” within the jurisdiction of HSCRC includes
“emergency services” with no language suggesting a proximity requirement such as that
specified for the provision of outpatient services. MD. Code Ann., Health-Gen. § 19-
201(d)(1)(@i). Mr. Murray was not called by either party to explain to me why the
HSCRC would not regulate rates at the Germantown Emergency Center based upon the
fact that its existence and operation was, according to him, specifically made possible by
new Maryland legislation to permit the establishment of “emergency care” facilities
separate from a hospital or its grounds. See also Tr. 45-46; P. Brief at 8. Unless there is
some different meaning under Maryland law accorded the phrases “emergency care” and
“emergency services,” it seems to me that any emergency services provided at the
Germantown Emergency Center would clearly be within the jurisdiction of the HSCRC.
My task, however, is not to review the action of the HSCRC, and I give deference to Mr.
Murray’s interpretation of the enabling statutes for the HSCRC given his position as
Executive Director for that state agency. However, the evidence shows that rates for
reimbursement set by the HSCRC are actually higher than those recoverable through
CMS. Tr. 72; CMS Brief at 6. Thus, it would seem in Petitioner’s best interest to
encourage HSCRC to assume jurisdiction or to seek a legislative change in Maryland to
permit HSCRC jurisdiction, if it has not done so already.
9

When I indicated in the 2005 letter that the HSCRC “has made no finding
that the Germantown facility is not part of Shady Grove Adventist Hospital,
as those terms are used in the federal regulation,” I was attempting to make
the point that while the Commission makes findings as to its jurisdiction
over outpatient services in accordance with its own statutory law, it takes no
position on whether the facility is “provider-based” under applicable federal
regulation. The HSCRC leaves that determination, or finding, up to CMS.

CMS Ex. 18, at 1.

The parties have identified at least three possible ways to treat the Germantown
Emergency Center for purposes of Medicare reimbursement:

e A freestanding facility for which Medicare reimbursement might be made
for physician and related services, but would result in minimal or no
reimbursement for overhead expenses relative to what Petitioner might
recoup under either of the following classifications;

e A facility that is subject to the waiver provided by section 1814(b)(3) of the
Act and reimbursement pursuant to the Maryland state reimbursement
system under the Maryland HSCRC; or

e A provider-based entity with provider-based status relative to Petitioner and
reimbursement through CMS and its contractors at the federal rate.

The first option will result if the CMS decision stands.

The second should be the preferred treatment for Petitioner. According to evidence
Petitioner adduced at hearing, the state rates set by the Maryland HSCRC are actually
more favorable than the federal rate. Tr. 72; CMS Brief at 6. However, the Maryland
HSCRC, which is charged with setting rates for the Maryland reimbursement system, has
determined that the Germantown Emergency Center is not within its jurisdiction. Thus,
Petitioner is precluded from claiming the most favorable Maryland rates for Medicare
reimbursement for the services provided to Medicare eligible beneficiaries at the
Germantown Emergency Center.

Petitioner’s next best option or fall-back is to seek reimbursement at the federal Medicare
reimbursement rates for services provided to Medicare eligible beneficiaries at its
Germantown Emergency Center. To be eligible for reimbursement at the federal hospital
rate and recover some of its overhead expenses, Petitioner must show that the
Germantown Emergency Center is provider-based. The requirements for a determination
that a facility has provider-based status with a main provider are set forth at 42 C.F.R.
10

§ 413.65. CMS does not dispute that as of the time of its application for provider-based
status, Petitioner and the Germantown Emergency Center met all requirements for
provider-based status with one exception that caused CMS to deny recognition of
provider-based status. Tr. 37-38. CMS denied provider-based status based upon the last
sentence of 42 C.F.R. § 413.65(d)(1). CMS Ex. 3, at 28; 4. The sentence in question
states:

If a State health facilities’ cost review commission or other agency that has
authority to regulate the rates charged by hospitals or other providers in a
State finds that a particular facility or organization is not part of a provider,
CMS will determine that the facility or organization does not have provider-
based status.

The provision has two prongs: (1) there must be a cost review commission in a state with
the authority to regulate rates; and, (2) that body must find that a particular facility or
organization is not part of a provider. The CMS application of this provision to deny
provider-based status for the Germantown Emergency Center is an error of both fact and
law.

The parties do not question that the Maryland HSCRC is a “cost review commission.”
However, CMS seems oblivious to the fact that the HSCRC ruled that it did not have
authority to regulate the rates charged by Petitioner at the Germantown Emergency
Center. CMS has not explained why it should not defer to the HSCRC’s interpretation of
its enabling statutes. Because HSCRC has determined that it has no authority to regulate
rates at the Germantown Emergency Center, then as a matter of fact, the first prong of the
last sentence of section 413.65(d)(1) is not satisfied and that sentence is not a basis upon
which to deny provider-based status. Further, as a matter of unrebutted fact, Mr. Murray
has stated that the Maryland HSCRC did not find that the Germantown Emergency
Center was not part of Petitioner. The fact that the HSCRC made no finding that the
Germantown Emergency Center was not part of Petitioner, means that the second prong
of the last sentence of 42 C.F.R. § 413.65(d)(1) is also not satisfied because it requires a
specific finding by the state agency. Finally, CMS has not addressed the presumption that
arises that the Germantown Emergency Center is part of Petitioner because the Maryland
statutes, enacted to permit a facility such as the Germantown Emergency Center, require
that such a facility be an administrative part of a hospital. MD. Code Ann., Health-Gen.
§§ 19-3A-01-19-3A-03 (2007). Section 19-3A-01 defines a freestanding medical facility,
such as the Germantown Emergency Center, as being a facility where medical and health
services are provided, that is physically separate from a hospital or hospital grounds, and
is an administrative part of a hospital or related institution. A Maryland HSCRC
11

determination that the Germantown Emergency Center was not “part of” Petitioner would
be contrary to Maryland law. Thus, as a matter of law, the second prong of the last
sentence of 42 C.F.R. § 413.65(d)(1) is not met. Neither prong of the last sentence of 42
C.F.R. § 413.65(d)(1) is satisfied and its invocation by CMS to deny provider-based
status to the Germantown Emergency Center is in error.

While I appreciate the CMS concern that a main provider might attempt to “game” the
system to get the best recovery for services provided at a provider-based entity, that
concern is not implicated in this case. Here Petitioner does not qualify for reimbursement
by the Maryland reimbursement scheme and Petitioner has no choice in the matter.
Certainly, if Petitioner subsequently qualifies under the Maryland reimbursement scheme,
CMS may then act to ensure Petitioner is not reimbursed more than is permitted or
required by law. I have no trouble accepting the CMS position that it must protect the
Medicare trust fund and no exploration of the legislative history of 42 C.F.R. § 413.65 is
necessary to convince me. However, the weakness of the CMS position in this case is
highlighted by the fact that CMS has to resort to arguing that the regulation it was
responsible to promulgate is poorly drafted. CMS asserts that from the moment it
published its notice of proposed rule-making (NPRM) on the provider-based regulation in
the Federal Register in 1998, CMS has consistently taken the position that “it would be
inappropriate for a facility or organization to be considered freestanding for State
ratesetting purposes but [to seek] provider based status under Medicare.” CMS Brief at 8,
citing “63 Fed. Reg. at 47590 (September 8, 1998).” One can only wonder why, if that is
true, CMS did not clarify its regulation at the time.

In its reply brief CMS makes the argument that because Petitioner is reimbursed for
hospital services under the Maryland rate system authorized by section 1814(b)(3) of the
Act, that is the only avenue available for Petitioner to recover Medicare reimbursement
for outpatient hospital services provided at the Germantown Emergency Center. CMS
Reply at 9. CMS does not cite a provision of the Act or a regulation of the Secretary in
support of this assertion. Rather, CMS cites language from “65 Fed. Reg. at 18530”
(CMS Ex. 13, at 27). The language cited by CMS is taken from the required “regulatory
impact analysis” section of the rule-making document. When read in context, it is clear
that the point of the passage cited by CMS was to summarily state the impact of the new
regulation rather than to provide a legal interpretation of the Act or the new regulatory
provisions that followed. Further, the passage states that Maryland hospitals that are
reimbursed under the Maryland scheme authorized by section 1814(b)(3) of the Act are
excluded from the outpatient prospective payment system (PPS) (the federal rate scheme),
but it does not say that all Maryland hospitals, main providers, or provider-based entities
are excluded from PPS if not covered by the Maryland scheme. Certainly the language of
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section 1814(b)(3) suggests that not all providers in a state with a scheme subject to that
section need participate in or be covered by the state scheme. The section begins “if
some or all of the hospitals in a State... .” No one suggests that section 1814(b)(3) was
not drafted with the State of Maryland in mind as it was, and is, the only state with a
reimbursement scheme subject to that provision. I conclude the CMS argument is
unfounded.

Ill. Conclusion

I conclude that CMS should not have denied Petitioner provider-based status for the
Germantown Emergency Center based on 42 C.F.R. § 413.65(d)(1).

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )
)
Hilltop Haven Nursing Home, ) Date: May 2, 2008
(CCN: 67-5576), )
)
Petitioner, ) Docket No. C-06-297

) Decision No. CR1782
v. )
)
Centers for Medicare & Medicaid )
Services. )
)

DECISION

Petitioner, Hilltop Haven Nursing Home, violated 42 C.F.R. § 483.13(c), as alleged by a
survey of the facility completed November 3, 2005. There is a basis for imposition of a
per instance civil money penalty (PICMP) of $7000, and that amount is reasonable.
Withdrawal of approval for Petitioner to conduct a nurse aide training and competency
evaluation program (NATCEP) for a period of two years from November 3, 2005 through
November 2, 2007, was required based upon imposition of a civil money penalty (CMP)
of not less than $5000. Social Security Act (Act), $$ 1819(£)(2)(B); 1919(f)(2)(B); 42
C.F.R. §§ 483.151 (b)(2), (b)(2)(iv), and (e)(1).

I. Background

Petitioner is a long-term care facility located in Gunter, Texas. Petitioner is authorized to
participate in the federal Medicare program as a skilled nursing facility (SNF) and in the
Texas State Medicaid program as a nursing facility (NF). The Texas Department of
Disability Services (state agency) completed a survey of Petitioner’s facility on
November 3, 2005, and issued a statement of deficiencies (SOD). CMS Exhibit (CMS
Ex.) 4. The Centers for Medicare & Medicaid Services (CMS) notified Petitioner by
letter dated January 6, 2006, that it was imposing the remedies of: termination of
Petitioner’s provider agreement, effective March 3, 2006, if Petitioner did not return to
substantial compliance before that date; a PICMP of $8000, based on the alleged violation
2

of 42 C.FLR. $483. 13(c) (Tag F 224!); denial of payment for new admissions (DPNA),
effective January 21, 2006; and directed in-service training. CMS also advised Petitioner
that its authority to conduct a NATCEP was withdrawn. CMS Ex. |. Petitioner timely
requested a hearing by letter dated March 6, 2006, and the case was assigned to me for
hearing and decision on March 15, 2006. CMS notified Petitioner by letter dated April
28, 2006, that it had rescinded the remedies of termination and a DPNA, and that the
PICMP for the violation of 42 C.F.R. § 483.13(c) (Tag F 224) had been adjusted
downward to $7000. CMS Ex. 29. On August 10, 2006, | issued an Order Limiting
ssues for Hearing, granting a CMS motion to limit the issues for hearing and ruling that
the only deficiency at issue concerned the alleged violation cited at 42 C.F.R. § 483.13(c)
(Tag F 224), which was the basis for the $7000 PICMP and Petitioner’s loss of authority
to conduct a NATCEP.

held a hearing in Dallas, Texas, from August 29 through 31, 2006, and the proceedings
are recorded ina transcript (Tr.) with pages numbered 1-812. The parties offered and I
admitted as evidence CMS E 1-5, 8-15, 20-21, 23-24, and 27-30. Tr. 29, 30, 48, 49,
59, 60, 61, 62, 64, 65, 72, 73, 74, 75, 78, 798. Petitioner’s Exhibits (P. Exs.) 1-25 were
admitted. Tr. 81. CMS called to testify: Cheryl Lee Cannon, a nurse surveyor for the

' A “Tag” designation refers to the part of the State Operations Manual (SOM),
Appendix PP, “Survey Protocol for Long-Term Care Facilities,” “Guidance to
Surveyors,” that pertains to the specific regulatory provisions allegedly violated. The
cited deficiencies are set forth in the SOD, Form 2567L, prepared by state agency
surveyors. Each deficiency includes a scope and severity (SS) level, such as “SS-J.”
Scope and severity levels are used by CMS and state agencies when selecting remedies.
A scope and severity level is designated by an alpha character, A through L, selected by
CMS or the state agency from the scope and severity matrix published in the SOM at
section 7400E. 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. 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 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
satety. Letters A, D, G, and J indicate an isolated occurrence; letters B, E, H, and K
indicate a pattern of occurrences; and letters C, F, |, and L indicate widespread
occurrences. The matrix, which is based on 42 C.F.R. § 488.408, specifies which
remedies are required and optional at each level based on the frequency of the deficiency.
See SOM, section 7400E.

3

state agency (Tr. 108-208); Amy Bliss, a social services surveyor for the state agency (Tr.
332-74): Leena Volmer, a nurse surveyor for the state agency (Tr. 378-482); and Daniel J.
McElroy, a CMS nurse consultant (Tr. 483-502). Petitioner called to testify: Marie Ruth
Konecny, a nurse surveyor for the state agency (Tr. 215-26); Cheryl Lynn Morgan, nurse
consultant (Tr, 227-325), Ann Wedgwood-Stauch, a dietitian surveyor for the state
agency (Tr. 503-40); Suzanna Woodard, Petitioner’s Director of Nursing (DON) (Tr. 541-
651): David Robert Boggs, Petitioner’s Administrator (Tr. 666-716); and Karen Kimberly
Johnson-Cook, Petitioner's parent company’s Assistant Vice-President of Clinical
Services (Tr. 718-83). The parties submitted post-hearing briefs (CMS Brief and P. Brief,
respectively) and reply briefs (CMS Reply and P. Reply, respectively).

I. Discussion

A. Findings of Fact
The following findings of fact are based upon the June 29, 2006 stipulation of the parties,
(Jt. Stip.), the transcript of the hearing, and the exhibits admitted. Citations to exhibit

numbers related to each finding of fact may be found in the Analysis section of this
decision if not indicated here.

I. Resident | was admitted to Petitioner’s facility on June 7, 2004. CMS Ex. 14, at 7.

to

The physician's order for Resident |’s admission states that Resident | is not
capable of understanding or exercising her rights due to her diagnosis of
Alzheimer’s disease and dementia. P. Ex. 10, at 1.

3. Resident |’s admitting diagnoses included a history of respiratory arrest, anemia,
depressive disorder, generalized osteoarthrosis involving multiple sites, atypical
psychosis, a history of aspiration pneumonia due to inhalation of food or vomitus,
and Alzheimer’s disease. CMS Ex. 14, at 7.

4. Resident |’s quarterly assessment, minimum data set (MDS), with an assessment
reference date of September 6, 2005, the last date of the observation period,
indicated that she had short and long term memory problems; was severely
cognitively impaired; was easily distracted; mental function varied over the course
of the day; had periods of restlessness; sometimes made herself understood but that
was limited to making concrete requests; she was assessed as rarely or never able
to understand others; she had a sad, pained, worried facial expression; made
repetitive physical movements; she was assessed as being physically abusive,
which is described on the MDS form to indicate others were hit shoved, scratched,
or sexually abused; she displayed socially inappropriate or disruptive behavioral
4

symptoms; she was totally dependent on staff for bed mobility and transfers;
locomotion on the unit required supervision and with the physical assistance of
one: she could not stand without help; and she received both an antipsychotic and
antidepressant medication. CMS Ex. 14, at 8-12; P. Ex, 2.

Resident | spoke Spanish, not English, and communication was noted to be
difficult due to the language barrier. P. Ex. 8, at 1, 3, 4.

Resident | was very mobile in her wheelchair with poor safety awareness and
incidents of bumping into walls, tables, and other residents and entering other
resident’s rooms. P. Ex. 8, at 4,5, 7,8, 10, 12, 13.

Nurse’s notes record numerous instances of Resident |’s aggressive behavior
towards other residents:

a. On June 8, 2004, the resident “holds on to everyone she can reach.” P. Ex.
S.at 1.
b. On June 28, 2004, the resident was up in her wheelchair, propelling self,

oblivious to surroundings, bumping into objects, grabbing at staff and other
residents, and redirection was not always successful. P. Ex. 8, at 10.

c. On July 10, 2004, she was in the hallway moving around grabbing at
anyone who got close to her. CMS Ex. 14, at 21.

d. On July 13, 2004, she was up in her wheelchair, grabbing at staff and other
residents and she could not be redirected. P. Ex. 8, at 16; CMS Ex. 14, at
23,

e. On July 14, 2004, at 4:00 a.m., she was noted to continue to be up and

grabbing at other residents. CMS Ex. 14, at 24.

f On July 18, 2004, Resident | was noted to be grabbing and pushing family
members, staff, and others. CMS Ex. 14, at 25.

g. On July 19, 2004, the resident was up in her wheelchair, grabbing at other
residents and trying to bite them. P. Ex. 8, at 19-20; CMS Ex. 14, at 25-26

h. On July 20, 2004, she was noted to continue to try to pull at other residents
and staff. P. Ex. 8, at 20; CMS Ex. 14, at 26.
m.

S

On July 24, 2004, the resident was wheeling herself in the hallway and the
nurse and CNA witnessed her run into another resident’s wheelchair and
Resident | mashed her forearm? between her and the other resident’s wheels
resulting ina 2. cm skin tear with bruising to the surrounding tissue. P. Ex.
Sat 21.

Other incidents of Resident | pushing, slapping, grabbing, pulling hair,
running into visitors, staff, and other residents with her wheelchair, and
taking food from other residents are noted on July 27, 28, 29, 30, 31, 2004,
August 1,6, 7, 8,9, 10, 2004, P. Ex. 8, at 24, 25, 26, 27, 28, 30, 31, 32.

On August 10, 2004, a care plan meeting was conducted with Resident |’s
responsible party at the request of nursing staff to discuss the resident’s
aggressive behavior toward other residents, including hair pulling, pushing,
grabbing, and squeezing arms, it was agreed that the resident’s physician
would evaluate and change medication as needed, and the responsible party
was advised that Petitioner had to protect other residents and Resident |
could be discharged to home if necessary. P. Ex. 8, at 32-35.

On August 11, 2004, Resident |’s medications were changed. P. Ex. 8, at
34,

Nurse’s notes record that between the medication change on August I 1,
2004 to March 21, 2005, Resident | continued to run into others with her
wheelchair, to grab staff and other residents and that she had to be separated
at times by staff, despite additional medication changes. P. Ex. 8, at 36-79.

On March 21, 2005, Resident | was noted to be aggressive, combative,
trying to bite, attempting to self-transfer, she caused a superficial abrasion
to the left lower leg below knee, and staff could not calm her but
medication seemed to decrease the behaviors. P. Ex. 8, at 79.

On March 22, 2005, Resident | wheeled herself into another resident's
room and hit the resident’s family and tried to push the resident down and
Resident | had to be removed by staff. P. Ex. 8, at 79.

* The second-line of the note indicates the left forearm was mashed between the
wheels, but the third-line states that there was a 2 cm skin-tear to the right forearm. P.

Ex. 8, at 21.
6

p. Nurse’s notes show that Resident Is aggressive behaviors continued
between March 22 and June 1, 2005.* P. Ex. 8, at 79-81.

q. On June 1, 2005, Resident | propelled her wheelchair into another resident,
grabbed the other resident’s left hand, and caused a | cm skin tear when the
other resident pulled the hand away; and she was reported to have grabbed
and pulled at other residents and had to be separated several times. P. Ex.
8. at Sl.

r On July 4, 2005, Resident | was reported to be up and down hall all shift,
grabbing other residents and objects; redirection was unsuccessful; she
grabbed one resident and bit her hand causing injury; and she was noted to
require constant supervision. P. Ex. 8, at 82.

s. Nurse’s notes show that Resident I’s aggressive behaviors continued
between July 4, 2005 and November 2, 2005, except for August and
September when no specific incidents of aggressive behavior are noted.” P.
Ex. 8, at 83-91.

A July 9, 2005 targeted behaviors symptoms assessment, signed by a physician,
stated that Resident | “will pick at others near her [and] pull [them] towards her;”
other behaviors noted are physical combativeness and agitation,
uncooperativeness, wandering, and restlessness, and symptoms of disorientation,
confusion, and anxiety. CMS Ex. 14, at 20.

Care plan entries dated March 23, 2005, June 21, 2005, and September 13, 2005
show that Resident | was physically aggressive towards staff and residents due to
her diagnosis of Alzheimer’s disease and her atypical psychosis, and that she
“pushes, shoves, pulls, wanders in and out of rooms, tugs at peers, staff; will roll
her (wheelchair] into others;” the entry dated September 13, 2005, states she pats
at staff and peers and “grasps hold - tugs” at peers and is a risk for causing
disruption, skin tears, and bruising of peers. CMS Ex. 14, at 42.

I note however that Petitioner has produced few nurse’s notes for April 2005

and none for May 2005. See P. Ex. 8, at 80-81.

* [note that Petitioner has produced few nurse’s notes for August and September

2005. See P. Ex. 8, at 80-81. The absence of notes of aggressive behavior is at odds with
the MDS assessment that Resident | engaged in physically abusive behavior during the
seven-day assessment period that ended on September 6, 2005. See Finding of Fact 10.
0.

7

Resident |’s MDS with the assessment reference date of September 6, 2005, shows
that physically abusive behavior by Resident | was observed during the seven-day
assessment period. CMS Ex. 14, at 9.

Facility records dated October 22, 2005, show that Resident | grabbed Resident
2’s hand as Resident 2 ambulated by her, resulting in Resident 2 falling and
injuring herself. CMS Ex. 14, at 5-6, 28; CMS Ex. 15, at 7, 43.

Later on October 22, 2005, nurse’s notes indicate that Resident | was propelling
herself around and was reaching out and grabbing at objects or staff. CMS Ex. 14,
at 29.

A report related to the October 22, 2005 incident with Resident 2 notes that
Resident | “frequently reaches out & hits or grabs others, usually employees” and
that the intervention used was to redirect the resident. CMS Ex. 14, at 5-6.

During the survey on November 1, 2005, Surveyor Bliss observed Resident 1:

a. At 12:18 p.m., in the dining room, in a straight-backed geri-chair, at a
dining room table with her back facing everyone else, alone at table. CMS
Ex, 14, at 4; Tr. 335.

b. Staff were not in the dining room for approximately 15 minutes during her
observation, Tr. 337.

c. At 12:28 p.m., Resident | was sitting alone at the table and was observed to
grab and pull the chair toward her. CMS Ex. 14, at 4; Tr. 337.

d. At 12:32 p.m., Resident | was fidgeting and restless in her chair and staff
did not react. CMS Ex. 14, at 4; Tr. 337.

e. Staff served Resident | a lunch tray around 12:47 p.m, and subsequently
checked and brought her something different, but did not otherwise interact
with Resident |. Tr. 336, 344-45.

f. At 12:56 p.m., Resident | was grunting and throwing food. CMS Ex. 14, at
4; Tr. 337-38.
wu

16.

8

g. At approximately 12:59 p.m., Resident | threw an empty, rigid, plastic glass
at another resident who was reclined in a geri-chair and staff removed the
glass from the second resident’s lap. CMS Ex. 14, at 4; Tr. 338, 353, 361,
367-68.

h. Resident | grabbed the lower part of a resident’s cloth clothes protector
(bib) and tugged on it; no staff were there, and Surveyor Bliss intervened,
asked Resident | to let go, and redirected her. Tr. 338-39, 370-73.

i. Resident | was able to move her upper body freely in the geri-chair and
could stretch. Tr. 339, 343.

je Surveyor Bliss concluded that facility staff took inadequate interventions to
prevent Resident | from reaching other residents. Tr. 344-45.

On the morning of November 2, 2005, at approximately 11:35 a.m., Surveyor
Cannon observed Resident 1, who was sitting in a wheelchair, strike another
resident on the chest; no staff was present and the surveyor asked a hospice aide to
intervene who moved the residents apart and then went to find the charge nurse.
CMS Exs. 4, at 6; 28; Tr. 127-31, 136, 190-91, 195.

Nurse’s notes dated November 2, 2005, with the times 1130 and 1200, state that
Resident | got up unassisted several times; she was redirected by staff to her chair
three times; she got up again, walked to another resident and took the resident's
hand; Resident | got up unassisted and went to another resident and pulled on the
resident's left cheek: she was redirected to her geri-chari, again with assistance
from housekeeping; and the physician and Director of Nursing were notified. P.
Ex. 8, at 88-89; P. Ex. 22, at 4.

During the survey on November 2, 2005, Surveyor Volmer observed Resident 1:

a. At noon, propelling herself in a wheelchair with RN Kim Cook near her.
CMS Ex. 13, at I.

b. At 12:30 p.m., Resident | grabbed another resident’s arm, RN Cook moved
her a couple of feet, but kept her in the dining room. CMS Ex. 13, at 1; Tr.
386-88.

c. At approximately 12:32 p.m., Resident I struck Surveyor Volmer as she
walked past and RN Cook removed Resident | from the dining room. Tr.
389-90,
19.

20.

9

d. At 2:05 p.m., Surveyor Volmer observed Resident | in the dining room ina
geri-chair and she continued to attempt to hit and grab at people walking or
wheeling past. CMS Ex. 13, at 3; Tr. 391.

e. At 2:15 p.m., Surveyor Volmer observed Resident | grabbing at another
resident as a CNA was attempting to wheel the resident past Resident | and
another CNA came to assist and held Resident | back so that they could
pass. CMS Ex. 13, at 3; Tr. 392.

f. At 2:30 p.m., Resident 1, who was seated in a geri-chair in the hall
unmonitored, grabbed Surveyor Volmer’s wrist as she attempted to walk
past Resident | and the resident's fingers had to be pried loose. CMS Ex.
13, at 4; Tr. 393-94.

Social work progress notes dated August | 1, 2004, show that Resident I’s
daughter was advised that the resident was endangering other residents and that if
the resident’s aggressive behaviors were not controlled she would have to be
moved. P. Ex. 11, at 2.

Social work progress notes dated June 7, 2005, show Resident | was assessed as
being at risk for overstimulation and dangerous behavior incidents with other
residents and that use of “individual rummage props” (a diversion activity) was
ineffective due to her poor attention. CMS Ex. 14, at 63; P. Ex. 1], at 5.

Resident 1’s care plan related to her aggressive behavior with dates July 29, 2004,
August 6 and 10, 2004, September 16, 2004, October 27, 2004, November 22,
2004, December 7, 2004, December 21, 2004, January 11, 2005, and March 9,
2005 (P. Ex. 9, at 2), shows that:

a. Resident | was assessed as having repeated episodes of aggression toward
other residents including hair pulling, pushing, grabbing and squeezing
arms, holding on, disruptive behavior, rolling her wheel chair into other
residents, and wandering into and out of other resident’s rooms; and

b. Care planned interventions included: medicating, anticipating needs,
explaining procedures and giving time to adjust, intervening to protect
rights and safety of others, diverting Resident |’s attention, removing
Resident | from the situation, monitoring, engaging in structured activities,
use of a geri-chair with attached table as a trial (beginning September 16,
2004 but discontinued January 11, 2005), and evaluation by psychiatrist.
ae)

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10

Care planned interventions for Resident | dated March 23, 2005, June 21, 2005,
and September 13, 2005 related to her physical aggression included: medication;
anticipating resident needs; explaining procedures so the resident could adjust;
intervening to protect the rights and safety of others; diverting Resident I’s
attention and removing her if necessary; diverting Resident |’s attention with
activities; monitoring her; and assessing for risk of sensory overload. CMS Ex. 14,
at 42-43; P. Ex. 9, at 5-6.

A new care plan related to Resident I’s physical aggression dated November 2,
2005, lists interventions including: medication; anticipating needs; explaining
procedures specifically with Spanish speaking staff when possible; intervening to
protect the rights and safety of others; monitoring; providing opportunities for
positive interaction; and use of a geri-chair with table top in place during episodes
of agitation with release and repositioning every two hours for ten minutes. CMS
Ex. 14, at 61-62; P. Ex. 9, at 24-25.

Physician’s orders from Resident |"s admission to her discharge, dated June 12,
2004 through November 4, 2005, include orders for use of a seatbelt and alarm
while the resident was up in her wheelchair, use of a geri-chair with a tray or table
attached as a form of restraint in August and September 2004 and November 2005,
and various psychotropic drugs in various doses, not all necessarily intended to
address the resident’s aggressive behavior but with that possible collateral effect.
P. Ex. 10, at 1-20.

The evidence shows that Petitioner attempted interventions to address Resident |’s
behaviors, including: in-services for staff training; adjusting her care plan;
medication adjustments; psychiatric evaluations; social work evaluations; meeting
with the resident's family to explore treatment alternatives; use of a geri-chair to
help decrease agitation; use of a seat belt with an alarm to keep her seated when
up; one on one supervision when needed; use of Spanish speaking aides; provision
of Spanish tapes; engagement of Resident | in activities to use her motor skills;
training on redirection techniques; and working with the resident’s daughter to
formulate a workable treatment plan, despite the daughter's resistance (P. Brief at
7-8), none of which individually or collectively were effective to control Resident
I’s aggressive behaviors.

Resident | was sent to the hospital on November 2, 2005 at the insistence of th
surveyors, re-admitted, and eventually discharged to her daughter’s care on
November 6, 2005. P. Ex. 8.
26.

tu

wn

6.

Petitioner’s policies offered and admitted as evidence include the following titles
with the effective dates indicated: Resident to Resident Abuse, | 1/03/05;
Unmanageable Resident/Patients, 04/01/98; Abuse Reporting, 04/01/99; Abuse
and/or Resident Neglect Investigation, 04/01/99; Accident and Incident Reports,
04/01/99. CMS Ex. 21; P. Ex. 13, 14, 15.

Petitioner’s policy Number 32-102-00, subject: Abuse Reporting, effective date
04/01/99, revision date 3/25/04 states: “Our facility will not condone resident
abuse by anyone, including staff members, other residents, consultants, volunteers,
staff or other agencies serving the resident, family members, legal guardians,
sponsors, friends or other individuals.” P. Ex. 14, at 1.

B. Conclusions of Law
Petitioner timely requested a hearing and I have jurisdiction.
Petitioner had policies in effect at the time of the November 2005 survey that

satisfied its obligation to develop policies under 42 C.F.R. § 483.13(c) to prohibit
mistreatment, neglect, abuse of residents or the misappropriation of their property.

Petitioner violated 42 C.F.R. § 483.13(c) (Tag F 224), because it failed to
implement its policies to protect its residents from the aggressive behaviors of
Resident |, as demonstrated by repeated instances of aggressive behavior by
Resident | toward others, including residents, staff, surveyors, and visitors over
more than a year.

Petitioner’s violation of 42 C.F.R. § 483.13(c) provides a basis for the imposition
of a PICMP and the $7000 PICMP imposed is reasonable.

The scope and severity of the deficiency is not subject to review, as the scope and
severity of the deficiency has no effect on the range of PICMP which may be
imposed and it has no impact upon the withdrawal of Petitioner’s authority to
conduct a NATCEP. 42 C.F.R. § 498.3(b)(14); 488.438(a)(2); see 42 C.F.R.

$§ 498.3(d)(10)(11), 488.438(e).

Petitioner’s loss of its authority to conduct a NATCEP is mandatory for the period
November 3, 2005 through November 2, 2007, as I sustain a CMP of more than
$5000. Act, $§ 1819(f)(2)(B); 1919(f)(2)(B); 42 C.F.R. §§ 483.151(b)(2),
(b)(2)(iv), and (e)(1).
C. Issues

The issues in this case are:

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

Nu

Whether the remedies imposed are reasonable.

—]

. Applicable Law

The statutory and regulatory requirements for participation in the Medicare and Medicaid
programs by a long-term care facility are found at sections 1819 and 1919 of the Act and
at 42 C.F.R. Part 483. Sections 1819 and 1919 of the Act vest the Secretary with
authority to impose CMPs and PICMPs against a long-term care facility for failure to
comply substantially with federal participation requirements.

Pursuant to the Act, the Secretary has delegated to CMS and the states the authority to
impose remedies against a long-term care facility that is not complying substantially with
federal participation requirements. Facilities that participate in Medicare may be
surveyed, on behalf of CMS, by state survey agencies in order to determine whether the
facilities are complying with federal participation requirements. 42 C.F.R. §§ 488.10-
488.28, 488.300-488.335. Pursuant to 42 C.F.R. Part 488, CMS may impose a PICMP or
per day CMP against a long-term care facility when a state survey agency concludes that
the facility is not complying substantially with federal participation requirements. 42
C.F.R. $§ 488.406; 488.408; 488.430. The regulations specify that a CMP which is
imposed against a facility on a per day basis will fall into one of two ranges of penalties.
42 C-F.R. §§ 488.408, 488.438. The upper range of CMP, from $3050 to $10,000 per
day, is reserved for deficiencies that constitute immediate jeopardy to a facility’s
residents, and, in some circumstances, for repeated deficiencies. 42 C.F.R.

$$ 488.438(a)(1)(i), (d\(2). The lower range of CMP, from $50 per day to $3000 per day,
is reserved for deficiencies that do not constitute immediate jeopardy, but either cause
actual harm to residents, or cause no actual harm, but have the potential for causing more
than minimal harm. 42 C.F.R. § 488.438(a)(1)(ii).. When a PICMP is imposed for an
instance of noncompliance, the range of penalty is $1000 to $10,000 per instance. 42
C.PLR. § 488.438(a)(2). The regulations at 42 C.F.R. Part 488 also give CMS a number
of other remedies that can be imposed if a facility is not in compliance with Medicare
requirements. /¢.
13

Pursuant to 42 C.F.R. § 488.301, "/i/munediate jeopardy means a situation in which the
provider's noncompliance with one or more requirements of participation has caused, or
is likely to cause, serious injury, harm, impairment or death to a resident.” (Emphasis in
original). Further, "/s/ubstantial compliance means a level of compliance with the
requirements of participation such that any identified deficiencies pose no greater risk to
resident health or safety than the potential for causing minimal harm.” /d. (emphasis in
original).

The Act and regulations make a hearing before an administrative law judge (ALJ)
available to a long-term care facility against whom CMS has determined to impose a
CMP ora PICMP. Act, § 1128A(c)(2); 42 C.F.R. §§ 488.408(g), 498.3(b)(13). The
hearing before an ALJ is a de novo proceeding. Anesthesiologists Affiliated, et al., DAB
CRO65 (1990), aff’d., 941 F. 2d 678 (8th Cir. 1991). A facility has a right to appeal a
“certification of noncompliance leading to an enforcement remedy.” 42 C.F.R

§ 488.408(g)(1); see also 42 C.F.R. §§ 488.330(c), 498.3. However, the choice of
remedies by CMS or the factors CMS considered when choosing remedies are not subject
to review. 42 C.F.R. § 488.408(g)(2). A facility may only challenge the scope and
severity level of noncompliance found by CMS if a successful challenge would affect the
amount of the CMP that could be collected by CMS or impact upon the facility’s
NATCEP. 42 C.F.R. §§ 498.3(b)(14), (d)(10)(). CMS’s determination as to the level of
noncompliance “must be upheld unless it is clearly erroneous.” 42 C.F.R. § 498.60(c)(2).
This includes CMS’s finding of immediate jeopardy. Woodstock Care Center, DAB No.
1726, at 9, 38 (2000), aff'd., Woodstock Care Center v. Thompson, 363 F. 3d 583 (6th Cir.
2003). The Departmental Appeals Board (the Board) has long held that the net effect of
the regulations is that a provider has no right to challenge the scope and severity level
assigned to a noncompliance finding, except in the situation where that finding was the
basis for an immediate jeopardy determination. See, e.g., Ridge Terrace, DAB No. 1834
(2002); Koester Pavilion, DAB No. 1750 (2000). Review of a CMP by an ALJ is
governed by 42 C.F.R. § 488.438(e).

Pursuant to sections 1819(b)(5) and 1919(b)(5) of the Act, SNFs and NFs may only use
nurse aides who have the required training and competency evaluation. Sections 1819(e)
and 1919(e) of the Act impose upon the states the requirements to specify what NATCEP
programs they will approve that meet the requirements established by the Secretary and a
process for reviewing and approving those programs using criteria set by the Secretary.
Pursuant to sections 1819(f)(2) and 1919(f)(2), the Secretary was tasked to develop
requirements for approval of NATCEP programs and the process for review of those
programs. The Secretary promulgated regulations at 42 C.F.R. Part 483, Subpart D.
Pursuant to 42 C.F.R. § 483.151(b)(2) and (e)(1), a state may not approve and must
withdraw any prior approval of a NATCEP offered by a skilled nursing facility that:

(1) has been subject to an extended or partial extended survey under sections

14

1819(g)(2)(B)(G) or 1919(g)(2)(B)(i) of the Act, unless the survey shows the facility was
in compliance with participation requirements; (2) has been assessed a CMP of not less
than $5000; or (3) has been subject to termination of its participation agreement, denial of
payment for new admissions, or the appointment of temporary management.

When a penalty is proposed and appealed, CMS must make a prima facie case that the
facility has failed to comply substantially with federal participation requirements. "Prima
facie" means that the evidence is “[s]ufficient to establish a fact or raise a presumption
unless disproved or rebutted.” Black's Law Dictionary 1228 (8th ed. 2004); see also
Hillman Rehabilitation Center, DAB No. 1611, at 8 (1997), aff'd., Hillman Rehabilitation
Center v, U.S. Dep't. of Health and Human Services, No. 98-3789 (G.E.B.), slip. op. at 25
(D. N.J. May 13, 1999). To prevail, a long-term care facility must overcome CMS’s
showing by a preponderance of the evidence. Batavia Nursing and Convalescent Center,
DAB No. 1904 (2004); Batavia Nursing and Convalescent Inn, DAB No. 1911 (2004);
Emerald Oaks, DAB No. 1800 (2001); Cross Creek Health Care Center, DAB No. 1665
(1998); Hillman Rehabilitation Center, DAB No. 1611.

E. Analysis
1. Petitioner violated 42 C.F.R. § 483.13(c).

The only alleged violation of the regulation at issue before me is alleged in the SOD dated
November 3, 2005, as a violation of 42 C.F.R. § 483.13(c) (Tag F 224). The regulation
states, in pertinent part:

(c) Staff treatment of residents. The facility must develop and implement
written policies and procedures that prohibit mistreatment, neglect, and
abuse of residents and misappropriation of resident property.

42 C.F.R. § 483.13(c). The regulation includes four subsections. The first specifies that a
facility must not “use” verbal, mental, sexual or physical abuse, corporal punishment, or
involuntary seclusion; that a facility cannot employ anyone who has been found guilty of
abusing, neglecting, or mistreating a resident or who has been reported to the state nurse
registry for such conduct or misappropriation of resident property; and that a facility must
report to the state any court action against any employee that indicates the employee is
unfit to serve as a nurse aide or other facility staff. The second subsection requires that a
facility must ensure all alleged violations® involving mistreatment, neglect, abuse, injuries

* It is not clear to which violations the drafters referred, violations of its policies,
violations of the Secretary’s regulations, violations of state law, violations of the Act, or
Is
of unknown source, and misappropriation of a resident's property be reported. The third
subsection requires that a facility have evidence that it thoroughly investigated all alleged
violations,” while preventing additional potential abuse. The fourth subsection requires
that the results of the investigation be reported and that corrective action be taken.

“Abuse” is “the willful infliction of injury, unreasonable confinement, intimidation, or
punishment with resulting physical harm, pain or mental anguish.” 42 C.F.R. § 488.301.
The Survey and Certification Operations Branch, Region VI of CMS issued Regional
Survey and Certification Letter No. 00-03 on January 19, 2000. CMS Ex. 30. In Letter
No, 00-03, CMS recognized that because “abuse” as defined by the regulation requires an
element of willfulness, it was not appropriate to cite a facility for abuse under Tag F 223
where the incident under investigation involved conduct of a demented resident because
the element of willfulness could not be shown. Surveyors were instructed to investigate
such incidents for possible citation under other regulations.

Surveyors were also instructed by Letter No. 00-03 to consider citing a facility under Tag
F 224 for neglect because the facility failed to protect other residents from behavior of a
demented resident that posed a threat to other residents or the demented resident, or under
Tag F 226 for failure to implement policies and procedures. “Neglect” is defined as
failure to provide goods and services necessary to avoid physical harm, mental anguish,
or mental illness.” 42 C.F.R. § 488.301. Considering the definition of neglect and the
discussion in Letter No. 00-03, it is apparent that CMS, at least staff in Region VI, believe
it permissible to cite a facility for neglect for failure to provide goods and services
necessary to protect its resident population from physical harm, mental anguish, or mental
illness arising from the behavior of a demented resident. In the alternative, CMS Ex. 30
indicates that CMS, at least staff of Region VI, concluded it permissible to cite a facility
for failure to issue and implement policies intended to protect its resident population from
harmful behavior of a demented resident.

violation of some standard-of-practice. In the context of this regulation, the most sensible
construction would be violation of Petitioner’s policies and procedures that prohibit
mistreatment, neglect and abuse of residents or misappropriation. However, the best
result may be achieved by simply ignoring the (probably unintended) requirement that
there be a “violation” of something, and reading the subsection to require reporting and
investigation of “any allegation of” mistreatment, neglect, abuse, injuries of unknown
source, or misappropriation.

° See footnote 5. The drafters use of the term “violations” in this subsection seems
to refer to violations of the policies of Petitioner adopted pursuant to the requirement of
42 C.F.R. § 483.13(c).
16

The SOM under Tag F 224 interprets the intent of 42 C.F.R. § 483.13(c) to be that each
resident has the right to be free from mistreatment, neglect, and misappropriation of the
resident’s property and that a facility has a duty to identify residents who are at risk for
“abusing” other residents. The regulation is interpreted to impose a duty upon a
participating facility to develop interventions to prevent occurrences, monitor for changes
that would trigger abusive behavior, and reassess interventions on a regular basis. SOM,
Guidance to Surveyors, Tag F 224. The SOM discussion of Tag F 226, a tag that is also
based upon 42 C.F.R. § 483.13(c), states that the intent of the regulation is, inter alia, that
a facility must develop and “operationalize” polices and procedures to prevent abuse,
neglect, mistreatment, and misappropriation and that a facility must do “all that is within
its control to prevent occurrences.” SOM, Guidance to Surveyors, Tag F 226. Although
the SOM does not have the force and effect of law, the provisions of the Act and
regulations interpreted by the SOM clearly do have such force and effect. State of
Indiana by the Indiana Department of Public Welfare v. Sullivan, 934 F.2d 853 (7° Cir.
1991): Northwest Tissue Center v. Shalala, | F.3d $22 (7" Cir. 1993). Thus, while the
Secretary and his delegee, CMS, may not seek to enforce the provisions of the SOM, the
provisions of the Act or regulations as interpreted by the SOM are enforceable.

The Departmental Appeals Board (the Board) addressed the scope of the regulation at 42
C.F.R. § 483.13(c) in its decision in Martha & Mary Lutheran Services, DAB No. 2147
(2008). That case involved the failure of a facility to protect its residents adequately
against a verbally and physically aggressive resident. There, the Board sustained the
ALJ's determination comparing a facility’s duty under 42 C.F.R. § 483.13 to protect all
its residents from neglect with its obligation, under 42 C.F.R. § 483.25(h)(2), to provide
individual residents with adequate supervision and assistance devices to protect against
accidents, The Board noted that the latter provision has been interpreted to require a
facility to implement “all reasonable efforts to protect residents against adverse events
that are reasonably foreseeable,” and also held that a facility’s “[flailure to protect a
resident against a known or foreseeable hazard - including the possibility that a resident
might be physically abused or assaulted by another resident whose aggressive behavior
has become known to a facility’s staff - is a failure by a facility to provide services that
are necessary to prevent physical harm or mental anguish and is, thus, neglect.” Martha
& Mary Lutheran Services, DAB No. 2147, at 6, citing DAB No. CR1595, at 3 (2007);
see also Emerald Oaks, DAB No. 1800, at 17 (2001).

The language of 42 C.F.R. § 483.13(c) is actually clear as to the obligation it imposes
upon a participating long-term care facility. A provider must: (1) develop and (2)
implement written policies and procedures that prohibit mistreatment, neglect, and abuse
of residents and misappropriation of resident property. Although the title of the
subsection, “[s]taff treatment of residents” could be read to focus the section upon staff
actions toward residents, the substantive language of the section does not limit the
17

obligation of the facility to regulating or controlling staff and resident interaction. Rather,
the substantive language of the section imposes a general obligation upon a provider to
prohibit mistreatment, neglect, and abuse of its residents or the misappropriation of their
property, without limiting the focus of the required policies to a specific source, i.e., staff,
visitors, or other residents. Decisions of the Board in the cases cited above are not
inconsistent with my interpretation.

Petitioner objects that it was not properly charged with a violation of 42 C.F.R.

§ 483.13(c) (Tag F 224). Petitioner argues that the regulation is a “policy
formulation/implementation tag, which does not pertain to whether a facility ‘neglected’
one of its residents.” P. Brief at 4-5; P. Reply at 1-2. In support of its position Petitioner
cites my decision in Heron Pointe Health and Rehabilitation, DAB CR1401 (2006).
lowever, the situation in Heron Pointe is readily distinguishable. In Heron Pointe, |
found that the surveyors and CMS charged that the facility neglected a specific resident
by failure to assess, monitor and care plan for that specific resident. I further concluded
that there was no question in that case whether the facility had developed and
implemented the required policy to prohibit neglect. Thus, the charge in that case was not
properly cast in terms of neglect as a violation of 42 C.F.R. § 483.13(c), but rather the
alleged neglect should have been charged as violations of the specific regulations that
required delivery of the goods and services that CMS alleged were not delivered or
provided that resident.

n this case, unlike Heron Pointe, the charge is that Petitioner failed to implement its
policy against neglect or mistreatment of its residents, which is a proper charge. The
surveyors charge in the SOD that Petitioner violated 42 C.F.R. § 483.13(c) because:

(1) Petitioner failed to provide psychosocial assessment and interventions
for Resident | for her behaviors that posed the risk of injury to other
residents;’ and

(2) Petitioner failed to develop and implement a policy and procedure to
manage resident-to-resident altercations.

CMS Ex. 4, at 1-2. The SOD reflects that the surveyors’ second allegation focused on the
fact that Petitioner had no policy that prohibited resident-to-resident abuse or
mistreatment and that the activities of Resident | and Petitioner’s response demonstrated

* Neither the surveyors nor CMS were clear as to how this allegation fits within
the scope of 42 C.F.R. § 483.13(c). CMS does not argue in its post-hearing briefing that
this allegation is the basis for finding a violation of 42 C.F.R. § 483.13(c).
18

that no such policy had been implemented.’ Counsel for CMS argued in his opening
statement that Petitioner failed to provide necessary services to protect its residents from
the aggressive behavior of Resident | and the harm that may have occurred to other
residents or Resident | as a result of those behaviors. Tr. 86-87. In its post-hearing brief,
CMS argues Petitioner failed to develop and implement a policy to protect its residents
trom the acts of other residents. CMS Brief at 10-12, 15-16. Surveyor Cheryl Lee
Cannon testified that she participated in drafting the Tag F 224 citation of the SOD. Her
understanding is that the regulation requires a facility to implement polices and
procedures to prevent neglect, abuse, and misappropriation. In this case, her testimony
indicates the intent behind citing a violation of 42 C.F.R. § 483.13(c) was to allege that
Petitioner failed to implement policies and procedures “to prevent injuries to one or more
residents in the facility from resident 1.” Petitioner was not cited for resident-to-resident
abuse. Tr. 110, 161-66, 170-71. On cross-examination, Surveyor Cannon agreed with
counsel’s characterization that Petitioner was negligent with regard to incidents involving
Resident | and Resident 2, 28, 29, and 30. Tr. 174-79. Petitioner called Surveyor Marie
Konecny and she testified based upon her notes at CMS Ex. I 1, at 1, that immediate
jeopardy was cited by the surveyors based upon a violation of 42 C.F.R. § 483.13,
neglect. However, she did not participate in preparing the citation under Tag F 224. Tr.
217, 223. Surveyor Leena Volmer testified that she participated in the citation of Tag F
224 and that she believed it was based upon her observation of Resident | being
aggressive with other residents who were at risk for harm and Petitioner’s staff not
intervening appropriately to protect the other residents. Tr. 380-81, 398, 460, 462-63.
Surveyor Ann Wedgwood-Stauch testified that the Administrator was asked to produce
Petitioner’s abuse policy and he presented the sex abuse policy which is not what the
surveyors were looking for because it was only part of the policy, “{iJt wasn’t really a
complete policy.” Tr. 533-34.

David R. Boggs, Petitioner’s Administrator, testified that Petitioner had never been cited
before for being deficient for not having required policies. Tr. 675. He testified that the
surveyors asked him to produce the facility resident abuse policy. The facility had no
policy that was specifically a resident abuse policy, but the facility had a general abuse
policy. He testified that he gave the surveyors copies of the facility policies at P. Ex. 13,

* The surveyors state in the SOD that immediate jeopardy was abated when
Resident | was removed from the facility, but a deficiency that posed more than minimal
harm remained until Petitioner “implemented facility-wide” policies and procedures to
respond to residents with aggressive behaviors. CMS Ex. 4, at 2.
19

14, and 15 during the morning on November 2, 2005.” Tr. 682-86, 91. P. Ex. 13 isa
copy of Petitioner's policy entitled “Unmanageable Resident/Patient” that was in effect at
the time of the survey. Tr. 682. Mr. Boggs interpreted Petitioner’s policy entitled
“Abuse Reporting” (P. Ex. 14) to address abuse, mistreatment, and neglect, including
resident-to-resident conduct. Tr. 685-86. He testified that the policy at CMS Ex. 21, at I-
4, is a policy drafted to satisfy the surveyors’ request for a resident-to-resident abuse
policy. He testified that it was really just a provider notice that had been re-titled. Tr.
693-95.

Petitioner did not have a policy that specifically states that Petitioner prohibits
mistreatment, neglect, and abuse of its residents or the misappropriation of their property,
as required by 42 C.F.R. § 483.13(c). However, the unrebutted testimony of
Administrator Boggs is that Petitioner had in effect before the survey the policies at P.
Ex. 13-15. [am willing to conclude for purposes of this decision that, collectively, those
policies satisfied Petitioner’s obligation to develop policies under 42 C.F.R. § 483.13(c)
to prohibit mistreatment, neglect, abuse, and misappropriation. Petitioner nevertheless
violated 42 C.F.R. § 483.13(c) (Tag F 224), because it failed to implement its policies to
protect its residents from the aggressive activities of Resident | as demonstrated by
repeated instances of aggressive behavior by Resident | toward others, including
residents, staff, surveyors, and visitors.

| have set out in detail in the Findings of Fact the many instances of aggressive behavior
by Resident | from her admission to Petitioner in June 2004 through the conclusion of the
survey on November 3, 2005. Petitioner urges me to conclude that the preponderance of
the evidence demonstrates that it effectively managed Resident |’s behavioral issues.
Petitioner asserts that psychosocial assessments and interventions were consistently
provided and that, when interventions became ineffective, new ones were put into place.
Petitioner’s view is that Resident |’s care plans were updated and adjusted to meet her
changing needs.

Suzanna Woodard, Petitioner’s Director of Nursing (DON), testified that in her opinion
Resident | was under fairly good control with no episodes of aggression for months prior
to October 31, 2005, describing many interventions, most of which involved keeping the
resident occupied. Tr, 545-50. Her opinion that Resident | was well-controlled is not
credible given contemporaneous clinical records for Resident |, except to the extent that
she was referring only to the months of August and September 2005, when the minimal
nursing notes and other records for that period show no instances of aggression. Tr. 600-

” Copies of these policies are also found at CMS Ex. 21, at 5-10, with dates
suggesting they were received by the surveyors on November 3, 2005. Tr. 695-97.
20

OL. Her opinion and the absence of nursing notes reflecting aggressive behavior by
Resident | during August and September 2005 is, however, inconsistent with Resident L's
MDs, which shows that physically abusive behavior by Resident | was observed during
the seven-day assessment period that ended on September 6, 2005. CMS Ex. 14, at 9.
Ms. Woodard also minimized the incident on October 22, 2005 between Residents | and
2. asserting that there was no aggression by Resident | and that she simply reached out
and took Resident 2’s hand. Tr. 554-56. The evidence does not show DON Woodard
was present when the incident occurred, and nurse’s notes related to the incident say that
Resident | grabbed Resident 2. P. Ex. 8, at 87; CMS Ex. 15, at 7.

Karen Kimberly Johnson-Cook, Nurse Consultant for Christian Care Centers, Petitioner’s
owner, testified that she was familiar with Resident Ls case and that with medication and
all the other interventions Petitioner implemented, there were several months where
Resident I's significant behaviors that affected other residents were less than once a
week. Resident |’s socially inappropriate behaviors of throwing food and resisting care
were routine. Tr. 733-37. Thus, Ms. Cook recognized that at no time were Resident |’s
significant behaviors that affected other residents completely controlled even though the
frequency may have been reduced for a time to less than one such incident per week.

Ms. Cook testified to providing one-on-one supervision to Resident 1, which was
effective in calming the resident and preventing further resident-to-resident incidents. Tr.
751-63. She agreed on cross-examination that Resident | would not be able to
distinguish whether she was hitting a surveyor, staff, or another resident. Tr. 784.

My Findings of Fact also list the many different interventions Petitioner attempted to
control Resident |’s aggressive behaviors between June 2004 and November 2005. It is
important to recognize that, despite the various interventions, Resident |’s aggressive
behaviors continued even though less frequently after July 2005. Ms. Cook demonstrated
that one-on-one supervision was effective, but the evidence does not show one-on-one
supervision was an intervention that was adopted or used on a regular basis to control
Resident |’s behavior and to protect other residents who might enter her reach.
Petitioner’s Policy Number | 3-127-00 entitled “Unmanageable Resident/Patient”
provides that unmanageable residents will not be retained by the facility. However, for
more than a year Resident | continued to grab, hit, bite, and engage in other aggressive
conduct. For more than a year, Petitioner’s interventions continued to be shown to be
inadequate to control Resident | and protect other residents from Resident 1’s aggressive
conduct. Petitioner did not follow its own policy and discharge Resident | until the
surveyors insisted that Petitioner was not protecting its residents and Resident | needed to
be ina facility more suited to control her behavior without risk to other residents or
patients. [ do not find credible Administrator Bogg’s testimony that he did not believe
that Resident | was ever unmanageable, hostile, or abusive. Tr. 711.

21
Petitioner argues that the surveyor notes of Surveyor Dorothy Fletcher at CMS Ex. 8,
show that Petitioner was in compliance with Task 5G." P. Brief at 15-16. Survey Task
5G addresses whether a facility developed and implemented policies and procedures
required by 42 C.F.R. § 483.13(c). [have reviewed Surveyor Fletcher’s notes and find
nothing to indicate that she concluded Petitioner was in compliance with 42 C.F.R.

§ 483.13(c) or that Petitioner had implemented all its policies as required by the
regulation. The SOD, which embodies the official findings and conclusions of the
survey, certainly alleges a violation 42 C.F.R. § 483.13(c).

Petitioner argues that it had established good control of Resident | and that the aggressive
behavior observed during the survey was actually the fault of the surveyors. P. Brief at 9-
13; P. Reply at 2-7. I have already noted that during the period of August and September
2005, Petitioner’s clinical records show no incidents of aggressive behavior, although an
MDS done during the period records physically abusive behavior was observed during the
seven-day period that ended September 6, 2005. However, I have also explained that the
absence of evidence of aggressive behavior during August and September 2005, does not
convince me that Petitioner had controlled Resident | or provided for protection of its
residents when Resident I was aggressive. In fact, the incident with Resident 2 in
October 2005 shows Petitioner had not controlled Resident | and had neglected to ensure
its other residents were protected from harm when Resident | was aggressive. Petitioner
asserts that Resident |’s behaviors were more pronounced on the third day of the survey
because fire alarms went on and off for two hours due to the concurrent life safety code
survey; her normal geri-chair had been taken away for repairs at the surveyors’ request;
and the presence of the surveyors in the facility upset the tenor of the facility. Actually,
Findings of Fact 14 through 17 reflect that Resident 1’s aggressive conduct was observed
at various times during the second day, as well as the third day, of the survey. Petitioner
argues that the events of the survey, including the chaos created by the fire alarm
situation, were atypical. Once the surveyors left the unit and stopped agitating the
residents, Resident | calmed down. P. Brief at 9-10, 13, 14. While I do not doubt that
Resident | was more agitated during the survey, my decision does not turn on the events
of the few days of the survey. Rather, I conclude that Petitioner assessed Resident | as
engaging in aggressive actions toward others; Resident | engaged in aggressive conduct
toward others repeatedly over more than a year at Petitioner’s facility, resulting in
obvious actual physical harm to some residents in the form of skin tears and a head
injury; it was foreseeable that Resident | would continue to engage in aggressive conduct
toward others; it was foreseeable that interventions that Petitioner had adopted focused on
controlling Resident 1’s behaviors were not consistently effective; and Petitioner knew or

'” SOM, App. P., Part I -- Survey Procedures for Long Term Care Facilities, Task
SG.
should have known that it needed to take more aggressive interventions or steps to protect
its other residents when Resident | was aggressive. However, Petitioner neglected to
plan and implement interventions necessary to protect its residents as it was obliged to do
by the regulation.

2. A $7000 PICMP is reasonable and withdrawal of Petitioner’s authority to
conduct a NATCEP was required.

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

§ 488.406, including imposing CMPs. CMS may impose a CMP for the number of days
that the facility is not in substantial compliance or for each instance that a facility is not in
substantial compliance. 42 C.F.R. § 488.430(a). There is only a single range of $1000 to
$10,000 for a PICMP. 42 C.F.R. §§ 488.408(d)(1)(iv); 488.438(a)(2). In this case CMS
has proposed a PICMP of $7000.

It is not for me to review the decision-making of CMS when determining the
appropriateness of an enforcement remedy. Rather, [ must assess de novo the
reasonableness of a CMP proposed by CMS based on the factors set forth at 42 C.F.R.

§ 488.438(f). Emerald Oaks, DAB No. 1800. In determining whether the amount of the
PICMP assessed here is reasonable, the following factors specified at 42 C.F.R.

§ 488.438(f) must be considered: (1) the facility’s history of noncompliance, including
repeated deficiencies; (2) the facility’s financial condition; (3) the seriousness of the
deficiencies as set forth at 42 C.F.R. § 488.404; and (4) the facility’s degree of
culpability.

Here I have no evidence regarding the facility’s history and Petitioner has not asserted
that its financial condition is such that it cannot pay the PICMP. However, I find that
Petitioner’s deficiency is serious, in that Resident 1’s aggressive behavior led to injury to
at least one resident and could have led to serious injury to herself or to other residents.
Thus, I find that the $7000 PICMP imposed by CMS, which is in the upper middle range
of PICMP, is not unreasonable based on the deficiency cited.

Petitioner has asserted that the loss of its NATCEP hurts not just itself, but the entire
Gunter, Texas community, because Petitioner cannot hire and train individuals from its
own community and the individuals it would like to hire are not able to travel elsewhere
to acquire nurse aide training. P. Brief at 21. However, as | uphold a CMP of more than
$5000, the state was required to withdraw approval of Petitioner’s authority to conduct a
NATCEP for two years. Act, $§ 1819(f)(2)(B), 1919(f)(2)(B) and 42 C.F.R.

§ 483.151(b)(2)(iv).
23

Petitioner argues that | should review and change the immediate jeopardy determination
in this case. Petitioner asserts that a facility is entitled to challenge the level of
noncompliance under 42 C.F.R. §§ 498.3(b)(14) and (d)(10)(i) if its NATCEP is affected,
regardless of whether the proposed CMP is a per day or per instance CMP; and that CMS
admitted in its motion to limit the scope of the hearing that Petitioner was entitled to
challenge the level of noncompliance because substandard quality of care deficiencies
were cited, and the facility's NATCEP was adversely affected. P. Reply at 7-8.
Petitioner's arguments are without merit. The determination that the deficiency posed
immediate jeopardy has no impact upon the decision in this case. There is only a single
range for PICMPs, not two ranges as is the case with a per day CMP where the higher
range is reserved for cases involving immediate jeopardy. Further, because I find a
PICMP of more than $5000 appropriate, Petitioner must lose its approval to conduct a
NATCEP without consideration for whether or not any deficiencies posed immediate
jeopardy. Finally, out of an abundance of caution, | do not consider the immediate
jeopardy declaration evidence of the seriousness of the deficiency for purposes of
determining the appropriate PICMP to impose.

1H. Conclusion

For the foregoing reasons, | conclude that Petitioner violated 42 C.F.R. § 483.13(c) and
that a PICMP of $7000 is reasonable. Further, where a CMP of more that $5000 is
imposed, the law requires the state agency to withdraw approval of a facility’s NATCEP
for two years.

/s/ Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

North Adams Commons Nursing
and Rehabilitation Center,
(CCN: 22-5342),

Date: April 30, 2008

Petitioner,

Docket No. C-08-106

Decision No. CR1781

Centers for Medicare & Medicaid
Services.

Vee SS SS SH YH YS YS YS

DECISION DISMISSING REQUEST FOR HEARING

This matter is before me on the Centers for Medicare & Medicaid Services’ (CMS)
March 28, 2008 Motion to Dismiss Petitioner’s Request for Hearing. Petitioner opposes
the CMS Motion.

CMS asserts that it has rescinded the only enforcement remedy it actually sought to
impose against Petitioner. Petitioner does not contest this assertion. Thus, the issue
fore me is whether a long-term care facility has a right to a hearing when CMS
withdraws the enforcement remedies provided for in 42 C.F.R. § 488.406. This issue is
ardly novel: all of the Administrative Law Judges (ALJs) of the Civil Remedies
Division, including myself, have addressed it many times, and have without exception
come to the same resolution of that issue I announce here. I find and conclude that North
Adams Commons Nursing and Rehabilitation Center is not entitled to a hearing, and on
the basis of 42 C.F.R. § 498.70(b) I GRANT CMS’s motion to dismiss.

Petitioner North Adams Commons Nursing and Rehabilitation Center is a skilled nursing
facility located in North Adams, Massachusetts. It is certified to participate in the
Medicare and Medicaid programs as a provider of services. In a letter dated November
3, 2007, Petitioner perfected its appeal of CMS’s September 19, 2007 determination to
impose a sanction, in the form of a $10,000 per-instance Civil Monetary Penalty

2

(PICMP), based on alleged deficiencies cited as the result of a survey conducted by the
Massachusetts Department of Public Health’s Division of Health Care Quality (MDHC).

Petitioner acknowledges that CMS has withdrawn the PICMP, the only remedy actually
proposed. Although MDHC and CMS had at certain points apparently discussed the
possibility of imposing an additional sanction against Petitioner’s Nurse Aide Training
and Competency Evaluation Program (NATCEP), it is clear that the NATCEP sanction
was never imposed and has never been at issue in this appeal.

The hearing rights of a long-term care facility are established by federal regulations at

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

§ 498.3(b)(13). Unless the finding of noncompliance results in the actual imposition of a
specified remedy, however, the finding is not an initial determination. 42 C.F.R.

§ 498.3(d)(10)(ii). Where, as here, CMS does not impose a remedy, or rescinds all
proposed remedies, a facility has no hearing right because no determination properly
subject to a hearing exists. It is the final imposition of an enforcement remedy or
sanction, and not the citation of a deficiency, that triggers a facility’s right to a hearing
pursuant to 42 C.F.R. Part 498. Fountain Lake Health & Rehabilitation, Inc., DAB No.
1985 (2005); Lakewood Plaza Nursing Center, DAB No. 1767 (2001); The Lutheran
Home-Caledonia, DAB No. 1753 (2000); Schowalter Villa, DAB No. 1688 (1999);
Arcadia Acres, Inc., DAB No. 1607 (1997).

Petitioner resists the CMS Motion because it maintains that the survey findings were
wrong. It denies that it allowed an instance of isolated immediate jeopardy to exist at its
facility during the time in question, and vigorously asserts that it was then in substantial
compliance with the requirements of 42 C.F.R §§ 483.20(k), 483.25, and 483.25(h)(2). It
seeks in these proceedings to vindicate its position and its reputation. Petitioner’s
position relies heavily on interpretations of the Administrative Procedures Act, 5 U.S.C.
§ 551 et seq., and the due process clause of the U.S. Constitution that have not found
success in this forum or before the Departmental Appeals Board (Board). In particular,
neither the ALJs of this forum nor the Board possess the authority to consider such
challenges to CMS actions. See Charlesgate Nursing Center, DAB CR868 (2002).
3

For the reasons set out above, IGRANT the CMS Motion to Dismiss. Petitioner’s
November 13, 2007 Request for Hearing must be, and it is, DISMISSED.

/s/
Richard J. Smith
Administrative Law Judge