Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Prestonburg Health Care Facility
(CCN: 18-5304),
Petitioner,
Vv.
Centers for Medicare & Medicaid Services.

Docket No. C-09-473

Decision No. CR2206

Date: August 10, 2010

DECISION

This matter is before me on the Centers for Medicare & Medicaid Services’ (CMS’s)
Motion for Summary Judgment. I have determined that Prestonburg Health Care Facility
(Petitioner) does not have a right to a hearing under the applicable regulations.
Accordingly, I grant CMS’s Motion for Summary Judgment and, consequently, I dismiss
Petitioner’s request for hearing.
I. Background
Petitioner is a long-term care facility located in Prestonsburg, Kentucky, that participates
in the Medicare program as a skilled nursing facility (SNF)', and in the Kentucky
Medicaid program as a nursing facility (NF). On March 20, 2009, a standard survey

(March 20 survey) was completed at Petitioner’s facility by the Kentucky State Survey
Agency (survey agency) to determine if Petitioner was in compliance with Medicare

' Petitioner is a nursing home facility both under the federal Medicare program (as an
SNF) and the state Medicaid program (as an NF) and is referred to as a “dually
participating facility.” See 42 C.F.R. § 488.301. SNFs are governed by section 1819 of
the Social Security Act (Act) and NFs are subject to section 1919 of the Act.
participation requirements. By letter dated March 26, 2009,” CMS notified Petitioner
that based on the March 20 survey findings, it was determined that Petitioner was not in
substantial compliance with program requirements and that the conditions at Petitioner’s
acility constituted immediate jeopardy and substandard quality of care to residents’
ealth and safety. Petitioner was advised that the immediate jeopardy was considered
ongoing since March 10, 2009, and that its noncompliance with deficiency tag F309
(Quality of Care) constituted substandard quality of care. The notice also advised
Petitioner that CMS was imposing remedies which included a denial of payment for new
admissions (DPNA) effective March 28, 2009; a discretionary termination of Petitioner’s
provider agreement effective April 12, 2009; and as a result of the extended survey of its
acility, Petitioner was subject to a two-year decertification of its nurse aide training
program (NACTEP). CMS included with its March 26 notice letter a copy of the revised
survey findings identified as CMS Form 2567L (also commonly referred to as a
Statement of Deficiencies). Petitioner was provided with the opportunity to submit a
credible allegation of compliance within 10 days from receipt of the CMS Form 2567L.
Petitioner was also advised of its right to file an appeal before an administrative law
judge (ALJ) of the Departmental Appeals Board. CMS Exhibit (Ex.) 2, at 2-3.

A revisit survey was conducted at Petitioner’s facility on April 8, 2009 (April 8 survey).
By notice letter dated April 17, 2009, CMS notified Petitioner that based on the April 8
survey findings Petitioner had not achieved substantial compliance. The letter advised
Petitioner that the remedies that were previously imposed would continue in effect until
Petitioner either achieved substantial compliance or its provider agreement was
terminated. CMS Ex. 3. On April 23, 2009, a Federal Life Safety Code survey (April 23
survey) was completed at Petitioner’s facility. Based on the surveyors’ findings, CMS
determined that Petitioner was not in substantial compliance with program requirements,
and that the conditions at Petitioner’s facility constituted no actual harm with the
potential for more than minimum harm that was not immediate jeopardy. CMS advised
Petitioner by notice letter dated May 8, 2009, that the previously imposed remedies
would continue if Petitioner did not achieve substantial compliance within 6 months after
the last day of the March 20 survey. CMS Ex. 4.

> Attached to its request for hearing Petitioner included a copy of the March 26, 2009
CMS notice letter. Petitioner states in its request for hearing that prior to CMS’s March
26, 2009 notice, Petitioner had received several notices from the state survey agency as
well as a copy of the initial CMS Form 2567L on March 24, 2009 from the state agency.
However, since Petitioner’s appeal before me is in response to the March 26, 2009 notice
letter it received from CMS and the referenced letters Petitioner discusses are not part of
the record in this case, I do not find it necessary to discuss the correspondence Petitioner
received from the state survey agency.
Petitioner underwent a Life Safety Code review on May 26 (May 26 survey), and based
on the results of that survey CMS notified Petitioner by notice letter dated June 3, 2009,
that substantial compliance had been achieved by Petitioner as of May 26, 2009. The
letter further advised Petitioner that the DPNA penalty would run from March 28 through
May 26, 2009, and the discretionary termination remedy would not be effectuated. CMS
Ex. 5.

Petitioner, represented by counsel in this matter, filed its request for hearing before an
ALJ on May 26, 2009, challenging five of the 10 deficiencies cited in the March 20
survey.’ In its request for hearing Petitioner specified that it was limiting its appeal to the
five immediate jeopardy deficiencies, and that it was not disputing the five non-
immediate jeopardy deficiencies cited during the March 20 survey of its facility.*
Request for Hearing at 2, n.2; 3; 4-9.

The request for hearing was assigned to me on May 29, 2009 for hearing and a decision.
An Order was issued to the parties at my direction the same day. Petitioner requested and
was granted a 60-day extension to the filing deadlines outlined in my Order. On
September 28, 2009, CMS filed a notice of its intent to move for summary judgment
(CMS Notice) asserting that Petitioner failed to preserve issues for which it had a right to
a hearing. CMS Notice at 1. On November 5, 2009, CMS filed its Motion for Summary
Judgment (CMS Motion) with five documents in support of its motion which were
identified as CMS Ex. | though CMS Ex. 5. Petitioner filed it opposition brief (P. Brief)
on December 7, 2009 with two attachments marked as P. Ex. 1 and P. Ex. 2.

A prehearing conference was convened by telephone on December 14, 2009, to discuss
CMS’s motion for summary judgment. The substance of the discussion held during the
conference is memorialized in my Summary of Prehearing Conference and Order, issued
December 30, 2009. During the conference Petitioner confirmed that it was not disputing
the five non-immediate jeopardy deficiencies cited during the March 20 survey, and that
it was exclusively challenging the five immediate jeopardy deficiencies also cited during
the same survey. Petitioner stated that it was concerned about the impact the immediate

* Petitioner is appealing the following five deficiency tags, all identified at an immediate-
jeopardy level and listed at a scope and severity (s/s) of “K”: F272 (Comprehensive
Assessments); F279 (Comprehensive Care Plans); F309 (Quality of Care); F490
(Administration); and F498 (Proficiency of Nurse Aides). Request for Hearing at 4-5;
CMS Ex. 1.

* Petitioner is not challenging the following non-immediate jeopardy deficiency tags, all
listed at an s/s of “D”: F282 (Comprehensive Care Plans); F315 (Urinary Incontinence);
F364 (Food); F365 (Food); and F367 (Therapeutic Diet). Request for Hearing at 2, n.1;
CMS Ex. 1.

jeopardy deficiencies would have on CMS’s “Five Star” quality rating of its facility. I
advised Petitioner that its rating with CMS’s “Five Star” quality rating system was not an
initial determination under the regulations and, therefore, not subject to my review.”
When I asked if Petitioner operated an approved NATCP, Petitioner advised me that it
had been approved to operate a NATCEP but had not yet started the program at the time
of the March 20 survey. The parties also agreed that the five non-immediate jeopardy
deficiencies which Petitioner had chosen not to appeal were not substandard quality of
care citations. See Order of December 30, 2009.

CMS advised me at the conference of its intent to file a reply brief that day. A briefing
schedule was then developed affording Petitioner opportunity to file a sur-reply to CMS’s
reply brief. CMS filed a reply brief (CMS Reply) on December 14, 2009. Petitioner
filed a sur-reply (P. Reply) on January 15, 2010.

II. Issues

The sole issue before me is whether Petitioner has a right to a hearing on the five
immediate jeopardy level deficiencies it has appealed, when the five non-appealed
deficiencies arising from the same survey are sufficient to support the remedies imposed
by CMS.

Ill. Applicable Law

The Social Security Act (Act) sets forth requirements for long-term care facilities,
including SNFs and NFs, participating in the Medicare and Medicaid programs, and
authorizes the Secretary of Health and Human Services (Secretary) to promulgate
regulations implementing the statutory provisions. Act §§ 1819 and 1919 (42 U.S.C.

§§ 1395i-3; 1396r). The Secretary’s regulations governing SNFs’ and NFs’ participation
in the Medicare program are found at 42 C.F.R. Part 483. Survey, certification and
enforcement procedures for all long-term care facilities, including SNFs and NFs, are
contained in 42 C.F.R. Part 488.

A SNF and/or NF must maintain substantial compliance with program requirements as
set forth at 42 C.F.R. Part 483 to participate in the Medicare and Medicaid programs.
The state agency or CMS conduct surveys of nursing facilities to determine whether they
are in compliance with the requirements of Part 483. No deficiency must be found by
surveyors that present a greater risk to resident health or safety than the “potential for
causing minimal harm” or the facility will be found not in substantial compliance and a
certificate of noncompliance will issue. 42 C.F.R. §§ 488.301; 488.330. Ifa facility is

> For reasons discussed in further detail later, Petitioner’s challenge to CMS’s “Five
Star” quality rating system is duly noted and preserved for appeal in another forum. See
also Order of December 30, 2009.
found to be not in substantial compliance then CMS has the authority to impose one or
more of the enforcement remedies listed in section 1819(h) of the Act (42 U.S.C.

§ 1395i-3(h)) and 42 C.F.R. § 488.406, including a DPNA and loss of NATCEP such as
that imposed in this case. Remedies are applied on the basis of the scope and severity of
the noncompliance found during surveys. 42 C.F.R. § 488.402(b). The factors to be
considered by CMS when selecting remedies are set forth at 42 C.F.R. § 488.404.

Regulations which govern the participation in Medicare of SNFs and NFs provide that a
SNF and a NF is entitled to a hearing from a determination by CMS which results in the
imposition of a remedy against the SNF or NF by CMS. However, a SNF or a NF is not
entitled to a hearing where CMS has imposed no remedy against it. 42 C.F.R. §§ 498.3;
498.5; 488.408(g)(1).

A single deficiency is sufficient for CMS to impose a remedy of DPNA. Act

§ 1819(h)(2)(B)(i); 42 C.F.R. § 488.417(a) and (b); Northern Montana Care Ctr., DAB
No. 1930 (2004), aff'd Montana v. Leavitt, No. 04-00097-GF-SEH (D.Mont. Sept. 18,
2006).

IV. Burden of Proof

When a penalty is imposed and appealed, CMS must establish a prima facie case that the
facility was not in substantial compliance with federal participation requirements. To
prevail, the facility must overcome CMS’s showing by a preponderance of evidence.
Emerald Oaks, DAB No. 1800, at 4 (2001); Cross Creek Health Care Ctr., DAB No.
1665 (1998), applying Hillman Rehabilitation Ctr., DAB No. 1611 (1997), aff'd Hillman
Rehabilitation Ctr. v. HHS, No. 98-3789 (GEB), slip op. at 25 (D.N.J. May 13, 1999). I
adopt the burden as set forth in the Board’s decision in the Hillman case, and as stated
and discussed in detail in the Batavia Nursing and Convalescent Center and Batavia
Nursing and Convalescent Inn cases. See Batavia Nursing & Convalescent Ctr., DAB
No. 1904 (2004), aff'd Batavia Nursing & Convalescent Ctr. v. Thompson, 129 F. App’x
181 (6" Cir. 2005); and Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004),
aff'd Batavia Nursing & Convalescent Ctr. v. Thompson, 143 F. App'x 664 (6" Cir.
2005). The parties have urged no different allocation in this case.

V. Discussion
A. Summary judgment is appropriate.

Appellate panels of the Departmental Appeals Board (Board) have, on multiple
occasions, discussed the well-settled principles governing summary judgment. Summary
judgment is appropriate and no hearing is required where either: there are no disputed
issues of material fact and the only questions that must be decided involve application of
law to the undisputed facts; or, the moving party must prevail as a matter of law even if
all disputed facts are resolved in favor of the party against whom the motion is made. See
White Lake Family Medicine, P.C., DAB No. 1951 (2004); Lebanon Nursing & Rehab.
Ctr., DAB No. 1918 (2004). A party opposing summary judgment must allege facts
which, if true, would refute the facts relied upon by the moving party. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986); see, e.g., Fed. R. Civ. P.
56(c); Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr.,
DAB No. 1628, at 3 (1997) (in-person hearing required where non-movant shows that
there are material facts in dispute that require testimony); Thelma Walley, DAB No. 1367
(1992).

In examining the evidence for purposes of determining the appropriateness of summary
judgment, I must draw all reasonable inferences in the light most favorable to the non-
moving party. Brightview Care Ctr., DAB No. 2132, at 2, 9 (2007); Livingston Care
Ctr., 388 F.3 at 172 (2003); Guardian Health Care Ctr., DAB No. 1943, at 8 (2004); but
see Brightview, DAB No. 2132, at 10 (entry of summary judgment upheld where
inferences and views of non-moving party are not reasonable). Moreover, drawing
factual inferences in the light most favorable to the non-moving party does not require
that I accept the non-moving party's legal conclusions. Cf’ Guardian Health Care Ctr.,
DAB No. 1943, at 11 (“A dispute over the conclusion to be drawn from applying relevant
legal criteria to undisputed facts does not preclude summary judgment if the record is
sufficiently developed and there is only one reasonable conclusion that can be drawn
from those facts.”).

This case presents no disputed issues of material fact and the only questions that require a
decision involved the application of the law to the undisputed facts. Accordingly, there
being no genuine issues of material fact, summary judgment is appropriate.

B. Petitioner did not challenge CMS’s determination of its noncompliance
with five non-immediate jeopardy deficiency citations (F282, F315, F364,
F365, and F367). By operation of law, these findings of noncompliance are
administratively final.

It is CMS’s position that: (1) all the non-appealed deficiencies (five deficiency tags)
from the March 20 survey provide a fully adequate basis for all the remedies imposed; (2)
that a hearing on the five immediate jeopardy deficiencies which Petitioner appeals
would not result in any change in the remedies imposed; and (3) Petitioner has no right to
a hearing on CMS’s “Five Star” quality rating of its facility. CMS Motion at 5, 6-7.

As discussed above, with the exception of CMS’s determination that Petitioner’s facility
was not in substantial compliance with five immediate jeopardy level deficiencies,
Petitioner does not appeal any of the non-immediate jeopardy deficiencies cited;
specifically, tags F282, F315, F364, F365, and F367. CMS’s determination that
Petitioner was not in substantial compliance with those non-appealed program
participation requirements is therefore final

and binding.° 42 C.F.R. § 498.20(b). An

initial determination is final and binding unless reversed or modified by a hearing
decision, or under other circumstances not applicable here. 42 C.F.R. § 498.20(b).

1. Petitioner did not reserve jurisdiction for the non-immediate

jeopardy deficiency tags

A facility affected by an initial determinatio:

F282, F315, F364, F365, and F367.

n and seeking review of the determination on

appeal must invoke jurisdiction in its request for hearing. If not, the determinations and

the findings on which they are based becom:

e final, non-reviewable, and binding on the

affected facility by operation of law. 42 C.F.R. §§ 498.20(b); 498.70(a).

In reviewing the contents of Petitioner’s request for hearing in order to determine
whether the right to a hearing has accrued with respect to all, some, or none of the issues
stated in the request I find that Petitioner timely filed its request for hearing on May 26,
2009, but appealed only five deficiency tags, all at an immediate jeopardy scope and
severity. Petitioner’s request for hearing did not seek review or challenge any of the

other five reported deficiency tags and, as no

Request for Hearing at 4-5; 42 C.F.R. § 498

ted above, they have now become final.
.20(b). Thus, Petitioner’s limitation of its

appeal to the five immediate jeopardy deficiencies enumerated above has in effect left in

place and beyond the reach of the appeal be:
citations and remedies CMS imposed.

2. CMS had a basis to impo:

The administratively final five deficiencies al

According to the scope and severity matrix
scope and severity of level D indicates a de:
the potential for more than minimal harm th

fore me the five non-appealed deficiency

se a DPNA against Petitioner.

Il have a D scope and severity level.
published in the State Operations Manual, a
ficiency that presents no actual harm but has
at does not amount to immediate jeopardy.

The matrix, which is based on 42 C.F.R. § 488.408, specifies which remedies are

required and optional at each level based up

§ 7400E. D-level deficiencies are classified as

scope and severity level, the matrix specifie:

on the frequency of the deficiency. See SOM
“isolated.” For deficiencies at the D
's that Category 1 remedies are required to be

imposed, and Category 2 remedies are optional.

A DPNA is a Category 2 remedy. 42 C.F.R. § 488.408(d). The regulations at 42 C.F.R.

§ 488.408(d)(3) provide that CMS may app
to any deficiency except when the facility is
deficiency constitutes immediate jeopardy.

ly one or more of the remedies in Category 2
in substantial compliance or when the
In the case before me, Petitioner’s

° These now-final deficiencies are relevant to my analysis of the imposed remedies and I

therefore discuss them in this decision wher

e it is appropriate to do so.
administratively final deficiencies include five deficiencies at the D level, which establish
that Petitioner was not in substantial compliance. Moreover, the non-appealed
deficiencies are, in and of themselves, sufficient to justify the DPNA.’ Even if Petitioner
were to prove that it was in substantial compliance with the appealed immediate jeopardy
citation the remedies imposed by CMS would not be nullified or in any other way
affected. The basis for a Category 2 DPNA lies in the now administratively final
deficiencies, which are binding on Petitioner.

Accordingly, I find that CMS was authorized under the regulations to impose a Category
2 DPNA remedy against Petitioner. 42 C.F.R. § 488.408(d)(1)(i).

3. Petitioner chose to limit its appeal before me.

The regulation at 42 C.F.R. § 498.40(c) provides that an ALJ may extend the time for
filing a request for hearing for good cause shown. Here, Petitioner made a thoughtful and
deliberate choice to limit its appeal to the five immediate jeopardy deficiency tags
specifically addressed in its request for hearing and as confirmed by its counsel during
the December 14, 2009 pre-hearing conference. Request for Hearing at 2 n.2; Order of
December 30, 2009. Petitioner has not requested and there is no reason to invoke my
discretionary authority to allow Petitioner to amend its hearing request, or to add new
issues to those already before me in this case. 42 C.F.R. §§ 498.40(c)(2); 498.56(a).

4. The State agency must withdraw Petitioner’s authority to conduct
NATCEP based upon the imposition against Petitioner of a DPNA.

State agencies are required to withdraw a facility’s authority to conduct NATCEP for a

period of two years when CMS imposes a D!

PNA. Act § 1819(f)(2)(B)(iii)(I\(c); 42

C.F.R. §§ 483.151(b)(2)(v), (e)(1). Here, CMS imposed a DPNA based on Petitioner’s

noncompliance with five non-immediate jeo

pardy deficiencies which, for the reasons

previously discussed, are now final. Thus, withdrawal of Petitioner’s authority to

conduct a NATCEP is required, even if Petit
challenge of the five immediate jeopardy de

ioner were to prevail on the merits in its
ficiency tags.

Accordingly, I find that the remedies imposed on Petitioner by CMS, the DPNA and the

loss of NATCEP approval for two years, are
now-final deficiencies, without reliance on t
appeal. 42 C.F.R. §§ 408.408(d)(1)(i); 483.

fully supported by the five non-appealed and
he five deficiency tags that Petitioner did

51 (b)(2)(v), (1).

T See Act § 1819(h)(2)(B)(i); 42 C.F.R. § 488.417(a) and (b); Northern Montana Care

Ctr., DAB No. 1930 (a single deficiency is s'
DPNA).

ufficient for CMS to impose a remedy of
C. A substandard quality of care citation provides a long-term care
facility with an independent basis to appeal the remedy of withdrawal
of approval of its NATCEP.

In July 1999, the Secretary corrected a perceived regulatory inequity by issuing an
interim final regulation permitting providers opportunity to appeal the loss of NATCEP
on an extended or partial extended survey triggered by findings of substandard quality of
care. The Secretary explained that experience had shown that the loss of NATCEP could
have a serious impact on some facilities, given existing constraints in availability of nurse
aides and training programs, and that 42 C.F.R. § 498.3(b) should be revised to provide
full hearing to review the underlying factual basis of the substandard quality of care
findings, even where no other remedy was being imposed. 64 Fed. Reg. 39,934, 39,935
(July 23, 1999). The revision was effectuated through a new regulatory provision set out
at 42 C.F.R. § 498.3(b)(16) which states that CMS makes initial determinations with
respect to “[t]he finding of substandard quality of care that /eads to the loss by a SNF or
NF of the approval of its nurse aide training program.” (emphasis added). The plain
language of the regulation makes it clear that a substandard quality of care finding is an
initial determination and thus subject to appeal by a facility when it results in a facility’s
loss of a NATCEP that is currently in existence.

In the case before me, CMS’s notice letter of March 26, 2009 informed Petitioner that the
deficiency tag at F309 was identified as substandard quality of care. Petitioner was then
advised that its NATCEP was subject to withdrawal of approval. CMS Ex. 2 at 3.

1. Whether Petitioner had an NATCEP is unclear.

At the December 14, 2009 pre-hearing conference, Petitioner advised me that it had been
approved to operate a NATCEP but had not yet started the program at the time of the
March 20 survey. See Order of December 30, 2009. However, it is not clear from the
record before me if Petitioner had started a NATCEP program, or if Petitioner was
approved and had only sought applications for prospective trainees in a yet-to-be-
instituted NATCEP. The distinction is important since the preamble to the regulation
adopting section 498.3(b)(16) clearly states that review is not available to a facility that is
neither operating a nurse aide training program nor seeking approval to operate one. See
generally 64 Fed. Reg. 39,934; see, e.g., Briarcliff Nursing & Rehab. Ctr., DAB CR1228
(2004); St. Charles Health Care, DAB CR1182 (2004).

For purposes of my decision, I shall draw all reasonable inferences in a light most
favorable to Petitioner, the nonmoving party in the case before me, and accept as true the
alleged fact that Petitioner had a NATCEP in operation that met the requirements of the
drafter’s intent at the time material to this case.
10

2. The State agency is mandated to withdraw Petitioner's NATCEP
approval as a result of imposition of the DPNA.

Both the statute and the regulation are clear as to the prohibition of approval for facilities
who have been subjected to a DPNA. With the establishment of the DPNA as discussed
above, the statute at section 1819(f)(2)(B)(ili)(1)(c) makes clear that the Secretary “shall
prohibit approval of such a [NATCEP] program . . . (1) offered by or in a skilled nursing
facility which, within the previous 2 years . . . (b) has been subject to an extended survey
(or partial extended survey) under subsection (g)(2)(B)(i) ... .” Moreover, pursuant to
42 C.F.R. §§ 483.151(b)(2)(v) and (e)(1), a state may not approve and must withdraw
any prior approval of a NATCEP offered by a facility that has been subject to a DPNA.

Therefore, even if Petitioner had an operating NATCEP, the mandatory DPNA imposed
by CMS for the non-appealed five non-immediate jeopardy tags which are
administratively final automatically results in the state-mandate to withdraw Petitioner's
NATCEP approval. Act § 1819(f)(2)(B)(iii)(D)(c); 42 C.F.R. §§ 483.151(b)(2)(v), (e)(1).
It is important to note that the imposition of the DPNA triggered the mandatory, non-
discretionary obligation of the Secretary to deny approval of Petitioner’s NATCEP
program. No ruling that I could make in this case that is within my jurisdiction could
otherwise change the operation of the Secretary’s mandatory obligation.

D. CMS’s “Five Star” quality rating of Petitioner’s facility is neither
an enforcement remedy nor an initial determination subject to my
review.

Petitioner claims it is entitled to challenge the immediate jeopardy deficiencies identified
during the March 20 survey because those deficiencies resulted in CMS imposing an
“alternative remedy” of a negative “Five Star” rating of its facility. Petitioner avers that
this rating will severely prejudice Petitioner in its ability to market, admit, and retain
residents; and will result in an adverse impact on the facility’s reputation, financial and
operational status. Petitioner argues that in adopting the “Five Star” program, CMS made
it clear that facilities whose rating is adversely affected will have a full and fair
opportunity to challenge those survey findings in order to secure a more favorable rating.
P. Brief at 5; Request for Hearing at 2.

Petitioner is mistaken in its claim that CMS’s “Five Star” quality rating program is an
“alternative remedy.” The regulations are very specific as to what constitutes an
“alternative remedy” and CMS’s “Five Star” quality rating program is not included in
that list. The word “remedy” is defined in 42 C.F.R. § 488.406. An action take by CMS
is a “remedy” if the action is one which falls within the definition of a remedy. Remedies
are defined to include: termination of participation; appointment of temporary
management; denial of payment; denial of payment for new admissions; imposition of a
civil money penalty; imposition of State monitoring of performance; directed transfer of
11

residents; directed closure of a facility and transfer of the facility’s residents; imposition
of a directed plan of correction; directed in-service training; and alternative or additional
State remedies that are approved by CMS. 42 C.F.R. § 488.406(a). If an action taken by
CMS is not one of these remedies, then there is no right to a hearing from the action.
Consequently, the “Five Star” quality rating program is neither a remedy imposed by
state government agencies, nor it is a remedy imposed by CMS on facilities. See 42
C.F.R. § 488.406 (b)-(c).

Petitioner’s reliance on 42 C.F.R. § 431.153(h) to support its argument that the “Five
Star” rating is subject to my review is also misplaced. As mentioned earlier, Petitioner is
a “dually participating facility” and the statutory and regulatory requirements for
Petitioner’s participation are found at sections 1819 and 1919 of the Act and at 42 C.F.R.
Part 483, and enforcement and hearing rights are found at 42 C.F.R. §§ 488 and 498. The
regulation Petitioner cites to grants ALJs and appellate panels of the Board jurisdiction to
review cases where CMS has either terminated the provider agreement or has imposed an
alternative remedy against a NF who participates in the Medicaid program and, is
therefore, inapplicable to the case before me. Here, based on Petitioner’s participation in
the Medicare program, CMS has determined to directly impose remedies against
Petitioner.

Petitioner’s right to review and my authority to conduct the review are delineated at 42
C.F.R. Part 498. My jurisdiction is limited to review of “initial determinations” listed at
42 C.F.R. § 498.3(b). CMS’s “Five Star” quality rating program is used by CMS to
provide public awareness of the survey results of facilities. See CMS Motion at 7; P. Ex.
1 at 3; P. Ex. 2, at2. As such, CMS’s “Five Star” quality rating system is not listed as an
initial determination in 42 C.F.R. § 498.3(b). Consequently, the rating system is not an
initial determination over which | have jurisdiction and authority to review, and which
Petitioner has a right to a hearing before me.

Finally, Petitioner claims that it has been subjected to harm to its “reputation, financial
status, and operational abilities” and based on this harm and the 8th circuit's decision in
Grace Healthcare of Benton, | should exercise jurisdictional authority over Petitioner’s
appeal. Grace Healthcare of Benton v. U.S. Dep't of Health & Human Servs., 589 F.3d
926 (8" Cir. 2009), amended at 603 F.3d 412 (2009). The Court in Grace commented
that if Grace’s assertion that “unreviewed CMS findings of immediate jeopardy remain
accessible to the public and can be used to support damage claims against the provider in
private litigation” are true, then “that is a material adverse impact, in which case all
findings of immediate jeopardy that are appealed should either be upheld or reversed by
the ALJ or the DAB or be expunged from the agency's public records.” 589 F.3d at 935
(emphasis added).

I first note that appellate panels of the Board have consistently held that such claims as
the one Petitioner here advances do not invoke hearing rights when the regulations are
12

clear that a petitioner is not entitled to a hearing. See Florida Health Sciences Ctr., Inc.
d/b/a Tampa General Hosp., DAB No. 2263 (2009); Lakewood Plaza Nursing Ctr., DAB
No. 1767, at 8-10 (2001).

Second, the Board has addressed the recent 8th Circuit Court of Appeals’ dicta in Grace.
In a Ruling issued on February 22, 2010, the Board declined a request to reopened and
reconsider its decision in Golden Living Center - Frankfort, DAB No. 2296 (2009).
Petitioner in Golden Living requested the reopening based, in part, on the 8th Circuit
Court of Appeals’ dicta in its decision in Grace. However, in addressing Petitioner’s
request and reliance on the dicta in the Court’s decision, the Board stated that “the Grace
dicta . .. does not mandate that the ALJ or the Board must resolve noncompliance
findings that are not material to the outcome of an appeal before it. Nor does it opine that
either the ALJ or the Board, as opposed to CMS or the Secretary, is empowered to order
expungement of CMS’s public records or to . . . order removal of such findings 'from the
administrative record for all purposes. ’” See Golden Living Ctr. - Frankfort, DAB No.
2296 (2009), reopening denied, DAB Ruling No. 2010-2 (Feb. 22, 2010).

In applying the Board’s analysis in Golden Living Center - Frankfort, as confirmed by
the Board’s February 22, 2010 Ruling in that case, I find no reason to provide Petitioner
with a hearing to address the five appealed immediate jeopardy deficiencies as these
deficiency citations are not material to the outcome of this appeal. As has been
established, the deficiencies which Petitioner did not appeal suffice to support the
remedies CMS has imposed. See Golden Living Ctr. - Frankfort, DAB Ruling No. 2010-
2, at 3; Western Care Management Corp. d/b/a/ Rehab Specialties, DAB No. 1921, at 19
(2004).

I find that the five non-appealed and administratively final deficiencies from the March
20 survey are sufficient to support the DPNA and the resulting withdrawal of Petitioner’s
NATCEP. Accordingly, I conclude that Petitioner has no right to a hearing, and its
request for hearing must be dismissed pursuant to 42 C.F.R. § 498.70(b).

VI. Conclusion

For the reasons stated and discussed in this decision, Petitioner has no right to a hearing
and its request for hearing must be dismissed. 42 C.F.R. §§ 498.3; 498.5. Accordingly, I
grant CMS’s Motion for Summary Judgment and I dismiss Petitioner’s request for
hearing.

/s/
Alfonso Montafio
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In re CMS LCD COMPLAINT: Wheelchair Options/
Accessories (L11451),

Petitioner,
Vv.
Centers for Medicare & Medicaid Services.
Docket No. C-10-542
Decision No. CR2205

Date: August 20, 2010

AMENDED DECISION

I find to be reasonable Local Coverage Determination (LCD) 11451. I therefore deny the
challenge of Petitioner.

I. Background

On March 9, 2010 Petitioner filed a challenge to LCD 11451, a local coverage
determination issued by CIGNA, a Medicare contractor. This challenge was assigned to
me for a hearing and a decision pursuant to 42 C.F.R. Part 426. I reviewed the challenge
and found it to be acceptable. I then directed CIGNA to furnish me and Petitioner with
its LCD file. CIGNA moved that I dismiss the challenge and I denied the motion.
CIGNA then furnished its file to Petitioner and to me. I afforded Petitioner the
opportunity to review and to respond to the documents that it had been furnished by
CIGNA. Petitioner filed a document that it styled “Petitioner’s Motion for a Decision
that CIGNA’s LCD Record is Not Valid for Non-coverage of Power Seat Elevators on
Wheelchairs” (Petitioner’s motion for a decision) and 13 exhibits. I receive the exhibits
into the record of this case as P. Ex. 1 — P. Ex. 13. I also receive into the record
Petitioner’s hearing request with attached exhibits “A” through “G” and CIGNA’s LCD
file with attached exhibits 1 — 4.

This case is now ready for decision. Neither CIGNA nor Petitioner requested to present
testimony in person. I find the LCD record to be complete and adequate for me to decide
this case. Moreover, I find no need for an in-person hearing based on what has been
presented by the parties. This case may be decided based on the written record. 42
CFR. § 426.43 1(a)(2).

IL. Issue, findings of fact and conclusions of law
A. Issue

The sole issue in this case is whether LCD 11451 satisfies the reasonableness standard
defined by 42 C.F.R. § 426.110.

B. Findings of fact and conclusions of law
I make the following findings of fact and conclusions of law (Findings).

I. LCD 11451 satisfies the reasonableness standard defined by 42 C.F.R.
§ 426.110.

In deciding any challenge on the merits to an LCD the sole issue that I may hear and
decide is whether the LCD satisfies the reasonableness standard of 42 C.F.R. § 426.110.
42 C.F.R. § 426.425(c). The reasonableness standard states that:

In determining whether LCDs . . . are valid, the adjudicator must uphold a
challenged policy (or a provision or provisions of a challenged policy) if
the findings of fact, interpretations of law, and the applications of fact to
law . . . are reasonable based on the LCD . . . record and the relevant record
developed before . . . [the administrative law judge].

42 C.F.R. § 426.110. This standard requires me to uphold a challenged LCD if I find that
the contractor’s determination is reasonable. In deciding whether an LCD is reasonable I
do not substitute my policy judgments and conclusions for that of the contractor. If I find
that the LCD is reasonable based on the evidence before me I must sustain the LCD even
if I could find that the evidence might support a different policy determination. I do not
decide what an LCD should cover but rather, whether the distinctions made by an LCD
are reasonable based on the objective evidence before me.

Nor may I decide the reasonableness of an LCD determination based on the unique facts
of an individual beneficiary’s case. The issue before me is not whether any particular
Medicare beneficiary might benefit from the care that is excluded from coverage by an
LCD but whether the LCD determination is reasonable when considered across the entire
spectrum of beneficiaries who might seek to have a particular item or service covered.
Thus, an LCD may be determined to be reasonable even if it has the consequence of
denying an individual beneficiary coverage which might benefit him or her under the
unique circumstances of his or her case.

The specific issue in this case is whether the portion of LCD 11451, as applied through a
subsequent CIGNA policy statement, denying Medicare coverage for seat elevators on
powered wheelchairs is reasonable. I find it to be reasonable and so I deny Petitioner’s
challenge to the LCD.

On December 3, 2009 CIGNA issued an advanced determination of Medicare coverage
to Medical Mobility, Inc., (Medical Mobility) a durable medical equipment supplier in
Murfreesboro, Tennessee. Exhibit D to Petitioner’s hearing request. The determination
allowed coverage to Petitioner for a multiple power option power wheelchair. The
determination specifically excluded coverage for a seat elevator. In denying coverage for
this item, CIGNA stated:

A seat elevator is considered not primarily medical in nature and is a non-
covered option on a power wheelchair.

Id. at 2. CIGNA advised Medical Mobility that the determination was based on
documents that included, among other things, LCD 11451, and document that is entitled
Policy Article for Wheelchair Options/Accessories A20284.

A seat elevator on a powered wheelchair is an item that electronically raises and lowers
the seat of the wheelchair thus raising and lowering the wheelchair’s occupant. It may be
used for, among other things, enabling the occupant to reach items — such as a shelf or a
cabinet drawer — that would not otherwise be accessible to him or her. It may also be
used to raise the occupant to a level so that he or she may speak face to face with another
individual. Petitioner contends that, in his case, the seat elevator also may be used as a
means of assisting him to transfer in and out of his wheelchair and participate in the
various activities of daily living such as toileting, bathing, dressing, feeding, grooming,
and to be able to exit his home expediently in the case of an emergency. Petitioner’s
hearing request at 2. For purposes of this decision I accept Petitioner’s assertion as
truthful.

To summarize my findings, I conclude that LCD 11451 is consistent with the
requirements of law and with CMS’s policy governing reimbursement for motorized
wheelchair accessories. In declining to reimburse for powered seat elevators the LCD
restates a policy that CMS has expressed in other documents. I find the LCD to be
reasonable because it is consistent with CMS’s policy. CMS distinguishes between
reimbursable durable medical equipment that is determined to be medically necessary
and equipment which, while of benefit to the user, is not medically necessary. Powered
seat elevators in motorized wheelchairs have been found by CMS to fall in that latter
category and, for that reason, have been held not to be reimbursable. LCD 11451
reiterates that conclusion.

Section 1861(n) of the Social Security Act (Act) defines “durable medical equipment” as
items that are reimbursable under the Medicare program. The term includes:

a power-operated vehicle that may be appropriately used as a wheelchair,
but only where the use of such a vehicle is determined to be necessary on
the basis of the individual’s medical and physical condition .. . .

Id. The Act draws a distinction between a powered wheelchair that is a necessary
element of an individual’s medical care and one that is issued for another purpose, such
as for the convenience of the beneficiary or to improve the quality of his or her life. Only
those devices that are necessary will be covered under Medicare.

The LCD at issue in this case was first effective on or after October 1, 1993 and was
revised to address services performed on or after January 1, 2009. The LCD addresses
options and accessories for wheelchairs. It provides, generally, that:

Options and accessories for wheelchairs are covered if the patient has a
wheelchair that meets Medicare coverage criteria and the option/accessory
itself is medically necessary. . . .

Exhibit B to Petitioner’s hearing request at 2. LCD 11451 does not provide coverage for
powered seat elevator systems. It does cover a “power seating system”, which is
specified as “tilt only, recline only, or combination tilt and recline — with or without
power elevating legrests”, but only if certain criteria not relevant to this case are met. Id.
at 4. Essentially, the LCD distinguishes between an elevating mechanism that is intended
to mechanically assist the occupant of a wheelchair from a seated to a standing position
and one which raises and lowers the seat of a wheelchair in order to assist the occupant of
the chair with activities of daily living. The former device is considered to be medically
necessary in the appropriate case whereas the latter, while it may improve a beneficiary’s
quality of life, is not considered to be medically necessary.

The LCD also contains “revenue codes” which are specific codes that providers may use
to identify items for which they claim reimbursement. /d. at 6. I do not infer from the
inclusion of any item under a revenue code that the item will be reimbursed if a provider
seeks reimbursement for that item. Rather, the revenue codes are neutral in the sense that
they allow a provider to describe specifically the items for which it seeks reimbursement
without suggesting that any of these items will be reimbursed if a claim is filed for it.
Therefore, although revenue code item E2300 describes a “power wheelchair accessory,
power seat elevation system”, the presence of this item under the listed codes does not
mean, necessarily, that Medicare will reimburse for it.

On October 14, 2003, Walter Rutemueller, a technical advisor to the Division of Durable
Medical Equipment, Centers for Medicare Management of the Centers for Medicare and
Medicaid Services (CMS), issued an opinion directed to all durable medical equipment
regional carrier medical directors. Ex. 1 of the LCD file. Mr. Rutemueller addressed
specifically the issue of whether certain accessories to power wheelchairs, including
“power elevation”, were reimbursable Medicare items. /d.. The opinion, which was
issued in response to an inquiry from a carrier, stated that CMS would consider certain
features including “power elevation” “to be noncovered by reason of 1861(n)”. Although
this opinion is not lengthy or detailed, it is consistent with the distinction between
wheelchair accessories that are determined to be medically necessary and those that are
not necessary but which may enhance the quality of life of the user. CMS concluded,
consistent with section 1861(n) of the Act, that powered seat elevators were not
medically necessary and, therefore, not covered.

CMS explained why powered seat elevators were not reimbursable in much greater detail
in a National Coverage Determination (NCD) entitled “NCD for INDEPENDENCE
iBOT Mobility System (280.15). Exhibit 3 of the LCD file. This NCD addressed a
specific type of motorized wheelchair which it described as:

a battery-powered mobility device that relies on a computerized system of
sensors, gyroscopes, and electric motors to allow indoor and outdoor use on
stairs as well as on level and uneven surfaces. The mobility system
incorporates a number of different functions, including: a) Standard
Function that provides mobility on smooth surfaces and inclines at home,
work, and in other environments; b) 4-Wheel Function that provides
movement across obstacles, uneven terrain, curbs, grass, gravel, and other
soft surfaces; c) Balance Function that provides mobility in a seated
position at an elevated height; d) Stair Function that allows for ascent and
descent of stairs, with or without assistance; and e) Remote Function that
assists in the transportation of the product while unoccupied. . . .

Id. at 1-2 (emphasis added). The NCD concluded that the Standard Function was
reimbursable because it met the statutory definition of a motorized wheelchair in section
1861 of the Act as a wheelchair used in a beneficiary’s home that is reasonable and
necessary for beneficiaries who have a mobility deficiency sufficient to impair their
participation in mobility-related activities of daily living. However, the NCD also
concluded that the other functions, including the Balance Function, did not meet the
statutory definition of a motorized wheelchair. Consequently, the NCD excluded these
other functions from Medicare reimbursement.
The NCD was supported by extensive analysis. In a request for public comment dated
January 26, 2006, CMS stated a four prong test for determining whether an item would
qualify for reimbursement as durable medical equipment. Exhibit 2 of the LCD file at 7.
The test contains the following elements: (1) an item is “durable” if it can withstand
repeated use; (2) it is “medical equipment” if it is used primarily and customarily for a
medical purpose and not for environmental control or to enhance the environment in
which the beneficiary is placed; (3) it must be useful for treatment of an illness or injury
or to the improvement of a malformed body member; and (4) the individual must have a
medical need for the item in his or her home. /d. Using this test, the analysis of the
iBOT 4000 system concluded that there was not clinical evidence showing that anything
other than the Standard Function on the iBOT 4000 was customarily used for a medical
purpose and not for environmental control and/or enhancement. /d. at 15. Referring
specifically to the Balance Function (which includes seat elevation capability) the
analysis found:

Seat elevation serves the same purpose as other equipment that assist all
persons in reaching items out of reach or having an “eye-level”
conversation with a standing person. We believe that these are common
needs among many persons and that a seat elevation function that assists a
patient in accomplishing these activities is not presumptively medical in
nature. In addition, the clinical trials did not demonstrate how the Balance
Function serves a medical purpose to treat an illness or injury, or to
improve the functioning of a malformed body member. . . .

Id. at 17. The analysis distinguished between a powered seat elevator such as that
utilized by the iBOT 4000 and a Medicare-covered lift that effectively assists a
beneficiary in standing up and sitting down without other assistance. By contrast, the
Balance Function maintains the user in a seated position. Jd.

The NCD applies to a specific mechanical device, the iBOT 4000. However, the
principles of this NCD are entirely consistent with what CMS has stated over the years:
seat elevator mechanisms in motorized wheelchairs are not reimbursable items under
Medicare because they are intended primarily to enhance the quality of a beneficiary’s
life and not for a medical purpose such as treatment of an illness. Consequently, they are
not durable medical equipment within the meaning of section 1861(n) of the Act.

Recently, CIGNA reiterated its policy not to cover powered seat elevators. Ina
document entitled Article for Wheelchair Options/Accessories — Policy Article —
Effective January 2010 (A20284), CIGNA stated that a power seat elevation feature
(E2300) is noncovered because it is not primarily medical in nature. Exhibit “CEE” to
hearing request at 2.
CIGNA’s policy not to reimburse for powered seat elevators is reasonable. It embodies a
distinction that CMS has long maintained, that being a distinction between that which is
medically necessary and that which may be beneficial but which is not medically
necessary. Powered seat elevators have been held by CMS and by CIGNA not to be
medically necessary because, although they may enhance the quality of beneficiaries’
lives, they do not treat illnesses or promote cures.

LCD 11451 is not supported by extensive medical research done by CIGNA. But, there
is no requirement in law that CIGNA perform such research. CIGNA is entitled to rely
on research performed by other entities — in this case CMS -— if that research provides
reasonable support for the policy expressed in an LCD. As I have discussed, CMS
performed extensive analysis in analyzing the features of the iBOT 4000. Its analysis
established that the powered seat elevator function of that device is not medically
necessary. CIGNA is entitled to rely on that research and analysis in implementing its
LCD and in follow-up policy statements that apply to power seat elevator devices.

Where an NCD covers the same issue as is covered by an LCD the policy expressed in
the NCD has the force of law and is binding on the carriers. Thus, any LCD issued by a
carrier must be consistent with the policy expressed in an NCD. The NCD which I have
discussed in this case addresses the power seat elevator function of a specific device, the
iBOT 4000, and not a// power seat elevators. But, the analysis that underlies the finding
of the NCD concerning power seat elevators is clearly more broadly applicable.
Essentially, the NCD concludes that power seat elevators that raise and lower a
wheelchair’s occupant — as distinguished from those that tilt the occupant into a standing
position — are not medically necessary. CIGNA acted entirely reasonably in
implementing that policy in its LCD.

Petitioner argues that CIGNA’s LCD determination is invalid in that it does not rely on
medical evidence such as scientific articles, technology assessment, or clinical guidelines
to support its determination that power seat elevators are not medically necessary.
Petitioner’s motion for a decision at 1. However, there is no legal requirement that a
carrier must independently perform an evidentiary review as a prerequisite to issuing an
LCD if the policy expressed in the LCD is consistent with a broader policy expressed by
CMS or with the law. I do not find the LCD in this case to be reasonable based on
research performed by CIGNA. I find it to be reasonable because it is consistent with a
policy determination by CMS, a policy determination that was extensively analyzed and
supported.

Petitioner asserts also that CIGNA is relying only on a “two sentence email that offers a
conclusory opinion that seat elevators do not meet the definition of . . . [durable medical
equipment] because they are not primarily medical in nature and thus, are not covered.”
Petitioner’s motion for a decision at 1. That is not an accurate characterization of what
CIGNA relies on. As I have discussed, CIGNA relies on a policy of CMS which denies
reimbursement for power seat elevator devices. The e-mail alluded to by Petitioner is
consistent with that policy. Exhibit 1 of the LCD file.

Petitioner argues that Exhibits 2 and 3 of the LCD file should be excluded from evidence
as irrelevant to the issue of whether LCD 11451 is reasonable. That is so, argues
Petitioner, because 42 C.F.R. § 426.418 defines an LCD record to be limited to medical
evidence considered “on or before the date the LCD was issued. . . .” Petitioner asserts
that LCD 11451 was issued prior to the NCD governing the iBOT 4000 and that NCD’s
supporting analysis. Consequently, according to Petitioner, Exhibits 2 and 3, which
relate to that NCD, are irrelevant.

I disagree with this analysis. First, LCD 11451 is not a static document. It has been
revised and was clarified most recently by Policy Statement A20284 issued in January
2010. Documents generated prior to the issuance of clarifications and revisions to the
LCD obviously are generated on or before those clarifications and are, therefore, part of
the LCD file.

Moreover, Exhibits 2 and 3 are relevant to determining CMS’s policy even if they are
not, strictly speaking, part of the LCD record. In hearing and deciding this case I am not
limited to considering only evidence that is part of the LCD record. I may consider all
evidence that is relevant and Exhibits 2 and 3 are clearly relevant as evidence of CMS’s
policy and as a rationale for CIGNA’s clarification of its LCD to expressly exclude
reimbursement for power seat elevators. 42 C.F.R. § 426.110.

Petitioner also argues that the iBOT 4000 is distinguishable from a generic power seat
elevator because, allegedly, the iBOT 4000 has only two positions, down and up.
Petitioner’s motion for a decision at 12. Petitioner contends that the iBOT 4000 “Balance
Function” cannot provide the kinds of assistance that generic power seat elevators
provide due to this limited “up” or “down” positioning of the device. However, that is
not what was found in the analysis of the iBOT 4000, which concluded that the seat
elevator function of the iBOT 4000 could be used to help the occupant perform activities
that included reaching items that are out of reach and other activities of daily living.
Furthermore, Petitioner has not provided me with technical evidence proving that the
iBOT 4000 is so limited in its functions as Petitioner contends.

Petitioner next argues that “other contractors of CMS and other U.S. government
agencies” define power seat elevators as durable medical equipment. Petitioner’s motion
for a decision at 4. Thus, Petitioner contends, CIGNA’s exclusion of power seat
elevators from reimbursement is inconsistent with those other entities’ policies and is
unreasonable. Jd. As support for this contention Petitioner asserts that, in 2003, an entity
that Petitioner describes as “SADMERC (now known as PDAC)” issued a code for
power seat elevators “which could only have occurred if the product meets the definition
of DME.” Jd. According to Petitioner, PDAC is the entity with which CMS contracts to
develop billing codes for items for which reimbursement is claimed. Jd. at 4-5.
Logically, according to Petitioner, PDAC would not have developed a code for powered
seat elevators (E2300) unless these devices are reimbursable. Id. at 5

I disagree. As I discuss above, the reimbursement code is a system for describing what is
claimed by a provider. It is a classification system which enables both the provider and
the reimbursing entity to know what is being claimed without requiring a detailed verbal
description of the claimed item. But, the fact that a code exists for an item does not mean
that a policy determination has been made that the item will be reimbursed if claimed.
Consequently, the fact that a code exists for a power seat elevator does not establish that
it is durable medical equipment.

As support for its argument Petitioner relies on an affidavit from a former medical
director of SADMERC in which the affiant asserts that, if a power seat elevator does not
meet the definition of DME, a code would not have been issued for the product. P. Ex. 2.
I find this assertion not to be credible in the absence of supporting evidence explaining
why the code was issued. Moreover, the argument flies in the face of that which is
obvious. CMS determined that power seat elevators that raised and lowered their
occupants but which did not tilt as an assist to standing were not durable medical
equipment. The fact that a reimbursement code exists for a power seat elevator does not
derogate from the policy determination that is embodied in the NCD.

Petitioner also argues that various State Medicaid agencies reimburse for seat elevators.
Petitioner has not provided supporting evidence to show precisely what these entities
reimburse for or under what circumstances. Moreover, the fact that reimbursing entities
may come to different conclusions does not mean that any of their conclusions are,
necessarily, unreasonable.

Petitioner asserts additionally, that the Food and Drug Administration classifies mobility
devices as physical medicine devices. Therefore, according to Petitioner, they must
logically be durable medical equipment. But, the statutory function of the Food and Drug
Administration is not the same as that of Medicare. CMS and its contractors have the
independent responsibility to determine what is reimbursable under Medicare. They are
not bound in their determinations by the classifications that the Food and Drug
Administration might make.

Petitioner argues at length that power seat elevators are, in fact, medically necessary
devices. Petitioner’s motion for a decision at 5 — 8. I do not find Petitioner’s arguments
to be persuasive for two reasons. First, Petitioner’s arguments aim at proving that it may
be reasonable for Medicare to cover power seat elevators under certain circumstances.
Even if that is so it does not prove that CIGNA’s policy determination as expressed in
LCD 11451 and Policy Statement A20284 is unreasonable.
10

Second, many of the arguments stated by Petitioner supporting coverage for power seat
elevators address quality of life as opposed to medical issues. Section 1861(n) of the Act
does not define durable medical equipment and, in particular, powered wheelchairs, to
include devices that improve the quality of a beneficiary’s life. Devices are not covered
if they are not medically necessary. Power seat elevators — even if they improve the
quality of beneficiaries’ lives — do not fall within the Act’s definition of durable medical
equipment if they are not medically necessary.

For example, Petitioner cites to the affidavit of Teresa Plummer, a consultant, as support
for its argument that power seat lifts are medically necessary:

The seat elevator has significant medical uses and is an essential
component of power wheelchair for many clients. I have worked with
pediatric and adolescent clients using power wheelchairs who require the
use of a seat elevator in order to participate in essential activities of daily
living such as brushing their teeth, reaching into the refrigerator for
beverages or food, turning lights on, elevator doors open, and temperature
controls in the home environment. Additionally, seat elevators are
necessary for independent and caregiver assisted transfers to and from the
wheelchair, toileting, bathing, grooming, eating, and dressing.

P. Ex. 5 at § 2; Petitioner’s motion for a decision at 6-7. Assuming the truth of these
assertions, they are not a description of medically necessary functions. Rather, they
describe precisely the sort of activities that CMS determined to be quality of life related
and not medically necessary. I do not disagree with Petitioner that power seat elevators
may dramatically improve the quality of beneficiaries’ lives. But, improving the quality
of life does not equate to medically necessary under section 1861(n) of the Act nor does it
qualify an item as durable medical equipment.

Petitioner contends that a power seat elevator may assist a disabled individual to arise
from a seated position. Petitioner’s motion for a decision at 7. However, CMS addressed
this issue in its policy findings about power seat elevators and concluded that seat lifts
that tilt so as to facilitate standing may be medically necessary whereas those that simply
raise or lower the occupant are not. Petitioner has not shown this distinction to be
unreasonable.

Petitioner asserts also that “numerous Administrative Law Judges have determined in
individual appeals from the denial of coverage of seat elevators, that seat elevators meet
the definition of . . . [durable medical equipment] and should be covered by Medicare.”
Petitioner’s motion for a decision at 8. However, the decisions that Petitioner refers to
are not precedential and, moreover, they do not address the issue that I must decide, that
being whether LCD 11451 is reasonable.
11

Additionally, Petitioner argues that LCD 11451 contravenes an NCD other than that
which I have discussed in this decision, an NCD addressing mobility assistive equipment.
Petitioner’s motion for a decision at 10; P. Ex. 12. Petitioner asserts that the NCD makes
a general finding that mobility assistive equipment is reasonable and necessary for
beneficiaries who have a personal mobility deficit sufficient to impair their participation
in mobility related activities of daily living such as toileting, feeding, dressing, grooming,
and bathing in customary locations within the home. Jd. However, this is a general
finding and does not apply to specific items of equipment. The NCD governing power
seat elevators in the iBOT 4000 contains a specific finding that seat elevators that raise or
lower their occupants do not have a medical purpose. That finding must control because
it is specific.

2. I deny Petitioner’s challenge to LCD 11451.

I must deny Petitioner’s challenge to LCD 11451 because I conclude that CIGNA acted
reasonably.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Illinois Knights Templar Home,

(CCN: 14-5449),

Petitioner,

Vv.

Centers for Medicare and Medicaid Services.
Docket No. C-09-774
Decision No. CR2203

Date: August 10, 2010

DECISION

I sustain the determination of the Centers for Medicare and Medicaid Services (CMS) to
impose the following remedies against Petitioner, Illinois Knights Templar Home:

¢ Civil money penalties of $3,050 per day for each day of a period beginning on
March 28, 2008 and continuing through April 3, 2008; and

¢ Civil money penalties of $300 per day for each day of a period beginning on April
4, 2008 and continuing through April 30, 2008.

I. Background

Petitioner is a skilled nursing facility in the State of Illinois. It participates in the
Medicare program. Its participation in Medicare is governed by sections 1819 and 1866
of the Social Security Act and by federal regulations at 42 C.F.R. Parts 483 and 488. Its
hearing rights are governed by regulations at 42 C.F.R. Part 498.
CMS determined to impose the remedies that I describe in the opening paragraph of this
decision based on noncompliance findings that were made at a survey of Petitioner’s
facility conducted on April 14, 2008 (April survey). The April survey findings included
findings that Petitioner manifested three deficiencies that were so egregious as to
comprise immediate jeopardy for Petitioner’s residents. An “immediate jeopardy” level
deficiency is one that is so serious as to cause or to be likely to cause serious injury,
harm, impairment, or death to a resident or residents of a facility. 42 C.F.R. § 488.301.

Petitioner requested a hearing and the case was assigned to me for a hearing and a
decision. CMS moved for summary judgment and I issued a decision favorable to CMS.
An appellate panel of the Departmental Appeals Board subsequently remanded the case
to me because it found that there were disputed issues of fact. I then held a hearing in
Chicago, Illinois on April 12, 2010. At the hearing I received into evidence from CMS
exhibits that are identified as CMS Ex. 1 — 18, 21 — 27, and 29 — 70. I received into
evidence from Petitioner exhibits that are identified as P. Ex. 1 — 18. I also heard the
cross examination and redirect testimony of several witnesses whose direct testimony is
in evidence as affidavits or declarations.

IL. Issues, findings of fact and conclusions of law
A. Issues
The issues in this case are whether:

1. Petitioner failed to comply substantially with Medicare participation
requirements;

2. CMS’s determination of immediate jeopardy level noncompliance is
clearly erroneous;

3. CMS’s remedy determinations are reasonable.
B. Findings of fact and conclusions of law

In this decision I do not address all of the noncompliance findings that were made at the
April survey. I address all of the findings of immediate jeopardy level noncompliance as
well as one of the findings of non-immediate jeopardy level noncompliance. I do not
address the other noncompliance findings because the findings that I do address and that I
sustain are more than sufficient to justify CMS’s remedy determinations. Making
additional noncompliance findings is simply unnecessary to the outcome of this case.

The findings of noncompliance that I address consist of allegations that Petitioner failed
to comply with the following regulations: 42 C.F.R. §§ 483.13(b)(1)(i); 483.13(c)(2) —
(4); 483.13(c); and 483.75.
I make the following findings of fact and conclusions of law (Findings).

1. Petitioner failed to comply substantially with the requirements of 42
C.F.R. §§ 483.13(b) and (c)(1)(i).

The applicable regulation prohibits a facility from subjecting a resident to verbal, mental,
sexual, or physical abuse, corporal punishment, or involuntary seclusion. In practice the
regulation prohibits a facility from tolerating abusive behavior by facility staff against
residents. “Abuse” is defined at 42 C.F.R. § 488.301 to mean:

the willful infliction of injury, unreasonable confinement, intimidation, or
punishment with resulting physical harm, pain, or mental anguish.

The term “willful” has been interpreted on numerous occasions to mean “deliberate.”
Abuse can occur in the absence of a specific intent by a staff member of a facility to harm
aresident. Malice is not a necessary element of abuse. The willfulness standard is
satisfied where an employee of a facility deliberately does something which he or she
knows or should know could cause a resident to suffer from physical harm, pain, or
mental anguish.

CMS’s allegation that Petitioner failed to comply with the requirements of 42 C.F.R.

§§ 483.413(b) and (c)(1)(i) focuses primarily on the behavior of a certified nursing
assistant on Petitioner’s staff whom I refer to as ““H.” It is undisputed that very early on
the morning of September 9, 2007, H and two other nursing assistants were in a room
shared by two of Petitioner’s residents who are identified as Resident # 4 and Resident #
17. The nursing assistants were providing care to Resident # 17 while Resident # 4, who
is nearly blind, slept. While the three nursing assistants were in the room, H began
repeatedly hitting his leg against Resident # 4’s bed. The two nursing assistants who
were with H at the time, Olha York and Kathy Arends, respectively described what H
was doing as either “bouncing” the bed or “tapping” on it. CMS Ex. 41 at 1-2. These
nursing assistants described H’s behavior as joking. Jd. However, H refused to cease his
behavior when Resident # 17 and the two nursing assistants asked him to stop. Jd. That
refusal provoked a confrontation between H and the other nursing assistants. Ms. York
raised her hand as if to indicate that she would push H away from Resident # 4’s bed. Jd.
That gesture caused H to become angry and he threatened to harm Ms. York if she ever
touched him. /d. at 1. H then became very agitated, began yelling, and left the room.
Id.; CMS Ex. 16 at 22.

H did not give the other nursing assistants an explanation for his striking Resident # 4’s
bed. However, an explanation that I accept as reasonable was offered by nursing
assistant York, who observed that H had in the past picked on Resident # 17. She opined
that H was disturbing Resident # 4’s bed in order to “get at” Resident # 17, that is to say,
to either annoy or intimidate the resident. CMS Ex. 16 at 21.
After H left the residents’ room he went to Petitioner’s nurse’s station. He remained
angry and upset. CMS Ex. 16 at 16. He told a registered nurse that he wanted to go ona
break. CMS Ex. 16 at 16. When nursing assistant York approached the nurse’s station
H “jumped up from his seat and went outside, cussing and saying that he was going
ome.” CMS Ex. 41 at 1. Nursing assistants York and Arends then reported to the nurse
the events that had occurred in the residents’ room. CMS Ex. 16 at 16. Shortly thereafter
H called the nurse and advised her that he was leaving the premises.

Petitioner’s director of nursing and administrator were advised about the incident on
September 10, 2007. P. Ex. 7 at 4; P. Ex. 8 at 1. On that date the administrator spoke
with H. He gave H a written warning and counseled H about Petitioner’s code of ethics.
The warning stated that H had engaged in “uncooperative behavior or acts that are in
disregard of established personnel policies and procedures and that H had left his shift
before it was completed. CMS Ex. 43 at 2. In a separate note the administrator circled a
statement indicating that H had engaged in fighting or in threatening or intimidating
activities. Id. at 3.

H continued to work at Petitioner’s facility for several weeks after the events of
September 9, 2007. Petitioner terminated H’s employment on October 19, 2007. The
termination was the consequence of a second incident involving H.

On October 18, 2007, Petitioner’s activity director reported to the director of nursing and
Petitioner’s administrator that she had become aware of an allegation of abuse involving
H. CMS Ex. 16 at 8; CMS Ex. 42 at 3, 9. A nursing assistant, Mandy Ebert, reported
that she had witnessed H verbally abuse a resident identified as Resident # 13, a man
aged 88 years, who was totally dependent on Petitioner’s staff for assistance. According
to Ms. Ebert, the resident had complained to H that he felt as if H was “breaking his arm”
while H was transferring the resident via a device known as a hoyer lift. CMS Ex. 42 at
4. Ms. Ebert asserted that H had responded by saying: “if you keep that up, I’ll roll you
onto the floor.” Jd. Ms. Ebert also reported that she had witnessed H being rude to
residents on other occasions. /d. Neither Ms. Ebert nor another nursing assistant, who
had spoken with Ms. Ebert about the incident, immediately reported it to Petitioner’s
management. CMS Ex. 16 at 6, 8; CMS Ex. 42 at 5, 9; P. Ex. 7 at 8.

Petitioner’s administrator spoke with H about the reports of abuse. CMS Ex. 42 at 6. H
denied abusing residents but also became extremely confrontational. The administrator
then terminated H’s employment.

The evidence that I have discussed pertaining to H’s conduct establishes abusive behavior
by this employee. It also shows a failure on the part of Petitioner’s management to
recognize, and to respond appropriately, to this abuse. The behavior of H on the night of
September 9, 2010 was clearly abusive. It was not simply an altercation between H and
another nursing assistant. The evidence establishes that H deliberately and repeatedly
struck Resident # 4’s bed, conduct which was found to be offensive by Resident # 17, and
which had at least the potential for causing emotional distress to both Residents # 4 and
#17. It was not inadvertent as is evidenced by H’s refusal to stop engaging in the
conduct when asked to stop. The fact that the behavior was characterized as joking
behavior by the two other nursing assistants who observed H on that evening does not
detract at all from its abusive character. H may have intended his behavior to be funny
but he was on notice that others considered it to be offensive and he refused to cease his
behavior when he was asked to do so.

Furthermore, H’s explosive reaction to the other nursing assistants’ requests that he cease
his abusive behavior, in the presence of residents, was abusive in its own right. He
subjected residents who are by definition individuals who are frail and ill to his outburst
and this behavior clearly had the likelihood of causing the residents to suffer from
anguish.

A skilled nursing facility is not simply an extension of a hospital or a sick bay for frail
and ill individuals. It is, in fact, the residents’ home, the place where they live. Residents
of a facility are entitled to be treated with dignity and to be protected against abusive
conduct such as that engaged in by H. Petitioner failed to provide its residents with this
protection when it failed to remove H immediately from resident care when his behavior
on the morning of September 9, 2007 was brought to the attention of Petitioner’s
management. Either his employment should have been terminated or H should have been
suspended from resident care pending a full and thorough investigation of the
circumstances of the September 9 event.

Petitioner’s policy governing investigation of suspected incidents of abuse states that:
Employees alleged to have been involved in the abuse, neglect, involuntary

seclusion or misappropriation of resident property will immediately be
suspended pending the outcome of the investigation.

CMS Ex. 40 at 2. Petitioner plainly failed to follow its policy in the case of the
September 9, 2007 incident involving H.

I do not fault the actions of Petitioner’s management in removing H from employment on
October 19, 2007. That was appropriate given what management had learned about H.
But, the fact that H was allowed to remain in his job for more than a month after the
September 9, 2007 incident — during which he continued to provide care to residents —
proves failure by Petitioner’s management to appreciate the seriousness of the September
9 incident.

I have considered the evidence and arguments that Petitioner offers in defense of its
handling of H and I do not find them to be persuasive.
6

Petitioner argues that H’s repeated hitting of Resident # 4’s bed on the night of
September 9, 2007 was not forceful because the resident slept through the entire event.
Petitioner’s post-hearing brief at 4. There is no evidence in the record that describes with
any particularity how vigorously H hit the resident’s bed. However, it was not the force
with which H engaged in this action that the other nursing assistants and Resident # 17
ound to be offensive; rather, it was the inappropriateness of H’s behavior coupled with
is refusal to cease doing it when asked.

Petitioner also asserts that H’s conduct on the evening of September 9 was benign
because it was characterized as “joking” by the two nursing assistants who witnessed his
conduct. I have discussed that above. Whatever H’s intent was, he also knew that both
of the nursing assistants and Resident # 17 found his conduct to be offensive, because
they asked that he cease engaging in it and he refused.

Petitioner argues also that the events of September 9 did not constitute “even an
allegation of abuse.” Petitioner’s post-hearing brief at 4. The premise for this assertion
is that Resident # 17 would have filed a claim of abuse had she believed that H’s conduct
was abusive. This assertion is speculative and, so, I find it to be without merit.
Furthermore, Petitioner’s management knew that there was an allegation of abuse
because the two nursing assistants who were witnesses to H’s conduct had reported it in
terms that described abuse by any objective measure. CMS Ex. 41 at 1-2.

I note, moreover, that there is no evidence that anyone on Petitioner’s staff interviewed
Resident # 17 in the hours or days following the incident. Consequently, the resident’s
take on what occurred in the immediate aftermath of the incident is simply unknown. In
its post-hearing brief Petitioner asserts that its management interviewed “the resident who
witnessed the event,” meaning I assume, Resident # 17, as part of its investigation of the
September 9 incident. Petitioner’s post-hearing brief at 5. However, Petitioner has cited
to nothing in evidence to support that assertion and I can find no supporting
documentation in the record. Petitioner took statements from the two nursing assistants
who witnessed the event, but there is no record of a statement taken from Resident # 17
during Petitioner’s investigation of the September 9 incident. See CMS Ex. 42.

Resident # 17 was interviewed by a surveyor during the April survey. The resident,
however, was unable to remember the event of September 9 and therefore, contributed no
meaningful evidence concerning that event. Petitioner asserts that Resident # 17 felt
intimidated when she was interviewed by surveyors during the April survey and it
attempts to characterize the interview as an episode of abuse. This allegation is
irrelevant.

Petitioner argues that H’s conduct on September 9, 2007 was not abuse because it was
not specifically directed against a resident. Petitioner’s post-hearing brief at 5-7.
Petitioner characterizes the events of September 9 as constituting merely a dispute
between staff members which cannot rise to the level of abuse. I disagree with this
assertion on two counts. First, H’s conduct was directed both at Resident # 4 and
Resident # 17. It was directed against Resident # 4 because H repeatedly struck the
resident’s bed while she lay in it. It was directed against Resident # 17 because the
plausible explanation for H’s conduct was that he was attempting to annoy or anger the
resident. CMS Ex. 16 at 21. Second, H’s conduct was abusive towards residents even if
it was specifically directed at the two other nursing assistants who were in the room with
him on September 9. H knew or should have known that his striking Resident # 4’s bed
and his subsequent outburst of temper when confronted by one of the nursing assistants
had the likelihood of being viewed as offensive and intimidating by the residents.

Petitioner argues that the testimony of the surveyors who conducted the April survey is
not credible. It premises this argument on the assertion that the demeanor of the surveyor
who interviewed the nursing assistants about the September 9 incident was evasive.
Petitioner’s brief at 7. I disagree. I find nothing evasive in this witness’ testimony. The
premise for Petitioner’s characterization is that the surveyor was unable to remember
some of the findings that she made at the April survey without consulting her notes or
exhibits in evidence. I find that to be understandable given that the in-person hearing
took place about three years after the survey was completed. The surveyor’s memory
lapses are certainly no basis to impeach the notes and reports that she made
contemporaneously with the survey.

Petitioner argues also that its witnesses’ testimony is inherently more credible than that of
CMS’s witnesses. It contends that I must assume all of its witnesses’ written direct
testimony to be credible inasmuch as CMS counsel declined to cross examine these
witnesses. I do not find this argument to be persuasive. Petitioner seems to assert that
the only way in which a witness’ credibility may be assessed is by observing his or her
demeanor as that person testifies in person and under oath. That is simply incorrect.
Credibility may be based on many factors other than demeanor. Testimony that is not
supported by the record or that is inconsistent with other evidence may be found to be not
credible even if the affiant does not testify in person.

Petitioner has not pointed to any specific element of its witnesses’ testimony that calls
into question the veracity of the evidence that I have discussed in this decision. See
Petitioner’s post-hearing brief at 7. However, I have reviewed the written direct
testimony of Petitioner’s witnesses and I find it not to be credible in significant respects.
There are statements that are unsupported by any other evidence in the record and that
are, for this reason, not credible. Other statements are simply opinions which I find not
to be supported by the evidence.

In her affidavit Kathryn L. Swan, Petitioner’s administrator recites her version of the
September 9 incident involving H. P. Ex. 7 at 3-4. She characterizes the entire incident
as lasting less than a minute. About H’s actions, she says:
[H] was observed shaking his knee — like a nervous tic. In the process...
[H’s] knee tapped R4’s foot board . . . R4’s roommate asked . . . [H] to
stop. . . [H’s] nervous tic continued.

Id. These statements clearly are aimed at having me infer that the September 9 incident
was of very brief duration and involved no voluntary action by H. But, there is simply
nothing in the record to support them. Ms. Swan was not a witness to the September 9
incident. Neither of the nursing assistants who were witnesses and who were interviewed
after the incident characterized H’s actions as a “nervous tic” nor did they describe the
incident as lasting less than a minute. CMS Ex. 41 at 1-2.

Similarly, Ms. Swan characterizes the September 9 incident as follows:

The alleged actions of . . . [H] did not constitute abuse or an allegation of
abuse. His nervous energy was not willful, and did not inflict injury,
confinement, intimidation, or punishment to R4 or any other residents in
the facility... . The facility did not fail to recognize abuse because no abuse
occurred.

P. Ex. 7 at 3.

Ms. Swan offers no foundation for this assertion and I find it to be an unsupported
conclusion. I have explained why H’s actions on September 9 satisfy the definition of
“abuse” and why Petitioner should have treated the allegations of the two nursing
assistants who were present during the incident as allegations of abuse.

Petitioner’s director of nursing, Carol A. Langley, avers in her affidavit that no abuse
occurred on September 9, 2007. P. Ex. 8 at 1. Ms. Langley cites to no facts other than
those that I have addressed in this decision as support for her opinion. She bases her
opinion on “my conversations with . . . [H and the other two nursing assistants] as well as
my knowledge of R4 and R17....” Jd. She asserts also that she agrees with Ms.
Swan’s opinion about the events of September 9. I have explained why I disagree with
Petitioner’s characterization of the events of September 9 and the allegations that were
made about those events and it is unnecessary for me to revisit that analysis here except
to say that I disagree with this witness’ conclusions.

Petitioner offered affidavits by other witnesses. P. Ex. 9— P. Ex. 14. None of these
affidavits provide any evidence concerning the events of September 9, 2007 other than
that which I have previously addressed. Of the affiants, only Ms. York was an actual
witness to the September 9 events. P. Ex. 12. In her affidavit Ms. York affirms that what
she said previously about the September 9 incident is true. /d.; CMS Ex. 41 at 1. She
adds that “I don’t think . . . [H] was trying to be mean to R4. He only seemed to be angry
with me.” That statement adds nothing to what Ms. York previously said about the
incident. Moreover, and as I have explained, it is not necessary that I find that H was
trying to harm Resident # 4 by striking her bed in order that I conclude that his conduct
on September 9 was abusive.

2. Petitioner failed to comply substantially with the requirements of
42 CF.R. § 483.13(c)(2) — (4).

The applicable regulation mandates in relevant part that a skilled nursing facility must
ensure that all allegations of abuse are reported immediately to the facility’s administrator
and to relevant State officials in accordance with established procedures. It requires that
all allegations of abuse be thoroughly investigated. And, it requires that the results of all
investigations be reported to the administrator and to relevant State officials within five
working days of the incident.

CMS alleges that Petitioner failed to treat the September 9, 2007 incident as an abuse
allegation. Thus, according to CMS, the incident was not immediately reported to
Petitioner’s administrator, H was not prohibited from providing resident care pending the
outcome of an investigation into the incident, and the incident was not reported to State
officials. CMS also alleges that Petitioner delayed in investigating the allegations arising
from the October incident because the nursing assistant who made these allegations failed
to comply with facility policy and report them immediately.

The evidence overwhelmingly supports CMS’s allegations. It establishes that
Petitioner’s staff did not report the September 9 incident to Petitioner’s administrator
until the next day, a full day after the incident occurred. It establishes also that H was
allowed to continue to provide care to residents after the incident and was not relieved
rom his duties of providing such care until after the subsequent allegation of abuse in
October 2007. The evidence establishes that Petitioner’s staff failed to interview either
Resident # 4 or Resident # 17 about the incident. Finally, the incident was never reported
to State officials. The evidence also substantiates CMS’s assertion that the nursing
assistant who reported the October allegations delayed more than a week in making them.

Petitioner’s defense to CMS’s allegations and to the supporting evidence is that “there
were no allegations of resident abuse with respect to the September 9, 2007 event.”
Petitioner’s post-hearing brief at 12. Additionally, Petitioner asserts that the allegations
pertaining to the subsequent incident involving H that took place in October 2007 were
“fabricated” by the nursing assistant who made them. Jd. Consequently, according to
Petitioner, it is absolved from any duty to investigate the allegations relating to the
September and October 2007 incidents, was not required to suspend H after the
September incident, and was not required to report the September allegations to State
officials.

I disagree. First, and as I have held above, the allegations that the other two nursing
assistants made about H’s conduct on September 9, 2007 clearly described abusive
conduct. Those allegations obligated Petitioner to comply with all of the regulatory
requirements pertaining to investigation of abuse allegations. Similarly, the allegations
made concerning the October 2007 incident were, by any measure, allegations of abuse
and they also triggered the regulatory investigation and reporting requirements.
Petitioner may not evade its responsibility for reporting the September 2007 incident to
State officials by now claiming that no abuse actually occurred. The allegations that the
two nursing assistants made about that incident plainly described abuse. The regulation
requires that all allegations of abuse be investigated and reported even if they
subsequently turn out to be invalid. It is, therefore, no defense to argue in retrospect that
the investigation and reporting requirements were not triggered because the allegations
ultimately were not sustained.

There is an obvious reason for the requirement that all abuse allegations be reported to
State officials. When a facility’s management receives an allegation of resident abuse it
is placed in situation where, potentially, there is a conflict of interest. It is not ina
facility’s self-interest to authenticate allegations of resident abuse because, at the very
least, the facility’s reputation may be damaged. Moreover, such allegations, if proven,
may lead to the imposition of remedies against the facility. Thus, a facility has
motivation not to find abuse on its premises. On the other hand, the facility has an
absolute duty to protect the welfare and safety of its residents.

The requirement that abuse allegations be thoroughly investigated and reported to State
officials assures that this potential conflict of interest does not adversely affect the
outcome of investigations into such allegations. It assures that a neutral third party (the
State) will be apprised of the allegations and will be in a position to take protective action
if necessary. It also assures that the facility will do all that is needed to protect the safety
and well-being of its residents.

Similarly, it is no defense to assert that the allegations relating to the October incident
may have been “fabricated” or that they were false. The regulation requires that all
allegations of abuse — true or not — be investigated immediately and reported. Arguing
after the fact — as Petitioner does here — that the allegations turned out not to establish
abuse is a way of justifying in retrospect a failure to comply with regulatory
responsibilities.

3. Petitioner failed to comply substantially with the requirements of 42
CF.R. § 483.13(c).

The applicable regulation requires in relevant part that a facility develop and implement
written policies and procedures that prohibit mistreatment, neglect, and abuse of
residents. CMS alleges that Petitioner failed to comply with its own abuse policies in
dealing with the allegations of abuse that were made in September and October 2007.
Specifically, CMS asserts that Petitioner violated its abuse policy by failing to suspend H
or to relieve him of his responsibilities of providing direct care to residents while it
investigated the allegations made concerning the September incident. Also, CMS asserts
that the failure by the nursing assistant to report immediately her allegations of H’s
abusive behavior in October 2007 is a violation of Petitioner’s abuse policy.

The evidence overwhelmingly supports these allegations. There is no dispute that

Petitioner’s management failed to suspend H or to relieve him from resident care after it
learned about the September incident. Nor is there any dispute that the nursing assistant
who reported the October incident waited about a week before reporting her allegations.

Petitioner did not address CMS’s allegations in its post-hearing brief. I assume that it
contends that the suspension and reporting requirements were not contravened because
the allegations of abuse turned out — in Petitioner’s view — to be unsubstantiated. That
argument, although not made explicitly, is consistent with what Petitioner argues
elsewhere. But, if that is Petitioner’s position, it is without merit. Petitioner’s policies
are predicated on allegations of abuse and in that respect they mirror regulatory
requirements. It is no defense to argue, that when viewed with hindsight, allegations of
abuse turn out to be unproven.

4. Petitioner failed to comply substantially with the requirements of 42
CF.R. § 483.75

The regulation at issue requires that a skilled nursing facility be administered in a manner
that enables it to use its resources effectively and efficiently to attain or maintain the
highest practicable physical, mental, and psychosocial well-being of each resident.

CMS alleges that Petitioner failed to comply substantially with the requirements of this
regulation based on Petitioner’s alleged multiple systemic failures to comply with other
regulatory requirements. More specifically, however, CMS rests its case on Petitioner’s
failures to comply with the requirements that I address in Findings | and 2 of this
decision.

The evidence in this case plainly establishes a systemic failure by Petitioner’s
management to apply its policies to protect residents against abuse. What is evident in
this case is that Petitioner’s management failed to implement policies that assured that
allegations of abuse be promptly and thoroughly investigated, that they be reported to
appropriate State officials, and that residents are protected pending the outcome of such
investigations. The failures by Petitioner to implement its policies were not confined to
errors surrounding the September 9, 2007 incident. There was a subsequent failure
evidenced by the delayed reporting of allegations pertaining to the October incident.

Ultimately, the responsibility for implementing and enforcing a facility’s policies lies
with management. Petitioner’s policies concerning abuse were not self-implementing.
Management had to take affirmative steps in order to apply the policies when abuse
allegations were brought to its attention. The failure to treat the allegations concerning
the September 9, 2007 incident as abuse allegations and to implement the full panoply of
abuse policies to deal with that incident evidences a fundamental misunderstanding on
Petitioner’s management’s part about what constitutes abuse and how to deal with
allegations of abuse.

CMS predicated its allegations of noncompliance with 42 C.F.R. § 483.75 on the full
range of deficiencies that it alleged. However, the core of CMS’s allegations relates to
Petitioner’s noncompliance with the regulations governing abuse and which I have
addressed in detail in this decision. I find it unnecessary to make findings about other
alleged deficiencies in order to find that Petitioner failed to comply with the requirements
of 42 C.F.R. § 483.75. Evidence that Petitioner’s management failed to implement the
facility’s policy concerning investigation of and protecting against abuse is sufficient to
sustain CMS’s allegations of noncompliance with the requirements of 42 C.F.R.

§ 483.75.

5. CMS’s findings of immediate jeopardy level noncompliance are not
clearly erroneous.

CMS found immediate jeopardy level noncompliance with respect to three of the

deficiencies that I address in this decision. These deficiencies are Petitioner’s failures to
comply with the requirements of 42 C.F.R. §§ 483.13(b), 483.13(c)(1)(i), 483.13(c)(2) —
(4), and 483.75 (Findings 1, 2, and 4).

The evidence amply supports CMS’s determinations of immediate jeopardy. As I have
discussed, there was a fundamental misunderstanding on Petitioner’s part of its obligation
to recognize and respond appropriately to abusive behavior by its staff. That basic failure
created the likelihood that residents would be subjected to serious injury or harm.

I do not base this conclusion solely on the consequences of H’s behavior during the
September and October 2007 incidents. Petitioner argues that there is no proof that
residents sustained actual harm as a result of these incidents and I agree with that
contention. But, there was a likelihood of harm to residents that existed at Petitioner’s
facility by virtue of Petitioner’s failure to comprehend the need to enforce vigorously its
policies concerning abuse. The failure to suspend H, for example, after the September 9,
2007 incident, meant that an employee who demonstrated more than the potential for
committing abusive acts was allowed to continue to provide direct resident care. The
failure to report the September 9 incident to State officials meant that Petitioner’s
management had stripped residents of a protection that was guaranteed to them by law
and, as a consequence, left them vulnerable to the possibility that Petitioner would not
treat abuse allegations with the seriousness that they merited.

Petitioner did not prove CMS’s findings of immediate jeopardy to be clearly erroneous.
Essentially, Petitioner rests its case on its assertion that the September and October 2007
incidents did not constitute abuse of residents. But, even if that were true, it did not
relieve Petitioner’s management of its obligation to treat the allegations of abuse
seriously under its policies protecting residents against abuse and pursuant to governing
law and regulations. The failure of management to do so created jeopardy for
Petitioner’s residents even if the allegations that were made concerning the September
and October 2007 incidents were ultimately disproved. Moreover, I have found that the
September incident — H’s actions on that night — was abuse.

6. CMS’s remedy determinations are reasonable.

a. CMS’s determinations as to duration of noncompliance are
reasonable.

CMS determined that Petitioner manifested immediate jeopardy level noncompliance
during a period that began on March 28 and that continued through April 3, 2008 and
non-immediate jeopardy level noncompliance during a period that began on April 4, 2008
and that continued through April 30, 2008. The premise of CMS’s duration
determination is that Petitioner did not rectify its failure to comprehend and to implement
its obligation to protect against, investigate and report abuse during the entire period of
noncompliance but that its failure was particularly egregious (at the immediate jeopardy
level) during the March 28 — April 3 portion of the period.

Petitioner disputes these duration determinations. The basis for Petitioner’s opposition is
its continued insistence that it was complying with all participation requirements
throughout the period and that CMS’s allegations of noncompliance are baseless. I have
dealt with Petitioner’s objections previously and I will not revisit them here. Petitioner
has offered no evidence to prove that it corrected its deficiencies on dates earlier than
CMS found them to be corrected. Consequently, I sustain CMS’s determinations as to
duration.

b. The immediate jeopardy level civil money penalties are
reasonable as a matter of law.

Civil money penalties to address immediate jeopardy level noncompliance must fall
within a range of from $3,050 to $10,000 per day. 42 C.F.R. § 488.438(a)(1)(i). CMS
determined to impose penalties of $3,050 per day for Petitioner’s immediate jeopardy
level noncompliance. That is the minimum immediate jeopardy level penalty amount and
is, consequently, reasonable as a matter of law.

c. Civil money penalties of $300 per day are reasonable to address
Petitioner’s non-immediate jeopardy level noncompliance.

Penalties to remedy non-immediate jeopardy level noncompliance must fall within a
range of from $50 to $3,000 per day. 42 C.F.R. § 488.438(a)(1)(ii). Regulations
establish the criteria that must be used for deciding where within that range a penalty
amount ought to fall. 42 C.F.R. §§ 488.438(f)(1) — (4); 488.404 (incorporated by
reference into 42 C.F.R. § 488.438(f)(3)). The factors may include a facility’s
compliance history, the seriousness of its noncompliance, its culpability, and its financial
condition.

Penalties of $300 per day for non-immediate jeopardy level noncompliance are at the low
end of the non-immediate jeopardy penalty range, comprising only ten percent of the
allowable maximum. I find that the seriousness of Petitioner’s noncompliance is
sufficient to sustain penalties of at this very low level. The failure to completely correct
noncompliance with regulations governing prevention, investigation and reporting of
abuse meant that the facility’s residents were still at a risk for harm even after immediate
jeopardy was removed.

I note, furthermore, that Petitioner did not challenge the reasonableness of the amount of
CMS’s penalty determinations in its post-hearing brief. It has not offered any argument
showing that the penalty amount of $300 per day is unreasonable.

/s/
Steven T. Kessel
Administrative Law Judge