Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
NMS Healthcare of Hagerstown,
(CCN: 215256),
Petitioner,
v.
Centers for Medicare & Medicaid Services,
Respondent.
Docket No. C-14-447
Decision No. CR3232

Date: May 15, 2014

DECISION

I grant summary judgment in favor of the Centers for Medicare & Medicaid Services
(CMS) and against Petitioner, NMS Healthcare of Hagerstown, sustaining the imposition
of an $8000 per-instance civil money penalty against Petitioner.

I. Background

Petitioner is a skilled nursing facility doing business in Hagerstown, Maryland and
participating in the Medicare program. It requested a hearing to challenge the imposition
against it by CMS of the civil money penalty that I cite in the opening paragraph of this
decision. CMS moved for summary judgment and Petitioner opposed the motion. CMS
filed 22 exhibits in support of its motion and these are identified as CMS Ex. 1 - CMS
Ex. 22. Petitioner filed seven exhibits in opposition to the motion and these are identified
as P. Ex. | — P. Ex. 7. I receive all of these exhibits into the record.
IL. Issue, Findings of Fact and Conclusions of Law
A. Issue

The issue that I decide is whether it is appropriate to enter summary judgment against
Petitioner based on the law and the undisputed material facts.

B. Findings of Fact and Conclusions of Law

CMS asserts that Petitioner failed to comply substantially with the requirements of 42
C.F.R. § 483.25(h)(1). This subsection directs a skilled nursing facility to maintain a
resident environment that is as free of accident hazards as is possible. CMS contends that
Petitioner violated this requirement by allowing the water temperature in residents’
rooms to become excessively hot, thereby putting residents at risk for harm from
scalding.

Petitioner does not deny its noncompliance. But, it contends that CMS was clearly
erroneous in assigning a scope and severity level of immediate jeopardy to Petitioner’s
noncompliance. It asserts that there are disputed issues of fact as to the scope and
severity of its noncompliance that mandate an in-person hearing.

As I discuss below, the scope and severity of Petitioner’s noncompliance is irrelevant to
the question of whether a per-instance civil money penalty is authorized. Furthermore,
the undisputed facts showing the potential harm that Petitioner’s noncompliance might
have caused to its residents are more than ample justification for a per-instance civil
money penalty of $8000.

CMS has the option of imposing two types of civil money penalties when it has
determined that a skilled nursing facility failed to comply substantially with Medicare
participation requirements. The first type of penalty is a per-diem civil money penalty,
one that is imposed for each day of a facility’s noncompliance. Per-diem civil money
penalties may range in amount from $50 to $10,000 per day. The regulations prescribe
two categories of scope and severity for per-diem penalties. Noncompliance that is
substantial, but that does not rise to a scope and severity of immediate jeopardy to facility
residents, merits per-diem penalty amounts of between $50 and $3000 per day. 42 C.F.R.
§ 488.408(d)(1)(iii), (2). Noncompliance that falls within the immediate jeopardy level
of scope and severity merits per-diem penalty amounts of between $3050 and $10,000
per day. 42 C.F.R. § 488.408(e)(1)(iii), (2).
The second type of penalty is a per-instance civil money penalty, one that is imposed for
each instance of noncompliance. Per-instance civil money penalties of between $1000
and $10,000 may be imposed for any noncompliance that is substantial whether or not
immediate jeopardy exists. 42 C.F.R. §§ 488.408(d)(1)(iv), (e)(1)(iv). A finding of
immediate jeopardy is irrelevant to establishing the authority to impose a per-instance
civil money penalty. Id.

Here, CMS determined to impose a per-instance civil money penalty against Petitioner.
It is true that the surveyors who made the initial findings of noncompliance against
Petitioner determined that the scope and severity of Petitioner’s noncompliance was at
the immediate jeopardy level.' But that finding is irrelevant to the issue of remedy
because CMS ultimately determined to impose a per-instance penalty. The authority to
impose the penalty of between $1000 and $10,000 per instance is based on Petitioner’s
noncompliance and not on the presence of immediate jeopardy.

Consequently, there is no issue of immediate jeopardy in this case that I may hear and
decide. The surveyors’ finding of immediate jeopardy is simply irrelevant to the case.

Petitioner has conceded its noncompliance and the question of immediate jeopardy is
irrelevant and beyond my authority to hear and decide. That leaves only one question
that I may resolve and that is whether the $8000 per-instance penalty amount is
reasonable. I conclude that the undisputed material facts establish that the penalty
amount is reasonable.

There exists a regulatory framework for deciding whether a penalty amount is reasonable.
The reasonableness of a penalty amount is measured by factors set forth at 42 C.F.R. §§
488.438(f) and 488.404 (incorporated by reference into 42 C.F.R. § 488.438(f)(3)).

These factors include the seriousness of a facility’s noncompliance (measured without
regard to the presence or absence of immediate jeopardy where a per-instance civil
money penalty is at issue), its compliance history, and its financial condition.

The undisputed material facts establish that Petitioner’s noncompliance was very serious.
On July 8, 2013 (July survey) surveyors went to Petitioner’s facility and discovered that
the water taps in multiple residents’ rooms emitted water that approached or reached 130
degrees Fahrenheit (F). CMS Ex. 5 at 11-13; CMS Ex. 14 at 1, 3; CMS Ex. 15 §§ 8-25.

' The regulations define “immediate jeopardy” to mean a situation of noncompliance that
causes or is likely to cause serious injury, harm, impairment, or death to one or more
residents of a facility. 42 C.F.R. § 488.301.
The rooms where these temperatures were recorded included rooms in a unit that housed
residents with mental impairments including dementia, schizophrenia, paranoia, bipolar
disorder, poor judgment, mood swings, anxiety, psychosis and behavioral problems.
CMS Exs. 13, 15-16.

Water that is heated to temperatures exceeding 120 degrees F can produce severe
scalding and burns. CMS Ex. 11 at 15. Water heated to 127 degrees F can cause a third-
degree burn in a minute. Water that is heated as high as 130 degrees F can cause a third-
degree burn in considerably less time. CMS Ex. 11 at 15. Third-degree burns are
extremely serious injuries:

Third-degree burns penetrate the entire thickness of the skin
and permanently destroy tissue. These present as loss of skin
layers, often painless (pain may be caused by patches of first-
and second-degree burns surrounding third-degree burns), and
dry, leathery skin. Skin may appear charred or have patches
that appear white, brown, or black.

Id. at 16. Thus, Petitioner put mentally impaired residents, including demented
individuals who would have lacked the cognitive ability to determine whether they were
exposing themselves to dangerously high temperatures, in a situation where the residents
could experience severe burns as a result of exposure to dangerously hot water. That
level of noncompliance plainly merits a per-instance penalty of $8000.

Petitioner does not establish any ground for me to deny CMS’s motion. Much of
Petitioner’s argument is devoted to its contention that the immediate jeopardy citation in
the July survey report is arbitrary and capricious.” As I explain above, the surveyors’
finding of immediate jeopardy is irrelevant and I have no authority to address it.

Petitioner argues also that the water temperatures at its facility did not pose a serious risk
to its residents. First, it contends that there were no findings of actual harm to residents,
averring that there is no evidence that any resident was scalded. While that is true, it
doesn’t derogate from the fact that the potential for serious harm was certainly present,
given the high water temperatures and exposure of residents with significant mental
impairments to those temperatures. Second, Petitioner asserts that it is unlikely that a

> Petitioner grounds its argument that the immediate jeopardy finding is arbitrary and
capricious on its contention that other facilities did not receive immediate jeopardy-level
noncompliance citations for water temperatures that were as high or higher than those at
Petitioner’s facility. That argument would not prevail even if a finding of immediate
jeopardy was relevant because CMS’s findings in each case are adjudicated based on the
unique facts and circumstances of that case and not by comparison to findings in other
cases.
resident would expose himself or herself to water as hot as 130 degrees F long enough to
sustain a burn “given human reflexes.” Petitioner’s brief in opposition to CMS’s motion
at 5. But, Petitioner cites nothing to support this assertion. It offers no evidence that
would raise a disputed issue of material fact as to the potential danger of being exposed to
water that is heated to 130 degrees F. Third, Petitioner asserts that it had a supervised
bathing program that kept residents from being exposed to superheated water long
enough to be burned. Again, Petitioner cites no facts or evidence to support this
assertion. But, even if it is true, the presence of a supervised bathing program does not
derogate from the possibility that residents could be burned by water coming from the
taps in their rooms while they were unsupervised.

Petitioner also argues that it has a protocol for testing water temperatures. That may be
so, but it obviously was ineffective to prevent water from reaching dangerously high
temperatures on July 8, 2013. Finally, Petitioner contends that it immediately reacted to
the information it received about water temperatures on July 8 and took corrective action
promptly. That also may be so, but that does not serve as any impediment to imposing a
per-instance civil money penalty. Indeed, had Petitioner not corrected its noncompliance
immediately, then a per-diem as opposed to a per-instance penalty would have been
appropriate.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Michelle Hardy
(OI File No. H-12-4-3124-9),
Petitioner,
Vv.

The Inspector General.

Docket No. C-14-277
Decision No. CR3230
Date: May 13, 2014
DECISION

The Inspector General (1.G.) of the United States Department of Health and Human
Services excluded Petitioner, Michelle Hardy, from participation in Medicare, Medicaid,
and all other federal health care programs pursuant to 42 U.S.C. § 1320a-7(b)(4),
effective October 20, 2013. For the reasons stated below, I conclude that the I.G. has a
basis for excluding Petitioner from participation in federal health care programs because
the Arizona State Board of Nursing (AZ BON) revoked Petitioner’s license to provide
health care as a Registered Nurse (RN) for reasons bearing on her professional
competence or professional performance. The exclusion must last while Petitioner’s
license remains revoked. 42 U.S.C. § 1320a-7(c)(3)(E).

I. Background

By letter dated September 30, 2013, the I.G. notified Petitioner that she was being
excluded from Medicare, Medicaid, and all federal health care programs pursuant to

42 U.S.C. § 1320a-7(b) until she regains her license as an RN in Arizona and is reinstated
in the program by the I.G. The I.G. advised Petitioner that the exclusion was because her
license to provide health care as an RN was revoked, suspended, or otherwise lost or
surrendered while a formal disciplinary proceeding was pending before the AZ BON for
reasons bearing on her professional competence, professional performance, or financial
integrity. 42 U.S.C. § 1320a-7(b); 42 C.F.R. § 1001.501. IG. Exhibit (Ex.) 1.

Petitioner timely filed her request for a hearing (RFH) and this case was assigned to me
for hearing and decision. On January 8, 2014, I convened a prehearing conference by
telephone, the substance of which is summarized in my Order and Schedule for Filing
Briefs and Documentary Evidence (Order) of January 9, 2014. See 42 C.F.R. § 1005.6.
Pursuant to the Order, the I.G. submitted the I.G.’s brief (I.G. Br.) together with two
exhibits (I.G. Exs. 1-2). Petitioner submitted a response brief (P. Br.). I admit into
evidence LG. Exs. 1-2, without objection. Although Petitioner indicated that she did not
believe that an in-person hearing was necessary, she listed herself as a proposed witness.
P. Br. at 3. I provided Petitioner an opportunity to provide additional testimony. March
28, 2014 E-mail (DAB E-File Doc. No. 10). Petitioner responded, providing additional
argument and clarifying that she did not propose in-person testimony. March 29, 2014
E-mail (DAB E-File Doc. No. 11). The I.G. did not propose any witnesses. I.G. Br. at 6.
Therefore, an in-person hearing is unnecessary and I issue this decision on the basis of
the written record.

II. Issue

The sole issue before me is whether the I.G. has a basis for excluding Petitioner from
participating in Medicare, Medicaid, and all other federal health care programs pursuant
to 42 U.S.C. § 1320a-7(b)(4)(A).

Ill. Jurisdiction

I have jurisdiction to decide this issue. 42 C.F.R. §§ 1001.2007(a)(1), 1005.2(a);
42 U.S.C. § 1320a-7(f).

IV. Findings of Fact, Conclusions of Law, and Analysis!

A. There is a basis for Petitioner’s exclusion pursuant to 42 U.S.C. § 1320a-
7(b)(4)(A), and the I.G. has proven each required element under the statute.

The I.G. cites 42 U.S.C. § 1320a-7(b)(4) as the basis for Petitioner’s permissive
exclusion. I.G. Ex. 1. The statute provides:

(b) PERMISSIVE EXCLUSION. — The Secretary may
exclude the following individuals and entities from
participation in any Federal health care program

' My findings of fact and conclusions of law are set forth in italics and bold font.
oe Rk

(4) LICENSE REVOCATION OR SUSPENSION. — ANY
INDIVIDUAL OR ENTITY —

(A) whose license to provide health care has been revoked or
suspended by any State licensing authority, or who otherwise
lost such a license or the right to apply for or renew such a
license, for reasons bearing on the individual’s or entity’s
professional competence, professional performance, or
financial integrity. . . .

Thus, the elements that must be proven for exclusion pursuant to section 1320a-7(b)(4)
in this case are: (1) a state licensing authority revoked Petitioner’s license to provide
health care, and (2) for reasons bearing on Petitioner’s professional competence,
professional performance, or financial integrity.

I. The Arizona State Board of Nursing, a state licensing
authority, revoked Petitioner’s license to provide health care as
a registered nurse.

On September 20, 2012, the AZ BON revoked Petitioner’s license to practice nursing in
the state of Arizona. I.G. Ex. 2 at 4-5. Petitioner concedes that the AZ BON revoked her
license. P. Br. at 1-2. The AZ BON is the licensing authority for RNs in Arizona, with
the authority to issue RN licenses and to revoke those licenses. Ariz. Rev. Stat. §§ 32-
1606(B)(10), 32-1663(A)(5), (D). Thus, I find that the first element under 42 U.S.C.

§ 1320a-7(b)(4) is satisfied.

2. The Arizona State Board of Nursing revoked Petitioner’s
Registered Nurse license for reasons bearing on her
professional competence or professional performance.

On or about February 17, 2012, the AZ BON received information from Yuma County
Adult Probation indicating that Petitioner pled guilty to a felony charge. I.G. Ex. 2 at 2.
The AZ BON conducted an investigation that led to disciplinary proceedings. Petitioner
did not appear at the proceedings.” The AZ BON found that on or around May 10, 2011,
Petitioner was charged in the Yuma County Superior Court in Yuma, Arizona with

> Under Arizona law, Petitioner was deemed to have admitted the facts alleged against
her because she failed to defend herself in that proceeding. I.G. Ex. 2, at 1; Ariz. Rev.
Stat. § 32-1663(F)(3).
conspiracy to import into [the state of Arizona] or offer to
transport for sale or import into [the state of Arizona], sell,
transfer or offer to sell or transfer dangerous drugs, a class
two felony; possession of dangerous drugs for sale, to wit:
methamphetamine, a class two felony; promoting prison
contraband, a class two felony; and assisting a criminal street
gang, to wit: importation, transportation, transfer and sale of
a dangerous drug, a class three felony... .

I.G. Ex. 2 at2. The AZ BON also found that on or about March 2, 2012,
Petitioner was convicted pursuant to her guilty plea of “attempted assisting
a criminal street gang, a class four felony.” I.G. Ex. 2 at 2.

The AZ BON concluded that Petitioner’s criminal acts constituted “conduct or practice
that is or might be harmful or dangerous to the health of a patient or the public.” LG. Ex.
2 at 3, citing Ariz. Rev. Stat. § 32-1601(22)(d). The AZ BON also admonished Petitioner
for failing to report that she was charged with a felony, failing to report that she was
convicted of a felony, and failing to furnish a written detailed explanation to the AZ
BON, as required. Ariz. Rev. Stat. § 32-1601(22)(j), (J; Ariz. Admin. Code § R4-19-
403(25), (28), (29). The AZ BON found that Petitioner’s actions constituted
unprofessional conduct as defined in Ariz. Rev. Stat. § 32-1601(22)(b),(d),(j) and (/).
The AZ BON found Petitioner’s conduct and circumstances were sufficient cause to
revoke her license to practice as an RN in the state of Arizona. Accordingly, the AZ
BON revoked Petitioner’s RN license. I.G. Ex. 2 at 3-4; Ariz. Rev. Stat. §§ 32-
606(B)(17), 32-1664(N), 32-1663(A), (D), (E); see also Ariz. Rev. Stat. § 32-3208(D).

Petitioner argues that the revocation of her RN license did not bear on her professional
competence, professional performance, or financial integrity because the revocation
“occurred outside the relm [sic] of my practice.” P. Br. at 2,3. However, the AZ BON
concluded that there were four bases under Arizona law to revoke Petitioner’s license, all
of which constituted unprofessional conduct. One basis in particular, (i.e., any conduct or
practice that is or might be harmful or dangerous to the health of a patient or the public)
is sufficient to conclude on its face that it directly involves professional performance.

LG. Ex. 2 at 3; Ariz. Rev. Stat. § 32-1601(22)(d).

Therefore, I conclude as a matter of law, based on the facts in the record, that the AZ
BON revoked Petitioner’s RN license for reasons related to Petitioner’s professional
competence and professional performance. Accordingly, I conclude that the second
element required for exclusion pursuant to 42 U.S.C. § 1320a-7(b)(4) is satisfied.
Therefore, the I.G. has a legal basis to exclude Petitioner.
C. The length of Petitioner’s exclusion is reasonable as a matter of law.

I conclude that the period of exclusion, which is an exclusion until the AZ BON
reinstates Petitioner’s RN license, is required by 42 U.S.C. § 1320a-7(c)(3)(E). Although
Petitioner asserts that a five-year exclusion is excessive, this is not the length of exclusion
in this case. P. Br. at 3; I.G. Ex. 1 at 1. Petitioner is simply not permitted to apply to the
AZ BON to have her nursing license reinstated until five years have passed. I.G. Ex. 2 at
5. Petitioner complains that she has no plans to regain her RN license and does not know
ow the exclusion can be lifted if she does not attempt to get regain her license. RFH at
1. The statute does not provide an exception in such a circumstance. Further, I cannot
waive the requirement that Petitioner regain her Arizona RN license in order for the
exclusion to end. See 42 C.F.R. § 1005.4(c)(1). Petitioner also asserts that she
previously “never had a mark” on her license and that she wants to be able to earn a
living to provide for her son. RFH at 2; P. Br. at 2,3. Although I am sympathetic to this
argument, it is not relevant here because I have very limited authority to reverse an
exclusion under 42 U.S.C. § 1320a-7(b)(4). See 42 C.F.R. § 1005.4(c)(5). Although I
ave the authority to reverse an exclusion, see 42 C.F.R. §§ 1001.3005(a)(3), 1005.20(b),
I can only do so if the I.G. has failed to prove that there is a basis for the exclusion.

42 C.F.R. § 1001.2007(a); Keith Michael Everman, D.C., DAB No. 1880 (2003).

Further, I cannot reverse the I.G.’s decision to impose an exclusion based on equitable
grounds. Donna Rogers, DAB. No. 2381, at 6 (2011).

Pursuant to 42 U.S.C. § 1320a-7(c)(3)(E), the period of exclusion “shall not be less than
the period during which the individual’s or entity’s license to provide health care is
revoked, suspended, or surrendered ... .” Petitioner has not presented any evidence to
support that she has been reinstated as an RN in Arizona. Accordingly, I conclude that
there are currently no facts that raise an issue before me requiring interpretation or
application of 42 U.S.C. § 1320a-7(c)(3)(E). Therefore, I conclude that the period of
exclusion is mandated by law under 42 U.S.C. § 1320a-7(c)(3)(E), based on the facts in
the record.

V. Conclusion

For the foregoing reasons, I sustain the I.G.’s determination to exclude Petitioner from
participating in Medicare, Medicaid, and all federal health care programs pursuant to
42 U.S.C. § 1320a-7(b)(4)(A).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Lokay, Inc. d/b/a Good2Go Groceries,
Respondent.

Docket No. C-14-576
FDA Docket No. FDA-2014-H-0115

Decision No. CR3229

Date: May 13, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated the above-captioned matter when it
filed an Administrative Complaint for Civil Money Penalties (Complaint) with the
Departmental Appeals Board, Civil Remedies Division (CRD) and the Food and Drug
Administration’s (FDA) Division of Dockets Management. CTP seeks to impose civil
money penalties under the Federal Food, Drug, and Cosmetic Act (Act) and the Act’s
implementing regulations.

The Complaint alleges the following facts. Respondent owns an establishment that sells
tobacco products and is located at 1800 East Yesler Way, Seattle, Washington 98122.
Complaint § 3. CTP conducted two inspections of the establishment. Complaint § 9.
During one of the inspections, an FDA-commissioned inspector observed that:

[A] person younger than 18 years of age was able to purchase a package of
Marlboro cigarettes on March 28, 2013, at approximately 10:52 AM PT;

and . . . the minor's identification was not verified before the sale, as
detailed above, on March 28, 2013, at approximately 10:52 AM PT.

Complaint § 10.

On April 18, 2013, CTP issued a warning letter to Respondent specifying the violations
that the inspector observed. The letter warned Respondent that if it failed to correct the
violations, civil money penalties could be imposed on it and that it was Respondent’s
responsibility to ensure compliance with the law. Complaint § 10.

Angelo Wright responded to the warning letter on Respondent’s behalf in an April 25,
2013 letter. “Mr. Wright stated that he explained to his employees the importance of
verifying purchasers’ identification and age, and that the establishment’s tobacco sales
policy requires employees to verify the identification of tobacco purchasers who appear
‘youthful.’” During a subsequent conversation with a CTP official on May 20, 2013, Mr.
Wright committed to implement the requirement that retailers verify the identification of
any tobacco purchaser under the age of 27. Complaint § 11.

During a subsequent inspection of Respondent’s establishment, FDA-commissioned
inspectors documented that “a person younger than 18 years of age was able to purchase
a package of Newport Box 100s cigarettes on July 22, 2013, at approximately 12:40
PM.” Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on March 24, 2014, via United Parcel Service. CTP charged Respondent with
violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21 C.F.R.

§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth). Complaint
4 1, 10. CTP asked the CRD to impose a $250 civil money penalty based on two
alleged violations of the regulations in a 12-month period. Complaint § 13.

The Complaint provided detailed instructions related to filing an answer and requesting
an extension of time to file an answer. Complaint J 14-18, 20-22. The Complaint stated
that failure to file an answer could result in the imposition of a civil money penalty
against Respondent. Complaint § 19. Further, after CTP filed the Complaint, CRD sent
Respondent an Initial Order informing Respondent of the requirement to file an answer to
avoid a default judgment. CRD sent a form answer along with the Initial Order that
Respondent could fill out and file with CRD. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.

§ 17.9.

If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that:

[T]he presiding officer shall assume the facts alleged in the complaint to be
true, and, if such facts establish liability under the relevant statute, the
presiding officer shall issue an initial decision within 30 days of the time
the answer was due, imposing:

(1) The maximum amount of penalties provided for by law for the

violations alleged; or

(2) The amount asked for in the complaint, whichever amount is smaller.

21 C.F.R. § 17.11(a). Further, a failure to file a timely answer means that “the
respondent waives any right to a hearing and to contest the amount of the penalties and
assessments” imposed in the initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. Lalso find that CTP’s request to impose a $250 civil
money penalty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $250.
This initial decision becomes final and binding upon both parties 30 days after the date of
its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Senior Care Health & Rehabilitation Center -- Dallas,
(CCN: 67-5417),

Petitioner,
v.
Centers for Medicare & Medicaid Services
Docket No. C-12-1160
Decision No. CR3228

Date: May 12, 2014

DECISION

Petitioner, Senior Care Health & Rehabilitation Center — Dallas, is a long-term care
facility located in Dallas, Texas, that participates in the Medicare program. During the
facility’s annual survey, state surveyors discovered that facility nurses did not safely
administer intravenous (IV) medications. Based on this and other findings, the Centers
for Medicare & Medicaid Services (CMS) determined that, from March 29 through May
17, 2012, the facility was not in substantial compliance with Medicare program
requirements and that, from March 29 through April 28, 2012, its deficiencies posed
immediate jeopardy to resident health and safety. CMS imposed civil money penalties
(CMPs) of $5,550 per day for 31 days of immediate jeopardy and $150 per day for 19
days of substantial noncompliance that was not immediate jeopardy.

Petitioner admits that it was not in substantial compliance but challenges the immediate
jeopardy determination and the reasonableness of the CMPs.

For the reasons set forth below, I find that, from March 29 through April 28, 2012, the
facility’s deficiencies posed immediate jeopardy to resident health and safety; and that
the penalties imposed are reasonable.
I. Background

The Social Security Act (Act) sets forth requirements for nursing facility participation in
the Medicare program and authorizes the Secretary of Health and Human Services to
promulgate regulations implementing those statutory provisions. Act § 1819. The
Secretary’s regulations are found at 42 C.F.R. Part 483. To participate in the Medicare
program, a nursing facility must maintain substantial compliance with program
requirements. To be in substantial compliance, a facility’s deficiencies may pose no
greater risk to resident health and safety than “the potential for causing minimal harm.”
42 CFR. § 488.301.

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

Here, the Texas Department of Aging and Disability Services completed Life Safety
Code (LSC) and standard surveys on April 25, 2012 and April 28, 2012, respectively.
Based on the survey findings, CMS determined that the facility was not in substantial
compliance with multiple program requirements, specifically:

© 42 C.F.R. § 483.20(k)(3)(i) (Tag F281 — comprehensive care plans/professional
standards of quality) at scope and severity level K (pattern of noncompliance that
poses immediate jeopardy to resident health and safety);

© 42 C.F.R. § 483.25(c) (Tag F314 — quality of care/prevention of pressure sores) at
scope and severity level E (pattern of noncompliance that causes no actual harm
with the potential for more than minimal harm);

© 42C.F.R. § 483.25(i) (Tag F325 — quality of care/nutrition) at scope and severity
level D (isolated instance of noncompliance that causes no actual harm with the
potential for more than minimal harm);

© 42 C.F.R. § 483.25(k) (Tag F328 — quality of care/special needs) at scope and
severity level K;

© 42 C.F.R. § 483.25(m)(1) (Tag F332 — quality of care/medication error rates) at
scope and severity level K;

© 42 C.F.R. § 483.25(m)(2) (Tag F333 — quality of care/significant medication
errors) at scope and severity level K;
e 42C.F.R. § 483.35(i) (Tag F371 — dietary services/sanitary conditions) at scope
and severity level F (widespread noncompliance that causes no actual harm with
the potential for more than minimal harm);

© 42 C.F.R. § 483.60(a) and (b) (Tag F425 — pharmacy services/procedures and
consultation) at scope and severity level F;

e 42 C.F.R. § 483.60(b), (d) and (e) (Tag F431 — pharmacy services/consultation,
labeling, and storage) at scope and severity level F;

e 42 C.F.R. § 483.65 (Tag F441—infection control) at scope and severity level F;
e 42C.F.R. § 483.75 (Tag F490 — administration) at scope and severity level K;

e 42 C.F.R. § 483.75(f) (Tag F498 — administration/nurse aide proficiency) at scope
and severity level E; and

© 42 C.F.R. § 483.70 (a) (LSC) (Tags K025 — smoke barriers, at scope and severity
level F; K029 — fire rated construction, at scope and severity level E; and K072 —
means of egress, at scope and severity level F).

CMS Exs. | at 1-4; CMS Ex. 2.

Based on these findings, CMS imposed CMPs of $5,550 per day from March 29, 2012
through April 28, 2012, and $150 per day beginning April 29, 2012. CMS Ex. | at 2.
Thereafter, CMS determined that the facility returned to substantial compliance on May
8, 2012. The CMP continued through May 17, 2012. CMS Ex. | at 5-6.

Petitioner timely requested a hearing. Petitioner limits its appeal to the immediate
jeopardy determination — which is based on the deficiencies cited at 42 C.F.R.

§§ 483.20(k)(3)(i), 483.25(k), 483.25(m)(1), 483.25(m)(2), and 483.75 — and the CMPs
imposed. CMS’s determination that, from March 29 through May 17, 2012, the facility
was not in substantial compliance with program requirements is therefore final and
binding and provides a sufficient basis for imposing a penalty.

On February 26, 2013, I convened a telephone hearing from the offices of the
Departmental Appeals Board in Washington, D.C. Jennifer Mendola appeared on behalf
of CMS. She and Captain Dan McElroy, the sole witness, were in Dallas, Texas. Glen
D. Sanborn appeared from Amarillo, Texas, on behalf of Petitioner. Transcript (Tr.) at 5,
6.

I have admitted into evidence CMS Exhibits (CMS Exs.) 1-47, and Petitioner’s Exhibits

(P. Exs.) 1-3. Order Establishing Procedures for Hearing at 2 (January 29, 2013); Tr. at

6. The parties have filed pre-hearing briefs (CMS Pre-hrg. Br.; P. Pre-hrg. Br.) and post-
hearing briefs (CMS Post-hrg. Br.; P. Post-hrg. Br.).

IL. Issues

Based on the uncontested issues, the facility was not in substantial compliance with
Medicare program requirements from March 29 through May 17, 2012, and I must affirm
a CMP of at least $50 per day for those days. 42 C.F.R. §§ 488.408(d)(1)(iii),
488.438(a)(1)(ii).

The remaining issues are:

1. From March 29 through April 28, 2012, did the facility’s deficiencies pose
immediate jeopardy to resident health and safety; and

2. Are the CMPs imposed — $5,550 per day from March 29 through April 28, 2012,
and $150 per day from April 29 through May 17, 2012 — reasonable?

Tr. at 5-6.
III. Discussion

Program requirements. Services provided or arranged by the facility must meet
professional standards of quality. 42 C.F.R. §483.20(k)(3)(i).

Under the statute and the “quality of care” regulation, each resident must receive, and the
facility must provide, the necessary care and services to allow a resident to attain or
maintain the highest practicable physical, mental, and psychosocial well-being, in
accordance with the resident’s comprehensive assessment and plan of care. Act

§ 1819(b); 42 C.F.R. § 483.25. To this end, the facility must (among other requirements)
ensure that residents with special needs receive “proper treatment and care” for a variety
of special services, including injections. 42 C.F.R. § 483.25(k). The facility must also
ensure that its residents are free of any significant medication errors and that medication
error rates are no greater than 5%. 42 C.F.R. § 483.25(m).

Finally, the facility must be administered in a manner that enables it to use its resources
effectively and efficiently to attain or maintain the highest practicable physical, mental,
and psychosocial well-being of each resident. 42 C.F.R. § 483.75.
A. CMS’s determination that the facility’s deficiencies
posed immediate jeopardy to resident health and safety is
not clearly erroneous.

The underlying facts of this case are not in dispute, and they present a frightening picture
of the nursing staff’s inability to administer drugs safely, which, as Petitioner concedes,
put the facility out of substantial compliance with 42 C.F.R. §§ 483.20(k)(3)(i),
483.25(k), 483.25(m), and 483.75.

Resident 4 (R4). R4 was a 70-year-old woman, suffering from a wide range of disorders,
including anemia, heart failure, hypertension, wound infection, diabetes, hyperlipidemia,
cerebral vascular accident, and depression. Her leg had been amputated above the knee.
CMS Ex. 2 at 6. She was readmitted to the facility on March 29, 2012, following a
hospital stay for evaluation and treatment of her multiple pressure sores. CMS Ex. 5 at 3;
CMS Ex. 7 at 3; CMS Ex. 8 at 1, 7, 20, 24.

R4 had in place a “central tunneled internal jugular intravenous line,” which is a catheter
placed under her skin, ending in her jugular vein (the large vein in the neck that returns
blood from the head to the heart). CMS Ex. 2 at 4.

Licensed Vocational Nurse “E.”” On April 26, 2012, at 3:15 p.m., Surveyor Donna
Dudley, RN, observed a licensed vocational nurse (LVN), referred to as “LVN E,”
administer intravenously, through R4’s central IV line, the antibiotic, Vancomycin. In
preparing to administer the medication, the LVN first injected normal saline into the line,
a standard practice designed to verify that the IV is in its proper place. However, LVN E
did not take the steps necessary to insure that air could not enter the IV tubing. Surveyor
Dudley saw bubbles in the line, which means that air is present. The syringe, pre-filled
with medication, also contained one to two milliliters of air, which the LVN did not
remove. Instead, she injected the entire contents of the syringe into the IV tubing.
Surveyor Dudley put her hand over the LVN’s hand and said, “Stop! There is air in the
syringe,” but the LVN continued to inject its contents — air and all — into the resident’s
jugular vein. CMS Ex. 2 at 4, 7-8; CMS Ex. 42 at 2 (Dudley Decl.).

Injecting air into someone’s veins is extremely dangerous. It can cause a venous air
embolism (VAE) and lead to stroke or death. Given the location of R4’s catheter, air
could travel directly to her heart and into her lungs. CMS Ex. 42 at 2-3 (Dudley Decl.);
see CMS Ex. 12 (instructing staff to “purge air” from the flow regulator); CMS Ex. 11 at
2 (reporting that “catheter-associated venous air embolism mortality rates have reached
30%).

' My findings of fact/conclusions of law are set forth, in italics and bold, in the
discussion captions of this decision.
Nor did LVN E administer the correct dosage of Vancomycin. R4’s physician ordered
250 milliliters (ml) infused over a 90-minute period. CMS Ex. 2 at 9; CMS Ex. 8 at 12,
18, 20, 22. In administering IV medications, the facility used a “mechanical flow
regulator” (Control-a-Flo) to control the rate at which the medication was administered.
To infuse 250 ml over 90 minutes, the nurse set the drip factor at 10, resulting in a flow
rate of 28 drops per minute (10 drops equal 1 ml). CMS Ex. 2 at 9; see CMS Ex. 10 at
11. But mechanical flow regulators can be inaccurate, so nursing staff must also count
the drops actually administered. CMS Ex. 42 at 3-4 (Dudley Decl.). The facility’s
written policy instructed staff to “CONFIRM RATE BY COUNTING DROPS.” CMS
Ex. 10 at 10 (emphasis in original). Similarly, the regulator’s instructions caution that
“[f]low rate markings are approximate” so staff must “verify flow rate by observing drip
rate.” CMS Ex. 12. But LVN E did not count the drops. One of the surveyors did so and
reported that the flow rate was 36 drops per minute. CMS Ex. 2 at 9.

Further, LVN E could not accurately read the numbers on the regulator dial. She pointed
to the number “100” (ml/hr) and told the surveyors that it read “10.” She pointed to the
number “125” (ml/hr) and said that it read “30.” She subsequently admitted that she
could not read the dial without her glasses, which she was not wearing. CMS Ex. 2 at 10;
CMS Ex. 43 at 2 (Santoro Decl.).

Assistant Director of Nursing (ADON). Nor was the facility’s ADON able to administer
IV medication to R4 safely. When the ADON connected a new bag of medication, the
drip chamber on the tubing was empty, which allowed air to enter, and Surveyor Dudley
saw air enter the tubing. The ADON attached the tubing — air and all — to R4’s central
line, which would have allowed the air to go directly into the line and thus R4’s body.
Surveyor Dudley stopped the infusion by clamping off the tubing. She asked that the
Director of Nursing (DON) come to the room. Together, Surveyor Dudley and the DON
measured the amount of air in the tubing and agreed that 3.1 centimeters of air were in
the line. CMS Ex. 2 at 11; CMS Ex. 42 at 3 (Dudley Decl.).

Inadequate training. According to the facility’s policy for setting up a primary infusion,
only a professional nurse “with documented IV education” may set up a primary infusion.
CMS Ex. 10 at 8. Yet, with few exceptions, nursing staff had not been trained to
administer IV medications. According to the facility’s DON and its human resources
director, the facility last conducted in-service training on administering IV medications in
2007. CMS Ex. 42 at 4 (Dudley Decl.); CMS Ex. 36 at 29. Surveyor Dudley consulted
one of the nurses in the corporate offices, who provided personnel files for 10 of the
facility’s LVNs (he could not locate all of the files). Of those 10, only 3 LVNs had any
classroom training on administering IVs, and, of those, 2 training certificates dated back
to 2006 and 2007. Significantly, the ADON, who was responsible for training the other
LVNs in proper IV techniques, had no documented classroom training, only a “skills
check-off” list from the DON. CMS Ex. 42 at 4-5 (Dudley Decl.).
Medication error rate. R4 was not the only resident whose medications were not properly
administered.” The survey team observed 10 medication errors out of 48 opportunities
for error. Including R4, 7 of the 16 residents they observed did not receive their
medications as ordered, and the errors were made by a variety of staff — four LVNs, one
registered nurse (RN), and two medication aides. CMS Ex. 2 at 58; CMS Ex. 35 at 2-5;
CMS Ex. 36 at 3-6; CMS Ex. 37 at 25; CMS Ex. 38 at 1-2.

Specifically:

¢ On April 26, 2012, Surveyor Minika Ekpenyong, M.S., R.N., observed “LVN G”

administer 20 units of insulin to R20. A physician’s telephone order, dated April

11, discontinued prior insulin orders and called for 25 units of insulin every

evening. CMS Ex. 16 at 6. LVN G told Surveyor Ekpenyong that she did not
now that the order had been changed. CMS Ex. 16 at 16; CMS Ex. 44 at 3
(Ekpenyong Decl.). It seems that staff erred in filling out R20’s medication
administration record (MAR). The MAR accurately says to discontinue the
previous order — 20 units every evening. But staff did not write in the newly-
ordered number of units (25); they rewrote 20 and continued to administer that
amount. CMS Ex. 17 at 9. When Surveyor Ekpenyoung brought the April 11
order to LVN G’s attention, she said “oh.” CMS Ex. 2 at 74.

e R23 had orders for two doses of the anti-seizure medication, Dilantin, one for 100
milligrams (mg) and a second for 50 mg of Infatab (a chewable tablet usually
prescribed to children), each tablet to be administered three times a day. At 6:10
p.m. on April 26, “Medication Aide H” reported that the resident’s Dilantin was
not in the drug cart. The ADON reported that the facility was out of the Dilantin,
but it would be delivered later that evening. CMS Ex. 2 at 74; CMS Ex. 21 at 2;
CMS Ex. 41 at 2-3 (Hobson Decl.). But the medication was not delivered, and
staff gave R23 a 100 mg tablet only, which they took from the facility’s
emergency supply. They did not administer the additional 50 mg. This posed a
potentially serious problem for R23. Dilantin has a narrow range of effectiveness,
and the resident’s blood levels for the medication were already low. Immediately
prior to the time of the survey, they measured between 6.7 and 8.4 micrograms per
ml. The desired range is 10 to 20 micrograms. CMS Ex. 2 at 77-78; CMS Ex. 23;
CMS Ex. 41 at 5-6 (Hobson Decl.).

e Surveyor Coralea Hobson, R.N., M.Ed., observed Medication Aide H administer
eye medications to R21. R21’s physician ordered Travatan Z eye drops for each
eye, to treat the resident’s glaucoma, followed by artificial tears to the left eye

> Of the multiple medication errors, CMS relies only on those attributable to R4’s care to
establish immediate jeopardy.
e only, to be administered five minute after the Travatan. The medication aide
administered the second medication after just three minutes and administered the
drops to both eyes. CMS Ex. 2 at 79; CMS Ex. 44 at 4 (Ekpenyong Decl.).

e R22’s physician ordered the laxative Senna, 8.6 mg twice daily, but the
medication aide did not administer the medication. CMS Ex. 2 at 80; CMS Ex. 20
at 2; CMS Ex. 41 at 5 (Hobson Decl.).

e R15’s physician ordered 200 mg of Nitrofurantoin, which treats urinary tract
infections. “Medication Aide D” administered 100 mg instead. CMS Ex. 2 at 59.

e Finally, R19’s physician prescribed a multivitamin. Medication Aide D
administered Vitamin B complex instead. CMS Ex. 2 at 60.

Petitioner challenges none of this. P. Post-hrg. Br. at 11.

Because the services provided to R4 did not meet professional standards of quality, the
facility was not in substantial compliance with 42 C.F.R. § 483.20(k)(3)(i). R4 did not
receive “proper treatment and care” with respect to her injections, which put it out of
substantial compliance with 42 C.F.R. § 483.25(k). Staff medication errors were
significant and the rate of error far exceeded 5%, which put the facility out of substantial
compliance with 42 C.F.R. § 483.25(m)(1) and (2). Finally, the sheer volume of
deficiencies cited, including those not appealed, suggests a systemic problem here, for
which the facility’s administration should be accountable. See Stone County Nursing &
Rehab. Ctr., DAB No. 2276 at 15-16 (2009) (holding that a deficiency citation alleging
noncompliance with section 483.75 may be derived from findings of noncompliance with
other participation requirements). Moreover, the facility failed to administer its own
policies regarding medication administration and staff training, for which its
administrators are directly responsible. The facility was therefore not in substantial
compliance with 42 C.F.R. § 483.75.

Immediate jeopardy. Immediate jeopardy exists if a facility’s noncompliance has caused
or is likely to cause “serious injury, harm, impairment, or death to a resident.” 42 C.F.R.
§ 488.301. CMS’s determination as to the level of a facility’s noncompliance (which
would include an immediate jeopardy finding) must be upheld unless it is “clearly
erroneous.” 42 C.F.R. § 498.60(c). The Departmental Appeals Board has observed
repeatedly that the “clearly erroneous” standard imposes on facilities a “heavy burden” to
show no immediate jeopardy, and has sustained determinations of immediate jeopardy
where CMS presented evidence “from which ‘[o]ne could reasonably conclude’ that
immediate jeopardy exists.” Barbourville Nursing Home, DAB No. 1962 at 11 (2005)
(citing Florence Park Care Ctr., DAB No. 1931, at 27-38 (2004)); Daughters of Miriam
Ctr., DAB No. 2067 at 7, 9 (2007).
I need not find that the facility’s noncompliance actually caused serious harm, injury, or
death. So long as the deficiencies are likely to cause serious injury or harm, they pose
immediate jeopardy.

Petitioner complains that CMS imposed the immediate jeopardy finding, effective March
29, the day R4 was readmitted to the facility. According to Petitioner, “[w]e do not know
whether the actions of LVN E, [the] ADON .. . and the DON were isolated occurrences
of April 26, 2012 or the norm.” P. Post-hrg. Br. at 13. In fact, we know that when R4
was readmitted to the facility on March 29, she had in place the IV line that connected to
her jugular vein. We know that nurses were required to administer medications through
that line. We also know that nursing staff, including the ADON, had not been trained to
do so, did not know how to do so, and performed in a way that jeopardized the resident’s
safety.

The nursing staff’s techniques were not safe, because introducing air into a vein can
cause a VAE, which has “the potential for severe morbidity and mortality.” Many cases
of VAE are subclinical, without an adverse outcome, and symptoms are often
nonspecific. CMS Ex. 11 at 1. However, a VAE may be fatal and frequently carries
“high neurologic, respiratory, and cardiovascular morbidity.” CMS Ex. 11 at 2. Where,
as here, a majority of the nurses do not know how to administer medications to a resident
without introducing air into her jugular vein, they are likely to cause serious injury, harm,
or even death. CMS’s determination that the facility’s deficiencies posed immediate
jeopardy is therefore not clearly erroneous.

B. The penalties imposed are reasonable.

To determine whether a CMP is reasonable, I apply the factors listed in 42 C.F.R.

§ 488.438(f): 1) the facility’s history of noncompliance; 2) the facility’s financial
condition; 3) factors specified in 42 C.F.R. § 488.404; and 4) the facility’s degree of
culpability, which includes neglect, indifference, or disregard for resident care, comfort
or safety. The absence of culpability is not a mitigating factor. The factors in 42 C.F.R.
§ 488.404 include: 1) the scope and severity of the deficiency; 2) the relationship of the
deficiency to other deficiencies resulting in noncompliance; and 3) the facility’s prior
history of noncompliance in general and specifically with reference to the cited
deficiencies.

I consider whether the evidence supports a finding that the amount of the CMP is at a
level reasonably related to an effort to produce corrective action by a provider with the
kind of deficiencies found, and in light of the section 488.438(f) factors. I am neither
bound to defer to CMS’s factual assertions, nor free to make a wholly independent choice
of remedies without regard for CMS’s discretion. Barn Hill Care Ctr., DAB No. 1848 at
21 (2002); Cmty. Nursing Home, DAB No. 1807 at 22-26 (2002); Emerald Oaks, DAB
No. 1800 at 9-10 (2001); CarePlex of Silver Spring, DAB No. 1683 at 8 (1999).
10

CMS imposes a penalty of $5,550 per day for the days of immediate jeopardy, which is at
the low end of the penalty range for deficiencies posing immediate jeopardy ($3,050 to
$10,000 per day). 42 C.F.R. §§ 488.408(e)(iii); 488.438(a)(1)(i). For the period of
substantial noncompliance that was not immediate jeopardy, CMS imposes a penalty —
$150 per day — that is at the very low end of the applicable penalty range ($50 to $3,000).
42 C.F.R. §§ 488.408(d)(1)(iii); 488.438(a)(1)(ii). Considering the relevant factors,
these penalties are modest.

Except for alluding to an “enforcement action” that it took in May 2008, CMS says little
about the facility’s history. CMS Ex. 47 at 6 (McElroy Decl.). Petitioner, on the other
and, acknowledges that it has not consistently maintained substantial compliance, but
claims that its prior deficiencies caused no actual harm and did not pose immediate
jeopardy. P. Post-hrg. Br. at 19; P. Br. at 21; P. Ex. 3. According to a “health inspection
summary” submitted by Petitioner, in March 2011 and April 2010, the facility had lower-
level deficiencies in areas that included pharmacy and quality-of-care. P. Ex. 3. A

istory of substantial noncompliance is, by itself, sufficient to justify imposing penalties
above the minimum, so the deficiencies cited need not have caused actual harm or posed
immediate jeopardy. But here, the summary Petitioner submits is ambiguous about the
levels of noncompliance. They are described as “minimal harm or the potential for actual
arm.” Ifa deficiency poses the potential for more than minimal harm, the facility is not
in substantial compliance. If the deficiency causes minimal harm, the facility may still be
in substantial compliance. I therefore do not consider the facility’s history a significant
factor in determining whether the CMPs are reasonable.

With respect to the facility’s financial condition, the facility has the burden of proving, by
a preponderance of the evidence, that paying the CMP would render it insolvent or would
compromise the health and safety of its residents. Van Duyn Home & Hosp., DAB No.
2368 at 18 (2011); Gilman Care Ctr., DAB No. 2357 at 6-7 (2010). Here, Petitioner
points out that it has a large Medicaid population and operates at a loss because of low
reimbursement rates, although other entities within the corporation make up the short-
fall. If required to pay the CMP, the facility will freeze employee wages and delay non-
essential facility upgrades. For example, plans for a beauty shop will likely be put on
hold. P. Ex. lat 1-2 (Kerr Decl. {§ 3, 4, 6); P. Ex. 1 at 3-4 (Tappan Decl. §§] 3, 6); P. Br.
at 17-19; P. Post-hrg. Br. at 16-18. Such claims, which, in any event, are not supported
by compelling financial documentation, fall short of the standard for lowering a CMP
based on financial condition. In Guardian Care Nursing & Rehab. Ctr., DAB No. 2260
(2009), for example, the facility could not even afford to represent itself on appeal. Its
Medicaid census was 90%; its annual shortfall was $250,000; and it relied on charitable
contributions for its continuing viability. The Departmental Appeals Board criticized the
absence of financial documentation and concluded that the facility had not established

11

that additional resources would not be available. DAB No. 2260, at 9; but see Columbus
Nursing & Rehab. Ctr., DAB No. 2505 at 17-18 (2013) (finding that the absence of

documentation regarding the facility’s finan

cial condition did not preclude ALJ from

concluding, based on witness testimony, that financial condition justified reducing the

CMP).

Applying the remaining factors, I find that tl
medication to R4, by themselves, justify the

e facility’s deficiencies in administering
penalties imposed. Petitioner well knew

that its nursing staff had not been properly trained in administering IV medications. As
evidenced by the facility’s own policy, it recognized how critical such training is for

anyone charged with administering IV medi
When, on March 29, R4 was readmitted to tl
staff did not administer her medications in a

Moreover, in determining whether the CMP.

cations. Yet, it provided no such training.
e facility with the jugular IV line in place,
safe manner, disregarding her safety.

's are reasonable, I consider all of the

facility’s deficiencies, including those that Petitioner does not contest. The sheer number

of deficiencies cited justifies penalties signi:
multiple E and F-level deficiencies. But the

ficantly above the minimum, and they include
scope and severity designations tell only part

of the story. Even a cursory review of the facts underlying these citations shows how
serious the facility’s problems were. Although not cited at the immediate jeopardy or
actual harm levels, they had real consequences and posed the potential for significantly
compromising resident health and safety. Among other problems:

facility must ensure that she does not

42 C.F.R. § 483.25(c). Based on a resident’s comprehensive assessments, the

develop pressure sores unless her condition

renders them unavoidable. If she has pressure sores, the facility must provide

necessary treatment and services to p
prevent new sores from developing.
which had led to a bone infection. A!

romote healing, prevent infections, and
R4 suffered from serious pressure sores,
Ithough her physician ordered a pressure-

relieving device, for use with her wheel chair, the facility did not provide the
device or a reasonable substitute for it until months later.

Surveyors observed a nurse aide providing R4’s wound care without first washing

her hands.

Surveyors also watched an LVN tran:
without first cleaning the table top.

The same LVN “forgot” to treat the si
resident’s right heel. CMS Ex. 2 at 2

sfer supplies to a table in the resident’s room

ignificant (4 cm X 3 cm) pressure sore on the
4-32.

483.25(i) . Based on a resident’s comprehensive assessment, the facility must

ensure that the resident maintains “acceptable parameters of nutritional status,”
12

such as weight and protein levels, and receives a therapeutic diet when there is a
nutritional problem. R10 was an 80-year-old woman who was fed through an
enteral tube and by mouth. In January 2012, the facility’s dietician recommended
that her tube feeding be reduced, because she was over her ideal body weight.
Thereafter, facility staff provided 49% of her caloric needs and 55% of her protein
needs. More significant, they did not then monitor her weight and nutrition intake.
When she did not eat, or ate little, they failed to offer her alternate meals, snacks,
or shakes. Between March | and April 25, 2012, she lost 6% of her body weight.
The facility’s dietician was not aware of her weight loss. CMS Ex. 2 at 32-38.

e 42C.F.R. § 483.35(i). The facility must store, prepare, distribute, and serve food
under sanitary conditions. Surveyors reported pooling water, food spills, and a
putrid odor in the walk-in refrigerator. They saw plugged drains, oven filters
covered in grease and dust, appliances and serving bowls covered in food debris,
and food stored in containers without tight-fitting lids.

Staff did not wear hair restraints.

Staff wore single-use gloves for multiple tasks.

Unpasteurized eggs were used to prepare dishes that had soft or runny egg yolks.
Hot foods were not kept at a safe temperature.

The surveyors observed cracked food carts. “Sanitizing buckets” lacked sanitizer.
At 9:18 a.m., Surveyor Ann Wedgwood pointed out caked-on food in the
microwave. When she returned to the kitchen at 3:50 p.m., it had not been

cleaned. CMS Ex. 2 at 105-111; CMS Ex. 45 (Wedgwood Decl.).

I find these and the immediate jeopardy deficiencies extremely serious and the staff
culpable. The penalties imposed are therefore reasonable.
13

IV. Conclusion

Petitioner has conceded that, from March 29 through May 17, 2012, it was not in
substantial compliance with Medicare program requirements. For the reasons discussed
above, I find that, from March 29 through April 28, 2012, its deficiencies posed
immediate jeopardy to resident health and safety. I affirm as reasonable the penalties
imposed —$5,550 per day for the period of immediate jeopardy and $150 per day for
period of substantial noncompliance that was not immediate jeopardy.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Stacie Cook, LCSW,
(PTAN: 202i802404)
(NPI: 1992855431),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-562
Decision No. CR3227

Date: May 12, 2014

DECISION

Cahaba Government Benefit Administrators, LLC (Cahaba), an administrative contractor
acting on behalf of the Centers for Medicare & Medicaid Services (CMS), determined
that the effective date for the Medicare enrollment of Petitioner, Stacie Cook, was June
21, 2013, with a retrospective billing period commencing May 20, 2013. Petitioner filed
a request for hearing (RFH) seeking an earlier effective date. For the reasons discussed
below, | affirm the determination that Petitioner’s effective date for billing privileges is
June 21, 2013, and leave unchanged the determination that Petitioner may retrospectively
bill Medicare for services provided from May 20, 2013.

I. Background and Procedural History

Stacie Cook is a licensed clinical social worker in the state of Georgia. CMS Ex. 1, at 3.
In March 2013, Ms. Cook submitted web-based applications, Form CMS-8551 (CMS-
8551) and Form CMS-855R (CMS-855R), to initially enroll as a Medicare supplier and to
reassign some of her Medicare benefits to Mindful Transitions, LLC (MT). CMS
Exhibits (Exs.) 1; 2. To complete the submission of these applications, Petitioner mailed
signed Certification Statements, which Cahaba received on March 19, 2013. CMS Exs.
at 13-16; 2 at 8; 4, at 1. Cahaba rejected Petitioner’s CMS-855I on May 31, 2013,
because Petitioner failed to timely submit additional information that Cahaba requested.
CMS Ex. 4. Because Cahaba rejected her CMS-8551, Cahaba also rejected Ms. Cook’s
CMS-855R because she was not eligible to reassign benefits if she was not an approved
Medicare supplier. CMS Ex. 9 at 1. On June 21, 2013, Cahaba received corrected
applications, CMS-855I and CMS 855R, that MT submitted on Petitioner’s behalf. CMS
Ex. 9, at 1. On July 10, 2013, Cahaba notified Petitioner that it approved Petitioner’s
applications and established May 20, 2013 as the “effective date” for Petitioner’s
Medicare billing privileges and the reassignment of her benefits to MT.' CMS Ex. 6. On
September 10, 2013, Cahaba received Petitioner’s request for reconsideration of the
“approval date” and a request to change the approval date to April 1, 2013. CMS Ex. 8.
Once again, MT filed this on Petitioner’s behalf. Although Cahaba appears to have at
first rejected the filing from MT (CMS Exs. 7; 8), on December 4, 2013, Cahaba sent
Petitioner, via MT, an unfavorable reconsidered determination affirming Petitioner’s
Medicare effective date as June 21, 2013. CMS Ex. 9. Cahaba explained that it received
Petitioner’s applications on June 21, 2013, and subsequently approved those applications.
CMS Ex. 9, at 3-4. Therefore, “the effective date [of May 20, 2013] was set
appropriately . . . [because] Cahaba cannot backdate the effective date of billing beyond
the 30 day limitation.” CMS Ex. 9.

On January 15, 2014, MT filed, on Petitioner’s behalf, a timely RFH with the
Departmental Appeals Board, Civil Remedies Division (CRD). On January 29, 2014, I
issued an Acknowledgment and Pre-Hearing Order (Order), which instructed the parties
how and when to present evidence and argument in this case. On February 3, 2014, in
accordance with my Order, CMS counsel timely filed her notice of appearance, and on
March 5, 2014, CMS counsel timely filed a motion for summary judgment and brief
(CMS Br.), along with ten proposed exhibits (CMS Exs. 1-10). In my Order, I also
directed Petitioner to file a written notice of appointment by February 10, 2014, and her
pre-hearing exchange by April 9, 2014. Petitioner failed to file either submission, and on
April 22, 2014, I issued an Order to Show Cause (OSC). In the OSC, I directed
Petitioner to submit an explanation that demonstrated good cause for her failure to timely
file a pre-hearing exchange in accordance with my Order. Along with this explanation, I
also directed Petitioner to file her entire pre-hearing exchange and a notice of

' Cahaba erroneously characterized the beginning of the retrospective billing period to be
the “effective date.” See Jorge M. Ballesteros, DAB CR2067, at 2 (2010) (“CMS
apparently sets enrollment effective dates 30 days prior to the date of application”).
Therefore, I interpret the determination to mean that the “effective date” is the beginning
of the retrospective billing period and not the enrollment effective date. Rizwan Sadiq,
M.D., DAB CR2401, at 5-6 (2011). Administrative decisions and rulings cited in this
decision are accessible on the internet at: http://www.hhs.gov/dab/decisions/index.html.
appointment. Lastly, I warned Petitioner that if she failed to comply with the OSC or
failed to show good cause, I would dismiss the case for abandonment. On April 29,
2014, MT’s representative sent an email to the CRD staff attorney assigned to this case
and stated that Petitioner had nothing further to submit.

IL. Decision on the Written Record

Despite the failure of MT’s representative to provide good cause for submitting a timely
prehearing exchange, I will not dismiss Petitioner’s RFH for abandonment because MT’s
representative responded to the OSC. I am particularly lenient in this case because MT’s
representative has never submitted a notice of appointment as Petitioner’s non-attorney
representative (42 C.F.R. § 498.10(b)),” despite repeated attempts to obtain
documentation of MT’s authority to act for Petitioner.’ Therefore, I will adjudicate this
case to ensure that Petitioner’s right to administrative law judge review has not been
prejudiced.*

My Order advised that a party must file written objections to any exhibits submitted by
the other party, submit written direct testimony for each proposed witness, and that an in-
person hearing would only be necessary if the opposing party requested an opportunity to
cross-examine a witness. Order {J 8, 9, 10; Vandalia Park, DAB No. 1940 (2004);
Pacific Regency Arvin, DAB No. 1823, at 8 (2002) (holding that the use of written direct
testimony for witnesses is permissible so long as the opposing party has the opportunity
to cross-examine those witnesses). Petitioner did not object to any of CMS’s proposed
exhibits. See Order § 7. Therefore, I admit CMS Exs. 1-10 into the record. Petitioner
did not submit any proposed exhibits. Further, neither CMS nor Petitioner offered any

> Although MT has not argued that it has the right to request a hearing as the supplier to
whom Petitioner was reassigning benefits, it is possible, although not likely, that MT
might be an “affected party” under 42 C.F.R. § 498.2. However, because I have decided
to adjudicate, rather than dismiss, the RFH, MT’s right to review by an administrative
law judge (should any right exist) is protected.

> The CRD staff attorney working with me on this case spoke with MT’s representative
on the phone on or around February 10, 2014, and told the representative that Petitioner
must file a written notice of appointment in order for MT to represent her in this appeal.
This directive was restated in my April 22, 2014 OSC.

* Because MT’s representative has never been officially designated to act for Petitioner, I
direct CRD to send a copy of this decision to Petitioner’s address as it appears in CMS
Ex. 4 as well as MT’s address. If Petitioner determines that MT improperly acted on her
behalf, Petitioner may request, within 60 days of the date of this decision, that I reopen
this case. 42 C.F.R. § 498.100(a).
witnesses. Consequently, I will not hold an in-person hearing in this matter and will
decide this matter based on the written record. Order § 11.

III. Issue

Whether CMS had a legitimate basis for establishing June 21, 2013, as the effective date
of Petitioner’s Medicare billing privileges and May 20, 2013, as the beginning of
Petitioner’s retrospective billing period.

IV. Jurisdiction

I have jurisdiction to decide the issue in this case. 42 C.F.R. § 498.3(b)(15); see also
42 U.S.C. § 1395cc(j)(8).

V. Findings of Fact, Conclusions of Law, and Analysis®

The Social Security Act (Act) authorizes the Secretary of Health and Human Services
(Secretary) to promulgate regulations governing the enrollment process for suppliers.°
42 U.S.C. §§ 1302, 1395cc(j). Under the Secretary’s regulations, a provider or supplier
who seeks billing privileges under Medicare must “submit enrollment information on the
applicable enrollment application. Once the provider or supplier successfully completes
the enrollment process . .. CMS enrolls the provider or supplier into the Medicare
program” and establishes an effective date for billing privileges. 42 C.F.R.

§§ 424.510(a), 424.520.

I. Cahaba received Petitioner’s signed Medicare enrollment application
on June 21, 2013.

Petitioner filed two Medicare enrollment applications, CMS-855I and CMS-855R, with
Cahaba on March 19, 2013. CMS Ex. 1; CMS Ex. 2. Cahaba rejected Petitioner’s
enrollment applications, CMS-855I and CMS-855R, because Petitioner failed to provide
Cahaba certain information within the required regulatory time frame.’ CMS Exs. 3; 4.

> My findings of fact and conclusions of law are set forth in italics and bold font.

° Petitioner, a licensed clinical social worker, is considered a “supplier” for Medicare
purposes. See 42 U.S.C. §§ 1395x(d) (defining “supplier” as a physician or other
practitioner); 1395u(b)(18)(C)(iv) (identifying clinical social workers as practitioners),
1395x(hh) (listing criteria for clinical social workers).

7 Under 42 C.F.R. § 424.525(a)(1), CMS may reject a prospective supplier’s enrollment
application if the prospective supplier fails to furnish complete information on the

After Cahaba rejected Petitioner’s enrollment applications, Petitioner resubmitted
completed CMS-855] and CMS-855R, which Cahaba received on June 21, 2013. CMS
Ex. 9 at 1. Cahaba approved these applications on July 10, 2013. CMS Ex. 6. Since
Petitioner does not dispute these facts, I find that Cahaba received Petitioner’s completed
applications on June 21, 2013, and that Cahaba subsequently approved these applications.

2. The effective date for Petitioner’s Medicare billing privileges is June
21, 2013 because that is the date Cahaba received Petitioner’s
Medicare enrollment application that Cahaba subsequently approved.

Based on the date that Cahaba received Petitioner’s completed CMS-855I and CMS-
855R Cahaba established June 21, 2013, as Petitioner’s effective Medicare enrollment
date. See CMS Exs. 6 at 1; 9 at 2-3. The relevant regulation concerning the effective
date of Medicare enrollment states:

The effective date for billing privileges for physicians, nonphysician
practitioners, and physician and nonphysician practitioner
organizations is the later of the date of filing of a Medicare
enrollment application that was subsequently approved by a
Medicare contractor or the date an enrolled physician or
nonphysician practitioner first began furnishing services at a new
practice location.

42 C.F.R. § 424.520(d). The “date of filing” is the date that the Medicare
contractor “receives” a signed enrollment application that the Medicare contractor
is able to process to approval. 73 Fed. Reg. 69,726, 69,769 (Nov. 19, 2008); see
also Caroline Lott Douglas, PA, DAB CR2406, at 5-7 (2011). It is Petitioner’s
June 21, 2013 signed enrollment application that CMS was able to process to
approval, therefore, Cahaba correctly established June 21, 2013, as Petitioner’s
Medicare effective date.

The regulations also permit approved Medicare suppliers to retrospectively bill for
services provided to Medicare beneficiaries based on the following regulation:

Physicians, nonphysician practitioners and physician and
nonphysician practitioner organizations may retrospectively bill for
services when a physician or nonphysician practitioner or a
physician or a nonphysician practitioner organization have met all
program requirements, including State licensure requirements, and

provider/supplier enrollment application within 30 calendar days from the date of the
contractor’s request for the missing information.
services were provided at the enrolled practice location for up to—

(1) 30 days prior to their effective date if circumstances
precluded enrollment in advance of providing services to
Medicare beneficiaries, or

(2) 90 days [in certain emergencies not applicable to this
case].

42 CFR. § 424.521 (a).

Cahaba established that, based on a Medicare effective date of June 21, 2013,
Petitioner’s retrospective billing period commenced on May 20, 2013. CMS Ex.
6.8

Petitioner seeks an earlier date on which she may bill Medicare for services she
provided. Petitioner’s argument is that the effective date established by Cahaba is
“unjust” and that Petitioner’s Medicare effective date should be based on the
original applications that Petitioner submitted on March 19, 2013. RFH; CMS Ex.
8. However, as stated above, Cahaba rejected the original applications that
Cahaba received on March 19, 2013, because Petitioner failed to submit certain
information that Cahaba requested from her. CMS Exs. 3; 4 at 1.

I do not have the authority to determine whether Cahaba properly rejected
Petitioner’s March 19, 2013 CMS-855I and CMS-855R. See 42 C.F.R.

§ 424.525(d). Further, those applications can play no role in this case. As
succinctly stated in another case:

The regulations provide that the effective date of enrollment is the
date on which a contractor received an application which it was
subsequently able to process to approval. Thus, while the contractor
may require and request additional information to complete the
application, the effective date will relate back to the date of filing so
long as that application continues to be processed to a decision on
whether to approve it. The process ends, however, once the
application is rejected or denied. 71 Fed. Reg. at 20,759 (enrollment
process culminates in “the granting of billing privileges or denial or
rejection of the application”). A later submitted application,
therefore, even if then processed to completion, will be approved
with the effective date of its filing date, not that of any earlier
application which the contractor was not able to process to approval.

* Tn fact, thirty days prior to June 21, 2013, is May 22, 2013. If CMS wants to correct
this error, it has the means to do so. 42 C.F.R. § 498.30-498.32.
Karthik Ramaswamy, M.D., DAB No. 2563, at 5 (2014) (en banc). For purposes
of my review of this case, it is sufficient to show that Petitioner’s March 19, 2013
CMS-855I and CMS 855R were rejected but her June 21, 2013 Form CMS-8551
and CMS-855R were processed to completion. This is because, as explained
above, the effective date for Medicare enrollment, and, consequently, for any
retrospective billing privileges, is dependent upon the date CMS receives an
application that is ultimately approved. 42 C.F.R. § 424.520(d). In this case, that
application was Petitioner’s June 21, 2013 CMS-855I and CMS-855R.

VI. Conclusion

For the reasons stated above, I affirm CMS’s determination that Petitioner’s
effective date for Medicare billing privileges is June 21, 2013.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Pop/Kab, LLC d/b/a Pops Grocery,
Respondent.

Docket No. C-14-762
FDA Docket No. FDA-2014-H-0275

Decision No. CR3225

Date: May 9, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated the above-captioned matter when it
filed an Administrative Complaint for Civil Money Penalties (Complaint) with the
Departmental Appeals Board, Civil Remedies Division (CRD) and the Food and Drug
Administration’s (FDA) Division of Dockets Management. CTP previously initiated a
civil money penalty action, CRD Docket Number C-13-718, FDA-2013-H-05 13, against
the Respondent, which ended when the administrative law judge entered a default
judgment against Respondent.' CTP now seeks to impose additional civil money
penalties under the Federal Food, Drug, and Cosmetic Act (Act) and the Act’s
implementing regulations.

' CTP initiated the previous action by filing an Administrative Complaint for Civil
Money Penalties with CRD on May 3, 2013 (May 3, 2013 Complaint). CTP attached the
May 3, 2013 Complaint to the Complaint it filed when it initiated the present matter.
2
The Complaint alleges the following facts. Respondent owns an establishment that sells
tobacco products and is located at 267 Grand Avenue, New Haven, Connecticut 06513.
Complaint § 3. CTP documented violations during three inspections of the
establishment. Complaint § 9.

In the May 3, 2013 Complaint, CTP sought imposition of a civil money penalty
consistent with two violations of regulations found at 21 C.F.R. Part 1140. See
Complaint § 10; Pop Kab, LLC d/b/a Pops Grocery, DAB CR2847, at 2-3 (2013). The
administrative law judge found that Respondent committed two violations on July 2,
2012, and one violation during a two-part inspection conducted on December 24, 2012,
and January 2, 2013. Pops Grocery, DAB CR2847, at 3. The administrative law judge
entered default judgment against Respondent and ordered it to pay a $250 civil money
penalty. Pops Grocery, DAB CR2847, at 4.

During a subsequent inspection of Respondent’s establishment, FDA-commissioned
inspectors documented the following:

[A] person younger than 18 years of age was able to purchase a package of
Maverick Box cigarettes on September 13, 2013, at approximately 12:50
PM; and . . . the minor’s identification was not verified before the sale, as
detailed above, on September 13, 2013, at approximately 12:50 PM.

Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on March 10, 2014, via United Parcel Service. CTP charged Respondent with
new violations of 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21
C.F.R. § 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products
by means of photographic identification containing the bearer’s date of birth). Complaint
4, 1. CTP asked the CRD to impose a $2,000 civil money penalty based on four
violations of the regulations in a 24-month period. Complaint § 13.

The Complaint provided detailed instructions related to filing an answer and requesting
an extension of time to file an answer. Complaint J 14-18, 20-22. The Complaint stated
that failure to file an answer could result in the imposition of a civil money penalty
against Respondent. Complaint § 19. Further, after CTP filed the Complaint, CRD sent
Respondent an Initial Order informing Respondent of the requirement to file an answer to
avoid a default judgment. CRD sent a form answer along with the Initial Order that
Respondent could complete and file with CRD. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.

§ 17.9.
3
If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that:

[T]he presiding officer shall assume the facts alleged in the complaint to be
true, and, if such facts establish liability under the relevant statute, the
presiding officer shall issue an initial decision within 30 days of the time
the answer was due, imposing:

(1) The maximum amount of penalties provided for by law for the
violations alleged; or
(2) The amount asked for in the complaint, whichever amount is smaller.

21 C.F.R. § 17.11(a). Further, a failure to file a timely answer means that “the
respondent waives any right to a hearing and to contest the amount of the penalties and
assessments” imposed in the initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. Lalso find that CTP’s request to impose a $2,000 civil
money penalty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $2,000.
This initial decision becomes final and binding upon both parties 30 days after the date of
its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Joseph Grow
Administrative Law Judge