Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2012-H-0612),

Complainant,
v.
Manuel A. Fernandez d/b/a Fernandez Grocery
Docket No. C-12-870
Decision No. CR2594

Date: August 17, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving a complaint on
Respondent, Manuel Fernandez d/b/a Fernandez Grocery (Fernandez Grocery), at 1101
Lindley Avenue, Philadelphia, Pennsylvania 19141, and by filing a copy of the complaint
with the Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Rodriguez Grocery impermissibly sold tobacco products to a
minor and failed to verify the age of a person purchasing tobacco products, violating the
Federal Food, Drug, and Cosmetic Act (Act) and its implementing regulations, 21 C.F.R.
Part 1140, and seeks a $500 civil money penalty.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on June 22, 2012, CTP served the
complaint on Respondent Fernandez Grocery by United Parcel Service. In the complaint
and accompanying cover letter, CTP explained that, within 30 days, Respondent should
pay the penalty, file an answer, or request an extension of time in which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30 days, the
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering it to pay the full amount of the proposed penalty.
Respondent Fernandez Grocery has not filed an answer within the time prescribed.
Pursuant to 21 C.F.R. § 17.11, I assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e At Respondent’s business establishment, 1101 Lindley Avenue, Philadelphia,
Pennsylvania, on August 9, 2011, an FDA-commissioned inspector observed the
sale of cigarettes or smokeless tobacco to a person younger than 18 years of age;

e At Respondent’s business establishment, 1101 Lindley Avenue, Philadelphia,
Pennsylvania, on August 9, 2011, an FDA-commissioned inspector observed
staff’s failure to verify prior to sale, by means of photo identification containing
the bearer’s birth date, the age of a person purchasing tobacco products;

e Ina warning letter dated October 27, 2011, the CTP informed Respondent
Fernandez Grocery of the inspector’s August 9, 2011 observations, and that such
actions violate federal law, 21 C.F.R. §§ 1140.14(a) and 1140.14(b). The letter
further warned that Fernandez Grocery’s failure to correct its violation[s] could
result in a civil money penalty or other regulatory action;

e At approximately 2:13 p.m. on March 30, 2012, at Respondent’s business
establishment, 1101 Lindley Avenue, Philadelphia, Pennsylvania, an FDA-
commissioned inspector observed the sale of Newport Non-Menthol Box
cigarettes to a person younger than 18 years of age;

e At approximately 2:13 p.m. on March 30, 2012, at Respondent’s business
establishment, 1101 Lindley Avenue, Philadelphia, Pennsylvania, an FDA-
commissioned inspector observed staff’s failure to verify prior to sale, by means
of photo identification containing the bearer’s birth date, the age of a person
purchasing tobacco products.

These facts establish Respondent Fernandez Grocery’s liability under the Act. The Act
prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); 21 U.S.C. § 387¢(a)(7)(B); 21 C.F.R. § 1140.1(b).
Under 21 C.F.R. § 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any
person younger than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer must
verify, by means of photo identification containing the bearer’s date of birth, that no
person purchasing the tobacco product is younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500.00 against Respondent
Manuel A. Fernandez d/b/a Fernandez Grocery. Pursuant to 21 C.F.R. § 17.11(b), this
order becomes final and binding upon both parties within 30 days of the date of its
issuance.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
J & H of Washington, Inc., d/b/a Young’s Quick Stop #1,
Respondent.

Docket No. C-12-877
FDA Docket No. FDA-2012-H-0656

Decision No. CR2593

Date: August 17, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

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

The Complaint alleges the following facts. Respondent owns an establishment in
Aberdeen, Washington that sells tobacco products. Complaint § 2. CTP conducted two
inspections of the establishment. Complaint § 8. During the first inspection, on June 6,
2011, an FDA-commissioned inspector observed that Respondent sold cigarettes or
smokeless tobacco products to a person younger than 18 years of age, in violation of

21 C.F.R. § 1140.14(a). Complaint { 10.
2
After the first inspection, on September 8, 2011, CTP issued a warning letter to
Respondent specifying the violation that the inspector observed. The letter warned
Respondent that a failure to correct the violations could result in the imposition of civil
money penalties, that it was Respondent’s responsibility to ensure compliance with the
law, and that the letter was not intended as an exhaustive list of violations. Complaint
4 10. CTP did not receive a response to the warning letter. Complaint 11.

During a two-part follow-up inspection on February 23 and March 5, 2012, an FDA-
commissioned inspector documented that “‘a person younger than 18 years of age was
able to purchase a package of Newport Box cigarettes on February 23, 2012, at
approximately 10:56 AM PST.” Complaint § 9. In addition, the inspector observed that
“the minor’s identification was not verified before the sale, as detailed above, on
February 23, 2012, at approximately 10:56 AM PST.” Complaint § 9.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on June 22, 2012, via United Parcel Service. CTP charged Respondent with
violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21 C.F.R.

§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth). Complaint
41 1,9, 10. CTP asked the CRD to impose a $500.00 civil money penalty based on three
alleged violations of the regulations in a 24-month period. Complaint § 13.

Both the cover letter to the Complaint and the Complaint provided detailed instructions
related to filing an answer and requesting an extension of time to file an answer. The
letter and Complaint stated that failure to file an answer could result in the imposition of
a civil money penalty. Respondent neither filed an answer nor requested an extension of
time within the 30-day time period prescribed in 21 C.F.R. § 17.9.

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

presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by
law for the violations alleged; or (2) The amount asked for in the complaint,
whichever amount is smaller.

21 C.F.R. § 17.11(a). Further, a failure to file a timely answer means that “respondent
waives any right to a hearing and to contest the amount of penalties and assessments”
imposed in the initial decision. 21 C.F.R. § 17.11(b).
3
Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. I also find that CTP’s request to impose a $500.00 civil
money penalty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $500.00.
This initial decision becomes final and binding on both parties within 30 days of the date
of its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

Bi Xia Zhang d/b/a China Lotus Restaurant,
Respondent.

Docket No. C-12-804
FDA Docket No. FDA-2012-H-0582

Decision No. CR2590

Date: August 15, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving a complaint on
Respondent, Bi Xia Zhang d/b/a China Lotus Restaurant, at 1301 North 29" Street,
Philadelphia, PA 19121, and by filing a copy of the complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management. The complaint alleges that
China Lotus Restaurant impermissibly sold tobacco products to a minor and failed to
verify the age of a person purchasing tobacco products, violating the Federal Food,
Drug, and Cosmetic Act (Act) and its implementing regulations, 21 C.F.R. Part 1140, and
seeks a $500 civil money penalty.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on June 15, 2012, CTP served the
complaint on Respondent Bi Xia Zhang by United Parcel Service. In the complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent should pay
the penalty, file an answer, or request an extension of time in which to file an answer.
CTP warned Respondent that if it failed to take one of these actions within 30 days, the
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering it to pay the full amount of the proposed penalty.
Respondent Bi Xia Zhang has not filed an answer within the time prescribed. Pursuant to

21 C.F.R. § 17.11, Lassume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At Respondent’s business establishment, 1301 North 29" Street, Philadelphia, PA,

on June 1, 2011, an FDA-commissioned inspector observed the sale of cigarettes

or smokeless tobacco to a person younger than 18 years of age;

e At Respondent’s business establishment, 1301 North 29th Street, Philadelphia,
PA, on June 1, 2011, an FDA-commissioned inspector observed staff's failure to
verify prior to sale, by means of photo identification containing the bearer’s birth
date, the age of a person purchasing tobacco products;

e Ina warning letter dated September 29, 2011, the CTP informed Respondent Bi
Xia Zhang of the inspector’s June 1, 2011 observations, and that such actions
violate federal law, 21 C.F.R. §§ 1140.14(a) and 1140.14(b). The letter further
warned that Bi Xia Zhang’s failure to correct its violation[s] could result in a civil
money penalty or other regulatory action;

e At approximately 4:15 p.m. on February 23, 2012, at Respondent’s business
establishment, 1301 North 29th Street, Philadelphia, PA, an FDA-commissioned
inspector observed the sale of Newport Box cigarettes to a person younger than 18
years of age;

e At approximately 4:15 p.m. on February 23, 2012, at Respondent’s business
establishment, 1301 North 29th Street, Philadelphia, PA, an FDA-commissioned
inspector observed staff’s failure to verify prior to sale, by means of photo
identification containing the bearer’s birth date, the age of a person purchasing
tobacco products.

These facts establish Respondent Bi Xia Zhang’s liability under the Act. The Act
prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. §1140.1(b).
Under 21 C.F.R. § 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any
person younger than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer must
verify, by means of photo identification containing the bearer’s date of birth, that no
person purchasing the tobacco product is younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against Respondent Bi
Xia Zhang d/b/a China Lotus Restaurant. Pursuant to 21 C.F.R. § 17.11(b), this order
becomes final and binding upon both parties within 30 days of the date of its issuance.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Bono Home Health Care, LLC
(NPI: 1003138322)

Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-771
Decision No. CR2588

Date: August 17, 2012

DECISION DISMISSING APPEAL FOR CAUSE

The request for hearing of Petitioner, Bono Home Health Care, LLC, is dismissed
pursuant to 42 C.F.R. § 498.70(b).

I. Procedural History

Palmetto GBA, t

e Medicare contractor, mailed Petitioner a letter dated July 8, 2011,

notifying Petitioner that its Medicare billing privileges were revoked and its provider
agreement terminated effective April 21, 2011. Palmetto cited as grounds for the
revocation and termination that a site visit revealed that Petitioner was no longer
operational to furnish Medicare covered items or services. The notice informed

Petitioner that it

ad a right to reconsideration by a contractor hearing officer and that a

request for reconsideration had to be made in writing within 60 calendar days of the
postmark date of the Palmetto letter. The letter also advised Petitioner that it was subject
to a two-year bar to reenrollment in Medicare. CMS Exhibit (Ex.) 1.

It is undisputed t!

at Petitioner did not request reconsideration of the revocation until

March 5, 2012, 244 days after the July 8, 2011 date on the Palmetto notice of revocation

and termination.
its appeal rights

CMS Ex. 7. On May 7, 2012, Palmetto notified Petitioner by email that
ad expired because no reconsideration request had been received within

60 days of the July 8, 2011 notice of revocation. Palmetto informed Petitioner that the
failure to timely request reconsideration was deemed a waiver of all rights to further
administrative review. CMS Ex. 7. No reconsideration decision was issued by the
contractor.

On May 29, 2012, my office received Petitioner’s request for hearing dated May 25,
2012. Petitioner also requested a stay of the revocation of its billing privileges and the
termination of its provider agreement. The case was assigned to me for hearing and
decision. I issued an Acknowledgment and Prehearing Order on June 4, 2012, and an
amendment to that order dated June 22, 2012.

On June 29, 2012, CMS filed a response to Petitioner’s request for a stay of the
revocation and a motion to dismiss Petitioner’s hearing request with supporting brief
(CMS Motion) and CMS Exs. | through 9. On July 19, 2012, Petitioner filed its
response (P. Response) together with Petitioner Exhibits (P. Exs.) A through E.
Petitioner also filed documents with its request for hearing marked P. Exs. A through J,
which I refer to as Request for Hearing (RFH) Exs. A through J. No objection has been
made to my consideration of the offered exhibits and CMS Exs. | through 9, P. Exs. A
through E, and RFH Exs. A through J are admitted.

II. Applicable Law

A provider or supplier may request reconsideration of an initial determination by CMS
that affects the provider’s or supplier’s ability to participate in the Medicare program. 42
C.F.R. § 498.5 (a), (b), (d) and (1). The request for reconsideration must be filed with
CMS; either directly by the provider/supplier or through the provider’s or supplier’s
designated representative, within 60 days of receipt of the notice of the initial
determination. 42 C.F.R. § 498.22(b). The date of receipt of the initial determination is
presumed to be five days after the date on the notice from CMS or its contractor, unless
there is a showing that it was received earlier or later. 42 C.F.R. § 498.22(b).

III. Findings of Fact and Conclusions of Law

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

A. Petitioner has no right to a hearing before an ALJ because there has been
no reconsideration determination.

B. Dismissal is required as Petitioner has no right to a hearing.

CMS moved to dismiss Petitioner’s request for hearing on grounds that I lack jurisdiction
because Petitioner failed to timely request reconsideration of the initial determination
which is now final pursuant to 42 C.F.R. § 498.20(b). CMS argues that Palmetto notified
Petitioner by letter dated July 8, 2011, that its billing privileges were revoked and its
provider agreement terminated effective April 21, 2011.'! CMS Ex. 1. The notice letter
informed Petitioner of its right to reconsideration; that the reconsideration request must
be received within 60 calendar days of the postmark date of the notice letter; and that the
reconsideration request must be signed and dated by the authorized or delegated official
within the entity. The notice also informed Petitioner that failure to timely request
reconsideration would be treated as a waiver of all rights to further administrative review.
CMS Motion at 1-2.

Petitioner asserts, based on the declaration of its owner, that it did not receive the notice
of revocation and termination dated July 8, 2012, until January 23, 2012. P. Ex. C.
Petitioner has presented evidence showing that it continued to have repeated interactions
with Palmetto and CMS throughout the remainder of the calendar year 2011, consistent
with Petitioner being enrolled in Medicare, and Petitioner argues, inconsistent with
Petitioner’s enrollment being revoked July 8, 2011. RFH at 1; P. Response at 4-8; P. Ex.
C; RFH Exs. B-E. Petitioner notes that it did receive a notice from Palmetto dated July 8,
2011, which welcomed Petitioner to the Medicare program and included information for
Petitioner as a new provider. RFH at 2; P. Ex. C, at 2-3; RFH Ex. B.

Petitioner enrolled in Medicare effective February 8, 2011, as a home health agency
within the meaning of section 1861(0) of the Social Security Act (the Act) (42 U.S.C. §
1395x(0)). CMS Ex. 3; CMS Ex. 4 at 2. A home health agency is a provider of services
pursuant to section 1861(u) of the Act (42 U.S.C. § 1395x(u)).° The regulations are

' CMS asserts it is undisputed that Palmetto GBA mailed Petitioner a notice revoking its
enrollment on July 8, 2011. Petitioner does not concede that the notice was mailed and
disputes that the notice was received prior to January 23, 2012. CMS has presented no
evidence to show that the notice letter was actually placed in the mail on July 8, 2011, by
producing a certified or registered mail receipt. Rather, CMS relies, as it is entitled to,
upon the rebuttable presumption that the letter was deposited in the ordinary course of
government business and the rebuttable presumption that the letter was received within
five calendar days. I conclude as discussed hereafter that I have no jurisdiction to review
whether or not Petitioner rebutted the presumptions relied upon by CMS.

> A “supplier” furnishes services under Medicare and the term supplier applies to
physicians or other practitioners and facilities that are not included within the definition
of the phrase “provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider
of services,” commonly shortened to “provider,” includes hospitals, skilled nursing
facilities, comprehensive outpatient rehabilitation facilities, home health agencies,
hospice programs, and a fund as described in sections 1814(g) and 1835(e) of the Act.

(Footnote continued next page.)
potentially confusing regarding the appeal rights of a provider that has its billing
privileges revoked and its provider agreement terminated. CMS and its contractor are
authorized to revoke enrollment and billing privileges for the reasons listed in 42 C.F.R.
§ 424.535. Pursuant to 42 C.F.R. § 424.545(a) a provider whose Medicare enrollment
and billing privileges have been revoked may appeal in accordance with 42 C.F.R. Part
498. Termination of a provider agreement is governed by 42 C.F.R. § 489.53. The
regulation provides that a provider may appeal the termination of its provider agreement
in accordance with 42 C.F.R. Part 498. 42 C.F.R. § 489.53(e). The procedures for
appealing determinations that affect participation in Medicare are found in 42 C.F.R. Part
498. The termination of a provider agreement pursuant to 42 C.F.R. § 489.53 is an initial
determination subject to review by an administrative law judge (ALJ) and appeal to the
Departmental Appeals Board (the Board). 42 C.F.R. § 498.3(b)(8). A determination to
revoke enrollment in Medicare is also an initial determination of CMS subject to review
by an ALJ and appeal to the Board. 42 C.F.R. § 498.3(b)(17). Pursuant to 42 C.F.R. §
498.5(b), a “provider dissatisfied with an initial determination to terminate its provider
agreement is entitled to a hearing before an ALJ.” Section 498.5 of Title 42 imposes no
requirement for there to be reconsideration by CMS or its contractor. However, 42
C.F.R. § 498.5(1)(1) provides that if an existing provider, such as Petitioner, is
dissatisfied with an initial determination to revoke Medicare billing privileges, the
provider may request reconsideration pursuant to 42 C.F.R. § 498.22. The regulation
provides that a provider is entitled to a hearing before an ALJ if dissatisfied with the
reconsideration decision. 42 C.F.R. § 498.5(1)(2). Thus, pursuant to 42 C.F.R. §
498.5(b) Petitioner arguably may request that an ALJ review the initial determination to
terminate its provider agreement, while pursuant to 42 C.F.R. § 498.5(1) Petitioner must
obtain reconsideration of the initial determination to revoke billing privileges and
enrollment prior to requesting review by an ALJ. This apparent conflict is resolved by 42
C.F.R. § 424.545(a)(1)(ii) which provides:

When a provider appeals the revocation of billing privileges
and the termination of its provider agreement, there will be
one appeals process which will address both matters. The
appeal procedures for revocation of Medicare billing
privileges will apply.

Petitioner seeks review of the revocation of its billing privilege and the resulting
termination of its provider agreement. Accordingly, the provisions related to review of
revocation of billing privileges and enrollment in Medicare apply in this case.

(Footnote continued from preceding page.)

Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction between providers and suppliers is
important because they are treated differently under the Act for some purposes.
I am bound by the regulations and I can only hear a matter if I have jurisdiction.
Petitioner does not have a right to an ALJ hearing in this case. Petitioner failed to timely
request reconsideration regarding the revocation of its billing privileges and enrollment in
Medicare, and no reconsideration decision was issued by CMS or its contractor. I have
no authority to consider whether or not the request for reconsideration to Palmetto was
timely or to grant specific relief in the form of an order to CMS or its contractor to
conduct reconsideration.> Because there was no reconsideration decision, Petitioner has
no right to a hearing by an ALJ. Dismissal is required. 42 C.F.R. § 498.70(b).

II. Conclusion

For the foregoing reasons, Petitioner’s request for hearing is dismissed. I may vacate a
dismissal if either party files such a request within 60 days of receipt of this dismissal and
states good cause for such action. 42 C.F.R. § 498.72.

/s/
Keith W. Sickendick
Administrative Law Judge

> I considered remanding this case to CMS for clarification of whether or not the
contractor hearing officer properly considered whether the time for requesting
reconsideration should have been extended. However, there is no evidence before me
that Petitioner requested that CMS or the contractor extend the time for Petitioner to file
its request for reconsideration pursuant to 42 C.F.R. § 498.22(d) for good cause.
Furthermore, I have concluded that I also have no jurisdiction to remand to CMS in this
case as there was no reconsideration decision.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Embassy Health Care Center,
(CCN: 14-5316),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-11-773
Decision No. CR2587

Date: August 13, 2012

DECISION

Petitioner, Embassy Health Care Center (Petitioner or facility), is a long-term care facility
located in Wilmington, Illinois, that participates in the Medicare program. Everyone
agrees that one of its employees deliberately slapped a resident three times, and another
employee witnessed the assault but delayed reporting it. Based on this and other cited
deficiencies, the Centers for Medicare & Medicaid Services (CMS) determined that the
facility was not in substantial compliance with Medicare program requirements and
imposed a civil money penalty (CMP) of $150 per day for 84 days of substantial
noncompliance (April 22 through July 14, 2011), for a total penalty of $12,600.

Here, CMS moves for summary judgment, which Petitioner opposes.

For the reasons set forth below, I grant CMS’s motion. The undisputed evidence
establishes that the facility was not in substantial compliance with the challenged
program requirements for the period alleged and that the penalties imposed are
reasonable.
I. Background

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

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

Here, following a survey completed April 22, 2011, CMS determined that the facility was
not in substantial compliance with multiple program requirements, specifically:

© 42C.F.R. § 483.13(c) (Tag F226 — resident behavior and facility practices/
policies to prohibit neglect and abuse) at scope and severity level D (isolated
instance of noncompliance that caused no actual harm with the potential for more
than minimal harm);

© 42 C.F.R. § 483.15(g)(1) (Tag F250 — quality of life — medically-related social
services) at scope and severity level E (pattern of noncompliance that causes no
actual harm with the potential for more than minimal harm);

© 42 C.F.R. § 483.15 (h)(1) (Tag F252 — quality of life — safe, clean, comfortable
environment) at scope and severity level E;

© 42 C.F.R. § 483.15(h)(2) (Tag F253 — quality of life — housekeeping and
maintenance services) at scope and severity level E;

© 42 C.F.R. § 483.20(k)(3)(ii) (Tag F282 — resident assessment/comprehensive care
plans — services provided ) at scope and severity level D;

e 42C.F.R. § 483.25(h) (Tag F323 — quality of care — accident prevention) at scope
and severity level E;

e 42C.F.R. § 483.35(a) (Tag F361 — dietary services/staffing) at scope and severity
level E;

© 42 C.F.R. § 483.35(b) (Tag F362 — dietary services/sufficient staff) at scope and
severity level E;

e 42C.F.R. § 483.35(i) (Tag F371 — dietary services/sanitary conditions) at scope
and severity level F (widespread noncompliance that causes no actual harm with
the potential for more than minimal harm);

e 42C.F.R. § 483.45(a) (Tag F406 — specialized rehab services) at scope and
severity level E;

e 42C.F.R. § 483.65 (Tag F441 — infection control) at scope and severity level E.
CMS Ex. 6.

Thereafter, the state agency received a confidential complaint from an unidentified
medical center. The complaint alleged that the facility sent one of its residents to the
emergency room for a psychiatric evaluation, claiming that she was self-mutilating and
refused to eat. Medical center staff saw no evidence of these conditions. But when they
attempted to return the resident to the facility, facility staff not only refused to pick her
up, they said that they would not let her in the door if she returned (according to the
complaint). CMS Ex. 41, at 2-3 (Granberry Decl. § 4); CMS Ex. 54, at 2.

Responding to this complaint, surveyors revisited the facility on July 1, 2011. CMS Ex.
41, at 2-3 (Granberry Decl. §§ 4-6). Based on their findings, CMS determined that the
facility was then not in substantial compliance with 42 C.F.R. § 483.12(a)(4)-(6) (Tag
F203 — transfer and discharge rights: notice requirements). CMS Exs. 2, 38.

On August 2, 2011, surveyors revisited the facility a second time. Based on their
findings, CMS determined that the facility achieved substantial compliance on July 15,
2011. CMS Ex. 2.

CMS has imposed against the facility a CMP of $150 per day for 84 days of substantial
noncompliance (April 22 through July 14, 2011), for a total CMP of $12,600.

Petitioner timely requested hearings challenging the April and July survey findings,
which we docketed under case numbers C-11-537 and C-11-773, respectively. Because
the two cases involved the same survey cycle and presented common questions of law
and fact, I consolidated them under Docket No. C-11-773. CMS now moves for
summary judgment. The parties filed prehearing briefs (CMS Br.; P. Br.). CMS then
submitted a motion for summary judgment and supporting memorandum (CMS MSJ) and
Petitioner filed a memorandum in opposition to summary judgment (P. Opp.). CMS
submitted 56 exhibits (CMS Exs. 1-56), and Petitioner submitted 20 exhibits (P. Exs. 1-
20).

IL. Issues
I consider first whether summary judgment is appropriate.

On the merits, the issues before me are: 1) from April 22 through July 14, 2011, was the
facility in substantial compliance with Medicare program requirements; and 2) if the
facility was not in substantial compliance, is the penalty imposed, $150 per day,
reasonable.

II. Discussion

Summary judgment. Summary judgment is appropriate when a case presents no issue of
material fact, and its resolution turns on questions of law. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986); Livingston Care Ctr. v. United States Dep't of Health
& Human Servs., 388 F.3d 168, 173 (6" Cir. 2004); see also Illinois Knights Templar
Home, DAB No. 2274 at 3-4 (2009) (citing Kingsville Nursing Ctr., DAB No. 2234 at 3-
4 (2009)). The moving party may show the absence of a genuine factual dispute by
presenting evidence so one-sided that it must prevail as a matter of law or by showing
that the non-moving party has presented no evidence “sufficient to establish the existence
of an element essential to [that party’s] case, and on which [that party] will bear the
burden of proof at trial.” Livingston Care Ctr., 388 F.3d at 173 (quoting Celotex Corp. v.
Catrett, 477 U.S. 317, 323-24 (1986)). To avoid summary judgment, the non-moving
party must then act affirmatively by tendering evidence of specific facts showing that a
dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.11
(1986); see also Vandalia Park, DAB No. 1939 (2004); Lebanon Nursing & Rehab. Ctr.,
DAB No. 1918 (2004).

To defeat an adequately supported summary judgment motion, the non-
moving party may not rely on the denials in its pleadings or briefs, but must
furnish evidence of a dispute concerning a material fact... .

Illinois Knights Templar, DAB No. 2274 at 4; Livingston Care Ctr., DAB No. 1871 at 5
(2003).

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.3d at 172; Guardian Health Care Ctr., DAB No. 1943 at 8 (2004); but see Cedar
Lake Nursing Home, DAB No. 2344 at 7; Brightview Care Ctr., DAB No. 2132 at 10
(entry of summary judgment upheld where inferences and views of non-moving party are
not reasonable). However, 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. Cedar Lake, DAB No. 2344 at 7; Guardian, 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.”).

A, CMS is entitled to a summary judgment finding that the
facility was not in substantial compliance with 42 C.F.R.
§ 483.13(c), because everyone agrees that a staff member
slapped a resident three times, and the staff. member who
witnessed this abuse delayed reporting it.

Here, the undisputed facts establish that a staff member slapped a facility resident
multiple times. Although another staff member witnessed the assault, he delayed
reporting it, in contravention of facility policy and 42 C.F.R. § 483.13(c).

Program requirements. Facility residents have the right to be free from verbal, sexual,
physical, and mental abuse. 42 C.F.R. § 483.13(b). Abuse is defined as “the willful
infliction of injury, unreasonable confinement, intimidation, or punishment with resulting
physical harm, pain or mental anguish.” 42 C.F.R. § 488.301. The phrase “willful
infliction” means that the actor must have acted deliberately, not that the actor must have
intended to inflict injury or harm. Merrimack County Nursing Home, DAB No. 2424 at 5
(2011); Britthaven, Inc., d/b/a Britthaven of Smithfield, DAB No. 2018 at 4 (2006).
Facilities must develop and implement written policies and procedures that prohibit
mistreatment, neglect, and abuse of residents. 42 C.F.R. § 483.13(c). Staff must not use
verbal, mental, sexual, or physical abuse, corporal punishment, or involuntary seclusion.
All alleged violations involving mistreatment or abuse must be reported “immediately” to
the facility’s administrator and appropriate state officials. 42 C.F.R. § 483.13(c)(2).

Here, consistent with the regulations, the facility’s abuse prevention policy “affirms the
right” of facility residents “to be free from abuse, neglect, misappropriation of resident
property, corporal punishment and involuntary seclusion.” The policy prohibits
mistreatment, neglect, or abuse of residents. Among other specifics, it calls for
“immediately protecting residents involved in identified reports of possible abuse,” and
having systems in place to investigate “promptly and aggressively” all reports and
allegations of mistreatment. According to the policy, physical abuse includes “hitting,

' My findings of fact/conclusions of law are set forth, in italics and bold, in the
discussion captions of this decision.
slapping, pinching, kicking, and controlling behavior through corporal punishment.” P.
Ex. 1, at 1; CMS Ex. 37, at 1.

CMS does not fault the facility’s written policy. However, the regulation requires that
policies be “implemented,” and implementing a policy requires more than drafting and
maintaining documents. Staff must follow the policy. As the Departmental Appeals
Board has long recognized, examples of neglect or abuse can demonstrate that the facility
as not implemented its policies. Barn Hill Care Ctr., DAB No. 1848 at 9-12 (2002);
Emerald Oaks, DAB No. 1800 at 18 (2001); see also The Cottage Extended Care Ctr.,
DAB No. 2145 at 4 n.4 (2008); Liberty Commons Nursing & Rehab. Ctr. — Johnston,
DAB No. 2031 at 7-17 (2006), aff'd, Liberty Nursing & Rehab. Ctr. — Johnston v.
Leavitt, 241 F. App’x 76 (4 Cir. 2007); 59 Fed. Reg. 56,130.

Undisputed facts. Although the record includes few details regarding Resident 29 (R29),
e apparently suffered from bipolar and schizoaffective disorders, as well as other
impairments, and resided on the facility’s “behavioral unit.” CMS Ex. 28, at 1, 24. The
facility admits that, at approximately 3:00 to 3:30 a.m. on April 15, 2011, R29 kicked
Nurse Aide Rosie Armstrong who, “in turn, smacked R29 in the face three times.” P.
Opp. at 3; P. Ex. 3, at 1 (Jude Decl. 4 4).? Nurse Aide Brent Watters witnessed the
incident — in fact, according to his written statement, he was holding the resident’s arms
when the incident occurred — but, contrary to facility policy, he did not report it until he
started his 2:00 p.m. shift later that day. P. Ex. 3, at 1 (Jude Decl. 4); CMS Ex. 28, at
15.

Thereafter, the facility terminated Nurse Aide Armstrong’s employment and disciplined
Nurse Aide Watters. P. Ex. 2; P. Ex. 3, at 1-2 (Jude Decl. {§ 4, 5); P. Ex. 4.

Petitioner argues that it was in substantial compliance with section 483.13(c) because:
1) Nurse Aide Armstrong’s treatment of R29 was not egregious enough to constitute
abuse; and 2) the facility had in place reasonable procedures to prevent abuse
(particularly after the abuse occurred). I reject both arguments.

Without question, slapping a resident falls within the regulatory definition of abuse
(“willful infliction of . . . intimidation or punishment with resulting physical harm, pain
or mental anguish.”). Even if this were debatable (which it is not), the facility’s own
policy specifically lists “slapping” as a form of abuse. P. Ex. 1, at 1; CMS Ex. 37, at 1.

> CMS determined that striking R29 three times in the face while he may have been
restrained caused no actual harm. Although I find this determination baffling — a slap
across the face is physically painful as well as humiliating — I have no authority here to
review the deficiency’s scope and severity. See 42 C.F.R. §§ 498.3(b)(14),
498.3(c)(10)(ii).
Thus, the facility itself recognized that slapping a resident constitutes abuse, and I may
reasonably hold it to that standard. See Agape Rehab. of Rock Hill, DAB No. 2411 at 7,
18 (2011); Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300 (2010), aff’d, Senior
Rehab. & Skilled Nursing Ctr. v. HHS, 405 F. App’x 820 (5" Cir. 2010) (quoting
Sheridan Health Care Ctr., DAB No. 2178 at 15 (2008) and holding that the facility’s
protocol represents the facility’s own judgment as to what must be done to attain or
maintain its residents’ highest practicable physical, mental and psychosocial well-being);
Spring Meadows Health Care Ctr., DAB No. 1966 at 18 (2005) (holding that “it is
reasonable to presume that the facility’s policy reflects professional standards of quality,
absent convincing evidence to the contrary”).

Nor am I persuaded that the facility’s purportedly “reasonable procedures” for preventing
abuse kept it in substantial compliance, notwithstanding the actions of staff.* First, I do
not agree with the facility administrator, Jodie Foster Jude, R.N. (nee Jodie Foster), when
she contends that the facility “did all it could to ensure that it looked out for R29’s safety
and well-being by having in place the proper preventative measures and by taking the
necessary follow-up action upon learning the facts of the incident.” P. Ex. 3, at 1 (Jude
Decl. 5). Certainly, Nurse Aide Armstrong was not looking out for R29’s safety and
well-being when she repeatedly struck him. Nurse Aide Watters was not looking out for
the resident’s safety and well-being when he delayed reporting the assault. As
Administrator Jude concedes, Nurse Aide Watters should have called the director of
nursing (a position she held at the time of the incident) or the assistant director of nursing
“the minute the incident occurred.” P. Ex. 3, at 1 (Jude Decl. § 5). His failure to do so
allowed the abuser ongoing contact with the resident for at least the remainder of her
shift, an additional three hours. CMS Ex. 28, at 3. It is well-settled that the facility is
accountable for such staff conduct and does not avoid that responsibility by subsequently
disciplining the individuals involved in the abuse/neglect. See, e.g., North Carolina State
Veterans Nursing Home, Salisbury, DAB No. 2256 at 10-15 (2009); Emerald Oaks, DAB
No. 1800 at 7 n.3 (2001).

> Petitioner also claims that “whether [the facility] employed reasonable procedures is
clearly a question of fact,” which precludes my entering summary judgment. P. Opp. at
11. The reasonableness of the facility’s procedures is not a question of fact, but a
conclusion of law. That distinction doesn’t matter here, however. First, CMS has not
alleged that the procedures themselves were inadequate; CMS charges that the facility did
not adequately implement its procedures. Second, notwithstanding the facility’s
subsequent efforts to implement its “reasonable procedures,” the undisputed actions of
nurse aides Armstrong and Watters put the facility out of substantial compliance.
Thus, without regard to any other deficiency findings, the facility’s noncompliance with
section 483.13(c) puts the facility out of substantial compliance with program
requirements and more than justifies the relatively low penalty imposed here.*

B. CMS’s unchallenged determination that the facility was
not in substantial compliance with multiple program
requirements is final and binding, and, based on those
deficiencies, CMS may impose a penalty.

CMS argues that seven of the eleven deficiencies cited during the April survey -- 42
C.F.R. §§ 483.15 (h)(1), 483.15(h)(2), 483.20(k)(3)(ii), 483.25(h), 483.45(a), and 483.65
-- are final and binding because Petitioner failed to challenge them.

CMS’s findings of noncompliance that result in the imposition of a remedy are
considered initial determinations that an affected party, such as Petitioner, may appeal.
The regulations governing such determinations dictate that CMS send notice to the
affected party setting forth the basis for and the effect of the determination and the
party’s right to a hearing. 42 C.F.R. §§ 498.20(a)(1), 498.3, 498.5. The affected party
may then challenge the determination by filing a hearing request within 60 days of its
receiving the notice. 42 C.F.R. § 498.40. An initial determination is final and binding
unless reversed or modified by a hearing decision (or under circumstances not applicable
here). 42 C.F.R. § 498.20(b).

Following the April survey, CMS sent the appropriate notice, and, by letter dated June
17, 2011, Petitioner requested a hearing. In that hearing request, Petitioner lists, by tag
number, the eleven deficiencies cited and demands a hearing to challenge them, as well
as the scope and severity findings “in connection with the F tags” and the CMPs.
Petitioner’s Hearing Request at 2 (June 17, 2011).

Simply listing the deficiency tags does not satisfy the requirements for an adequate
hearing request, however. The request must “identify the specific issues, and the findings
of fact and conclusions of law with which the affected party disagrees” and must “specify
the bases for contending that the findings and conclusions are incorrect.” 42 C.F.R.

§ 498.40(b). On its face, Petitioner’s hearing request did not satisfy this requirement.
Attached to the request is a copy of the facility’s Informal Dispute Resolution (IDR)
submissions to the state agency.’ Those submissions, however, address only the

* Because the abuse finding justifies the penalty imposed, I decline to address the
deficiencies cited under 42 C.F.R. §§ 483.35(a), 483.35(b) and 483.35(i)(2). See, e.g.,
Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300 at 6 n.5.

> States must offer facilities an informal opportunity to dispute survey findings. 42
CF.R. § 488.331.
deficiency cited under 42 C.F.R. § 483.35(i) (Tag F371 — dietary services/sanitary
conditions). They say nothing about the seven deficiencies that CMS identifies as
unchallenged.

Petitioner’s hearing request thus preserved only one issue with respect to the April survey
— its compliance (or noncompliance) with 42 C.F.R. § 483.35(i). Nevertheless, Petitioner
had another opportunity to articulate additional bases for its appeal. In my initial
prehearing order, I directed the parties to submit pre-hearing briefs and warned that the
briefs “must contain any argument that a party intends to make” and that “I may exclude
an argument and evidence that relates to such argument if a party fails to address it in its
pre-hearing brief.” Acknowledgment and Initial Pre-hearing Order at 4, § 7 (June 23,
2011). Petitioner’s pre-hearing brief addresses the deficiencies cited under section
483.35(i), and adds three additional issues: its compliance with sections 483.13(c)
(abuse); 483.35(a) (dietary staffing); and 483.35(b) (dietary support personnel). It
mentions 483.13(g)(1) (medically-related social services) but offers no arguments as to
its position on that issue.

Because it has proffered no arguments challenging CMS’s determinations regarding
section 483.13(g)(1) and the remaining six deficiencies cited during the April survey
(which are listed above), Petitioner has waived those issues, and CMS’s determination
that the facility was not in substantial compliance with those requirements is therefore
final and binding. See CMS Exs. 1, 6.

We thus have a final and binding determination that the facility was not in substantial
compliance with program requirements as of the April survey, so CMS has the discretion
to impose one or more of the enforcement remedies listed in 42 C.F.R. § 488.406, which
include the per diem CMP imposed here. Act § 1819(h); 42 C.F.R. § 488.402. So long
as CMS has a basis for imposing a remedy, I have no authority to review its
determination to do so (42 C.F.R. § 488.438(e)), nor may I review CMS’s choice of
remedy. 42 C.F.R. § 488.438(a)(1)(ii).

Finally, I may not review CMS’s scope and severity finding, because a successful
challenge would not affect the range of the CMP or the status of the facility’s nurse aide
training program (if it has one). 42 C.F.R. §§ 498.3(b)(14); 498.3(d)(10).
10

C. CMS is entitled to a summary judgment finding that the
facility was not in substantial compliance with 42 C.F.R.
§ 483.12(a)(4)-(6) because the undisputed evidence
establishes that the facility expelled one of its residents
without timely and adequate notice.”

Program requirements. With limited exceptions, the facility may not involuntarily
discharge its residents, but must permit them to remain. Among the exceptions: the
transfer or discharge is necessary for the resident’s welfare and the resident’s needs
cannot be met in the facility. 42 C.F.R. § 483.12(a)(2)(i). However, before a facility
transfers or discharges a resident, it must so notify the resident and, if known, a family
member or legal representative “in writing and in a language and manner they
understand.” 42 C.F.R. § 483.12(a)(4)(). The written notice must include the following:
1) the reason for the transfer/discharge; 2) the effective date of transfer/discharge; 3) the
location to which the resident is transferred/discharged; 4) a statement that the resident
has the right to appeal the action to the state; 5) the name, address and telephone number
of the state’s long-term-care ombudsman; 6) for residents with developmental
disabilities, the mailing address and telephone number of the state agency responsible for
protecting the developmentally disabled; and 7) for mentally ill residents, the mailing
address and telephone number of the state agency responsible for protection and
advocacy of mentally ill individuals. 42 C.F.R. § 483.12(a)(4), (6). Unless the resident’s
health and safety dictate otherwise (or the resident has not resided in the facility for 30
days), the facility must provide the notice “at least 30 days before the resident is
transferred or discharged.” 42 C.F.R. § 483.12(a)(5).”

Undisputed facts: Resident 21(R21). R21 was a 46-year-old woman who had been
admitted to the facility in September 2007. CMS Ex. 19, at 5. She had a long list of
diagnoses, including opiate withdrawal, schizoaffective disorder, depression, syncope,
anxiety, and chronic pain. CMS Ex. 19, at 8. Nevertheless, she apparently had no legal
guardian and was capable of acting on her own behalf. According to her care plan,

° Petitioner suggests that, unless CMS affirmatively establishes that the facility was not in
substantial compliance as of the July revisit, the facility would be entitled to an earlier
compliance date. This is not necessarily so. Generally, to establish an earlier onset date,
the facility must affirmatively demonstrate that it has achieved substantial compliance.
Premier Living & Rehab Ctr., DAB No. 2146 at 23 (2008); Lake City Extended Care
Ctr., DAB No. 1658 at 12-15 (1998); CMS Ex. 38. Here, however, CMS seems to agree
that, but for the deficiency cited under 42 C.F.R. § 483.12, CMS would have found an
earlier correction date.

7 The facility “must” also sufficiently prepare and orient residents “to ensure safe and
orderly transfer or discharge from the facility.” 42 C.F.R. § 483.12(a)(7).
11

updated in February 2011, she wished to move to a less structured environment. The
“tentative” plan calls for her to move to her own home, but indicates that, to make the
transition, she needs a visiting nurse, and assistance from “home healthcare.” The plan
includes a significant list of interventions aimed at achieving a successful transition from
facility to home: meeting with medical personnel to determine the services she would
need in the community; meeting regularly with the resident to prepare her for discharge;
contacting an appropriate home healthcare agency to set up needed services; teaching the
resident follow-up care; and preparing a written “post-discharge plan of care.” The
facility was to complete a community living assessment, help the resident find housing,
and provide her with appropriate phone numbers in case she needed additional help. The
resident was also supposed to attend psychosocial groups aimed at managing symptoms
and adjusting to community life. Her tentative discharge date was set at November 2,
2011. CMS Ex. 19, at 25.

According to a June 7, 2011 progress note, written by the facility’s social services
director, Stephanie Henrich, “Heidi from independent living” reported that R21 was
“almost ready to place [in] the community, but first needs paperwork filled out by
doctors.” CMS Ex. 42, at 27. During the survey, Administrator Jude confirmed to
Surveyor Byron Granberry that, as of June 8, the facility had not arranged a placement
for R21. CMS Ex. 38, at 3; CMS Ex. 54, at 2 (Granberry Decl. { 6).

Undisputed facts: facility policies. Neither party submitted a copy of the facility’s
written policy governing resident transfers and discharges. The parties nevertheless agree
that facility policy makes the social services director, Stephanie Henrich, responsible for
the residents’ discharge plans. In that capacity, she is supposed to assess whether a
resident is able to live in the community and to assist with living arrangements. She
follows up after discharge to ensure that the resident is fully acclimated to his/her new
environment. P. Ex. 18, at | (Henrich Decl. § 1). Before the facility discharges a
resident because the resident is harming herself or because the facility cannot continue to
care for her, “it exhausts every way to see if a resident’s needs could be met.” If, for
example, a resident chooses not to eat, the facility uses “support groups, medication, and
redirection, to name a few, to see if a resident’s behavior can be altered.” P. Ex. 18, at 1
(Henrich Decl. § 2). Ultimately, the facility recommends involuntary discharge only if it
is unable to alter the resident’s adverse behavior. P. Ex. 18, at 1 (Henrich Decl. § 2).
Under those circumstances, Social Services Director Henrich completes an involuntary
discharge form, which gives the resident 30-days written notice of discharge and advises
her of her right to a full hearing. The social services director sends copies to the
appropriate state agency, and awaits a response.

12

Sometimes, however, when the safety or health of individuals
in a facility is endangered or the immediate discharge is
required by the resident’s urgent medical needs, the resident
can be provided notice as soon as practicable, meaning, a 30-
day advance notice is not required.

P. Ex. 18, at 1-2 (Henrich Decl. § 4); accord P. Ex. 3, at 2 (Jude Decl. § 6) (confirming

that the facility policy requires “that in all involuntary discharge matters, the resident is
provided a 30-day notice,” unless “an immediate transfer or discharge is required by the
resident’s urgent medical needs.”)

Undisputed facts: the events of June 8, 2011. On June 8, 2011, the facility sent R21 to
the hospital.* At the same time, it gave her a “Notice of Involuntary Transfer and
Discharge and Opportunity for Hearing.” P. Ex. 20; CMS Ex. 42, at 5-7. According to
the notice, the reason for the proposed transfer or discharge is that “the safety of
individuals in this facility is endangered,” citing 42 C.F.R. § 483.12(a)(2)(iii).” The
notice indicates that the transfer/discharge is immediate, and the notice is signed by
Social Services Director Henrich. P. Ex. 20.

The hospital subsequently attempted to discharge R21 and return her to the facility, but
the facility refused to readmit her. Administrator Jude told Surveyor Granberry, “We
didn’t have a place to discharge R21[,] but R21 was refusing treatment[,] so we did an
involuntary discharge. We sent R21 to the hospital twice[,] and every time she came
back[,] she refused to eat[,] so the third time we sent R21 to the hospital without the
thirty day notice of involuntary discharge[,] and would not accept her back. CMS Ex. 38;
P. Ex. 54, at 2 (Granberry Decl. {ff 4, 6).

According to Social Services Director Henrich, she had “no choice” but to involuntarily
discharge R21 “due to concern for her safety and well-being;” R21 refused to eat or drink
unless she was discharged, and, as a result, the resident’s body atrophied and she became

® Apparently, she had been discharged from another hospital the day before and, initially,
showed no signs of distress or behavior problems. CMS Ex. 42, at 15. That night,
however, according to a nurse’s note, she insisted on calling her physician “repeatedly” at
1:00 a.m. and became agitated when her questions were not answered. She also reported
having eaten two cheeseburgers and complained about loose stools. CMS Ex. 42, at 16.

° Section 483.12(a)(2)(iii) allows for transfer/discharge if the safety of individuals in the
facility is endangered. Petitioner has not argued that R21 endangered the safety of
facility residents. Social Services Director Henrich does not explain why she gave this
reason for the discharge.
13

dehydrated. '° The resident also spent excessive periods of time in the sun, refusing water
despite the heat and humidity. She ignored staff warnings and stayed outside until her
skin burned, according to Social Services Director Henrich. P. Ex. 18, at 2 (Henrich
Decl. { 4); see CMS Ex. 42, at 28.'!

Administrator Jude echoes Social Services Director Henrich’s assertion that R21 refused
foods and liquids, which “caused her body to atrophy and become dehydrated,” and that
the resident spent excessive periods of time in the sun, refusing water despite the heat and
humidity, ignoring staff warnings, and staying outside until her skin burned. P. Ex. 3, at
2 (Jude Decl. § 6).

No one disputes that R21 lost weight; facility weight records document as follows her
monthly weights over the six-month period immediately preceding her discharge:

December 2010: 154
January 8, 2011: 140
February 14, 2011: 135
March 15, 2011: 136

April 13, 2011: 136
May 18, 2011: 134
June 8, 2011: 134

CMS Ex. 45. Thus, although she lost 20 pounds over that six-month period, the
undisputed evidence establishes that her weight was relatively stable for the four months

'° Petitioner points to no underlying medical records to support this claim of body
atrophy and dehydration. In fact, in a letter written after her discharge, her physician
mentions the resident’s weight loss, her threats to stop eating, and scratches and abrasions
on her forearm. He says that she is “manipulative” and “anxious” and has changed
doctors multiple times. “I do not want to continue as her doctor.” He does not mention
atrophy or dehydration. CMS Ex. 42, at 18. Nevertheless, whether the resident actually
suffered these conditions is not material. For purposes of summary judgment, I accept
the witnesses’ representations.

" Petitioner has not argued that the facility discharged R21 because of self-mutilating
behavior, nor does any witness make that claim. Although social service notes mention
R21’s scratching herself, no care plan entries suggest that the facility saw this as an
immediate problem. CMS Ex. 42, at 28. R21’s most recent care plan, dated May 5,
2011, identifies a history of self-injurious behavior, but says that she has not engaged in
the behavior for two years. CMS Ex. 42, at 33. If this became a problem in June, facility
staff were supposed to intervene by taking the approaches listed, including closely
supervising her and removing sharp objects from her room. Nothing in the record or
Petitioner’s arguments suggests that they did so.
14

immediately prior to her discharge and that she remained heavier than her ideal body
weight plus 10 pounds (IBW + 10), which the facility reported to be 126.5 pounds.
CMS Ex. 45; see CMS Ex. 42, at 20 (January 12 nutrition progress note indicating that
R21 gave up soda, hoping to achieve her desired weight of 115 pounds).

The facility identified weight loss as an issue for R21, although not a particularly serious
problem. In a dietary intervention entry, dated January 25, 2011, the dietician
recommended that R21 receive skim milk twice a day, no orange juice, no gravy, but
double portions at lunch and dinner, “‘per the resident’s request.” CMS Ex. 30, at 43.

According to R21’s care plan, which recorded her weight as 150 pounds, she was at risk
for weight loss related to her depression, chronic pain, and schizoaffective disorder. The
plan’s goal was for her to maintain her current weight plus or minus five percent. It
mentions that she is a “picky eater” and buys from a local store. It calls for a regular diet
plus snacks, says to offer substitutions for foods she dislikes, give her adequate time to
complete her meals, and monitor her weight monthly, reporting significant changes to her
physician, the dietician, and the administration. An entry dated April 11 notes that she
does not drink all of the liquids she asks for on her meal tray (2 milks and 2 juices), so

er liquids are cut to one milk/juice per tray, although she may have more. CMS Ex. 42,
at 22.

A plan entry, dated May 12, 2011, says that the resident “continues to request [double]
portions on meals she likes. She also continues to eat snacks, etc., purchased from local
store instead of meals prepared here.” CMS Ex. 42, at 23. Another entry, dated June 2,
2011, says “educated [resident] again on proper food nutrition — she tells me she can eat
what she wants when she wants.” CMS Ex. 42, at 23. A final entry, dated June 3, 2011,
says that 20 cases of soda from the local grocery store were delivered and that the
resident consumes soda all day. CMS Ex. 42, at 23.

Based on these undisputed facts, I find that the facility violated its own policies and
federal requirements when it discharged R21 without adequate notice. First, nothing in
R21’s care plan addresses the extreme situation described by Social Services Director
Henrich and Administrator Jude. Accepting as true their claims that the resident’s refusal
to eat caused dehydration, muscle atrophy, and other serious health issues, I would also
have to conclude that, contrary to its policy, the facility did not “exhaust every way to see
if [the] resident’s needs could be met.” See P. Ex. 18, at 1 (Henrich Decl. § 2). The
facility did not even address these issues in her care plan.

CMS does not fault the facility for sending the resident to an acute-care hospital for
assessment and treatment. However, when hospital staff determined that she did not
require further treatment and could safely return to the facility, it wrongfully refused to
readmit her. An acute-care hospital is not an appropriate long-term-care placement, as
facility staff well knew, or should have known. Accepting that the facility could no

15

longer meet the resident’s needs, someone had to find her an appropriate placement
elsewhere. The regulations place this responsibility squarely on the facility (where the
resident had lived for four years). The facility abdicated that responsibility and denied
the resident her right to a meaningful notice; it was therefore not in substantial
compliance with 42 C.F.R. § 483.12(a)(4)-(6).

D. The penalty imposed is not unreasonably high.

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

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

I consider whether the evidence supports a finding that the amount of the CMP is at a
level reasonably related to an effort to produce corrective action by a provider with the
ind of deficiencies found, and in light of the section 488.438(f) factors. I am neither
bound to defer to CMS’s factual assertions, nor free to make a wholly independent choice
of remedies without regard for CMS’s discretion. Barn Hill Care Ctr., DAB No. 1848 at
21; Community Nursing Home, DAB No. 1807, at 22 et seg. (2002); Emerald Oaks, DAB
No. 1800 at 9; CarePlex of Silver Spring, DAB No. 1638 at 8 (1999).

Here, the penalty imposed -- $150 per day -- is at the very low end of the penalty range
($50-$3,000) for per-day CMPs where the facility’s deficiencies do not pose immediate
jeopardy to resident health and safety. 42 C.F.R. §§ 488.408(d), 488.438(a)(1).

Petitioner has a dismal compliance history. Multiple deficiencies have been cited during
every survey for at least the last three years. CMS Ex. 3. Moreover, as I noted in a
recent decision, this facility has been designated a “special focus facility,” which means
that, because of its significant history of noncompliance, it is subject to more careful
monitoring. See Embassy Health Care Ctr., DAB CR2464 at 21 (2011). By itself, the
facility’s history more than justifies a significant penalty.

Petitioner has not argued that its financial condition affects its ability to pay the $12,600
CMP.

I need not even consider the remaining factors in order to sustain this very low penalty.
But considering those factors, I note that the sheer number of deficiencies sustained here
justifies a penalty well above the minimum. Moreover, a staff member deliberately

16

assaulted a resident; a second staff member witnessed the assault but delayed reporting it.
I find these failures very serious, evidencing a disregard for resident safety for which the
facility is culpable. Finally, the callous manner in which the facility expelled a resident,
without adequate notice or an appropriate placement, shows further disregard for the
resident’s comfort and safety.

IV. Conclusion

For these reasons, I grant CMS’s motion for summary judgment. The undisputed
evidence establishes that, from April 22 through July 14, 2011, the facility was not in
substantial compliance with program requirements. The relatively minimal penalty
imposed — $150 per day — is not unreasonably high.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
OM SAI Krishna, Inc. d/b/a Quick Stop,
Respondent.

Docket No. C-12-787
FDA Docket No. FDA-2012-H-0557

Decision No. CR2586

Date: August 15, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

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

The Complaint alleges the following facts. Respondent owns an establishment in Erie,
Pennsylvania that sells tobacco products. Complaint § 2. CTP conducted two
inspections of Respondent’s establishment and documented violations on both occasions.
Complaint § 8. During the first inspection on June 29, 2011, an FDA-commissioned
inspector observed that Respondent:
[Sold] cigarettes or smokeless tobacco products to a person younger than
18 years of age, in violation of 21 C.F.R. § 1140.14(a); [and] fail[ed] to
verify by means of photographic identification, containing the bearer’s
date of birth, that no person purchasing cigarettes or smokeless tobacco

is younger than 18 years of age, as required by 21 C.F.R. § 1140.14(b)(1).

Complaint § 10.

After the first inspection, on September 29, 2011, CTP issued a warning letter to
Respondent specifying the violations that the inspector observed. Complaint J 10. The
letter warned Respondent that a failure to correct the violations could result in the
imposition of civil money penalties and that it was Respondent’s responsibility to ensure
compliance with the law. In an October 3, 2011 letter, Harshna Patel, who identified
herself as Respondent’s owner, stated to CTP that all of Respondent’s employees were
trained to comply with FDA regulations and that she installed a camera system to monitor
Respondent’s employees. Complaint § 11.

During a follow-up inspection, an FDA-commissioned inspector documented that “a
person younger than 18 years of age was able to purchase a package of Newport Box
100s cigarettes on February 13, 2012, at approximately 4:24 PM” and that the minor’s
photographic identification was not verified before the sale. Complaint { 9.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on June 20, 2012, via United Parcel Service. CTP charged Respondent with
violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21 C.F.R.

§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth). Complaint
4 1,9, 10. CTP asked the CRD to impose a $500 civil money penalty based on three
alleged violations of the regulations in a 24-month period. Complaint § 13.

Both the cover letter to the Complaint and the Complaint provided detailed instructions
related to filing an answer and requesting an extension of time to file an answer. The
letter and Complaint stated that failure to file an answer could result in the imposition of
a civil money penalty against Respondent. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.

§ 17.9.

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

presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by

law for the vio

ations alleged; or (2) The amount asked for in the complaint,

whichever amount is smaller.

21 CFR. §

waives any right to a

imposed in tl

7.11(a).

e initial

Further, a failure to file a timely answer means that “respondent
earing and to contest the amount of penalties and assessments”
decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);

21 CER. §§

1140.1(

b), 1140.14. Lalso find that CTP’s request to impose a $500 civil

money penalty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $500.00.
This initial decision becomes final and binding upon both parties within 30 days of the
date of its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Royal Suites Health Care and Rehabilitation,
(CCN: 31-5503),
Petitioner,
v.

Centers for Medicare and Medicaid Services.

Docket No. C-12-371

Decision No. CR2585

Date: August 10, 2012

DECISION

I dismiss as untimely the hearing request of Royal Suites Health Care and Rehabilitation
(Petitioner) because no good cause justifies extending the time for filing.

I. Background

Petitioner is a long-term care facility located in Galloway Township, New Jersey and
participates in the Medicare program. Based on a survey completed on August 18, 2011,
the Centers for Medicare and Medicaid Services (CMS) notified Petitioner, by letter
dated September 22, 2011, that it was not in substantial compliance with Medicare
participation requirements and that CMS was imposing a per-instance civil money
penalty (PICMP) of $3,100. The notice letter also informed Petitioner that if it disagreed
with CMS’s determination, it could request a hearing before an administrative law judge
(ALJ) within 60 days of its receipt of CMS’s notice letter. CMS Exhibits (CMS Exs.) 1,
5.
By letters dated February 8, 2012, Petitioner filed a hearing request and a request for an
extension of time to file the hearing request. Petitioner concedes that it failed to request a
hearing timely. Petitioner argues, however, that good cause exists to extend the time for
filing because it believed it could not file a hearing request until an ongoing State Internal
Dispute Resolution (IDR) process was completed.

The hearing request and request for extension were docketed, and the case was assigned
to me. On May 7, 2012, CMS filed a motion to dismiss because Petitioner’s hearing
request was untimely filed and no good cause exists to extend the time for filing (CMS
Br.). CMS filed ten exhibits with its motion. Petitioner filed a response (P. Br.) on May
25, 2012, unaccompanied by exhibits. In the absence of objection, I admit into the record
CMS Exs. 1-10.

II. General Authority

Section 1866(h) of the Social Security Act (Act) (42 U.S.C. § 1395cc(h)) authorizes
administrative review of determinations that a provider fails to comply substantially with
Medicare program requirements “to the same extent as is provided in section 205(b) [of
the Act].” The Secretary of Health and Human Services must provide notice and
opportunity for a hearing “upon request by [the affected party] who makes a showing in
writing that his or her rights may be prejudiced” by the Secretary’s decision. The hearing
request “must be filed within sixty days” after the affected party receives notice of
CMS’s determination. Act § 205(b), 42 U.S.C. § 405(b) (emphasis added).

Similarly, the applicable regulations mandate that an affected party “file the request in
writing within 60 days from receipt of the notice . . . unless that period is extended... .”
42 C.F.R. § 498.40(a)(2). On motion of a party, or on his or her own motion, an ALJ
may dismiss a hearing request that was not timely filed if the time for filing is not
extended. 42 C.F.R. § 498.70(c). Receipt of the notice is “presumed to be 5 days after
the date on the notice unless there is a showing that it was, in fact, received earlier or
later.” 42 C.F.R. §§ 498.40(a)(2); 498.22(b)(3). The affected party may file a written
request for an extension of the 60-day period, stating the reason why the hearing request
was not timely filed. For good cause shown, an ALJ may extend the time for filing the
hearing request. 42 C.F.R. § 498.40(c).

Ifa facility is successful during an IDR proceeding at demonstrating that the deficiencies
should not have been cited, they are removed from the statement of deficiencies (SOD)
and any enforcement action imposed solely as a result of those deficiencies is rescinded.
42 C.F.R. § 488.331(c). However, failure of the state or CMS to complete IDR timely
cannot delay the effective date of any enforcement action against the facility, and a
facility may not seek a delay of such action on the ground that IDR was not completed
before the effective date of the enforcement action. 42 C.F.R. § 488.331(b).

III. Issue
The issues in this case are whether:
1. Petitioner’s hearing request is untimely.

2. There is good cause to extend the time period for Petitioner to file a hearing
request.

IV. Findings

Petitioner is not entitled to a hearing because it did not file a timely hearing
request, and no good cause justifies extending the time for filing.

Petitioner concedes that it did not file a timely hearing request but argues that good cause
exists to extend its time for filing.

The New Jersey Department of Health and Senior Services (state agency) conducted a
complaint survey of Petitioner’s facility on August 18, 2011. The state agency
determined that Petitioner placed and operated an electric space heater in a resident’s
room from August 2-11, 2011, which the state agency alleged was a violation of the Life
Safety Code. CMS Ex. 1. The state agency sent a letter to Petitioner on September 6,
2011, enclosing a SOD and offering Petitioner an opportunity to participate in the state
IDR process if Petitioner decided to contest the deficiency. The letter highlighted,
however, that the IDR resolution process would not “delay the effective date of any
enforcement action.” The letter also notified Petitioner that the state agency was
recommending to CMS that a $3,100 PICMP be imposed for past noncompliance
constituting immediate jeopardy. CMS Ex. 4.

CMS accepted the state agency’s recommendations and, by letter dated September 22,
2011, notified Petitioner of the noncompliance. The notice letter alleges specifically that
Petitioner was out of substantial compliance with the regulation at 42 C.F.R. § 483.25(h)
(Tag F323) at a scope and severity level of “J,” and then it informs Petitioner that CMS is
imposing a PICMP of $3,100 based on that noncompliance. The notice letter also advises
Petitioner that if it decides to dispute the finding of noncompliance and imposition of the
PICMP, it must file a hearing request within 60 days of its receipt of the notice letter.
CMS Ex. 5. Petitioner acknowledges, by letter dated December 14, 2011, that it received
CMS’s September 22, 2011 notice letter about September 24, 2011 [“[w]e received this
etter on approximately September 24" 2011”]. CMS Ex. 7. Therefore, Petitioner
needed to file a hearing request by November 23, 2011.

The state agency notified Petitioner of the IDR results, by letter dated November 21,
2011, stating that the deficiency at “F323 S/S=J” was upheld. CMS Ex. 6. Although
Petitioner asserts that, after its receipt of the IDR results, it “proceeded to file a request
for hearing before an administrative law judge” (P. Br. at 1), there is no evidence that
Petitioner ever filed, nor does Petitioner assert it filed, a hearing request with the Civil
Remedies Division of the Departmental Appeals Board before February 8, 2012.

Petitioner argues, “it became clear that the 60 day timeframe in which to request a
earing to contest [the state agency’s] findings ran from the September 22, 2011
Imposition of Remedies Notice rather than the November 21* notice finalizing the IDR
decision.” P. Br. at 2-3. Petitioner never explains how “it became clear,” nor does it
assert that it became clear to Petitioner before the 60-day period elapsed on November
23, 2011. Petitioner does state that it contacted CMS employee JK on December 14,
2011, several weeks after the 60-day period elapsed, and JK suggested that Petitioner
request “reconsideration to allow for timely filing of a request for hearing.” P. Br. at 3.

Petitioner sent a letter to CMS’s Deputy Associate Regional Administrator, JWR, on
December 14, 2011, requesting an extension and stating that it “realized our error” in not
appealing the hearing request within 60 days of its receipt of CMS’s September 22 letter
on approximately September 24, 2011, but that it “misinterpreted” the letter and thought
it did not have to request a hearing until it received the state agency decision resulting
from IDR. CMS Ex. 7.

By letter dated January 30, 2012, JWR responded, informing Petitioner that CMS could
not “offer an extension” to Petitioner to file a hearing request. JWR noted, however, that
42 C.F.R. § 498.40(c) provides that a party can file for an extension of time to request a
earing with an ALJ, stating the reason why the request was not timely filed. CMS Ex. 9.

On February 8, 2012, Petitioner requested an extension of time to file a request for
earing, along with the hearing request, on which this case is based. CMS asserts that
Petitioner did not show good cause for its untimely filing, arguing that pursuit of IDR
does not stay or toll the applicable appeal period or provide good cause for extending that
period. CMS Br. at 2.

Petitioner concedes that its hearing request was not timely filed. P. Br. at 2. Petitioner
argues that it has good cause to file its hearing request late because it “misinterpreted the
manner in which the process is conducted” and believed that it had to wait until after IDR
5
to file a hearing request. P. Br. at 6. Petitioner also asserts a claim of estoppel, arguing
that it relied to its detriment on the advice of JK, who instructed Petitioner to write a
letter to CMS requesting an extension of the hearing request and also on CMS’s January
30, 2012 letter instructing Petitioner to file for an extension with an ALJ. P. Br. at 5.

Petitioner now seeks “an opportunity to bring into question the validity of the cited
leficiency, the actual circumstances of which were corrected immediately upon
iscovery, regardless of the validity of the citation.” P. Br. at 5-6.

The Departmental Appeals Board has long held that pursuit of IDR does not toll or stay
the time period for requesting a hearing and that engaging in IDR does not excuse a
failure to timely file or constitute good cause for making an untimely filing. The Board
‘as pointed out that a state IDR process is separate from and in addition to appeal rights
provided to a facility under federal regulations, that requesting both IDR and a hearing at
the same time are not mutually exclusive, and that a petitioner could not reasonably
conclude that participation in IDR would somehow toll the federal appeal process where
a notice letter is clear with regard to a party’s hearing rights. Quality Total Care, L.L.C.,
d/b/a The Crossings, DAB No. 2242, at 10 (2009) (citing Concourse Nursing Home,
DAB No. 1856 (2002), aff’d Concourse Rehab. & Nursing Ctr., Inc. v. Thompson, No. 03
Civ. 260 (NRB) (S.D.N.Y Mar. 8, 2004), 2004 WL 434434, aff'd 155 Fed. App’x 28, No
04-2586-CV, 2005 WL 3076899 (2d Cir. Nov. 17, 2005)); Hillcrest Healthcare, LLC,
DAB No. 1879 (2003).

Here the regulatory timeframe to file a hearing request was made clear in CMS’s
September 22, 2011 notice letter, which spelled out in detail Petitioner’s hearing rights.
Petitioner’s failure to follow the precise instructions in CMS’s September 22, 2011 notice
letter and request a hearing within 60 days of its receipt of that letter does not constitute
good cause for Petitioner’s failure to timely file a hearing request.

Moreover, with regard to Petitioner’s argument that it relied to its detriment on advice
from CMS regarding how to request an extension to file a hearing request, nowhere does
Petitioner allege that it received advice from CMS employees prior to the expiration of
the 60-day period in which it was authorized to request a hearing. With specific regard to
Petitioner’s contacts with JK and JWR, Petitioner does not allege any contact with them,
or with anyone at CMS, prior to December 14, 2011, which Petitioner does not dispute
was after the expiration of the 60-day appeal period. Thus, even if I had the authority to
entertain claims of equitable estoppel, I would not find Petitioner harmed. The original
notice letters that Petitioner undisputedly received were clear that Petitioner had 60 days
to challenge the PICMP regardless of pending IDR proceedings.
V. Conclusion

For the reasons discussed above, I dismiss Petitioner’s hearing request, pursuant to 42
C.F.R. § 498.70(c), because it was not timely filed, and I deny Petitioner’s request for an
extension of time to file that hearing request, as no good cause justifies extending the
time for filing for IDR proceedings. Petitioner did not timely take advantage of the
opportunity to request a hearing, of which it was clearly notified in CMS’s September 22,
2011 notice letter.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Florida Health Sciences Center, Inc., d/b/a Tampa General Hospital,
(CCN: 10-0128),

Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-159
Decision No. CR2584
Date: August 8, 2012
DECISION DISMISSING HEARING REQUEST

This matter is before me on the Motion to Dismiss that the Centers for Medicare
and Medicaid Services (CMS) filed on February 29, 2012. Petitioner opposes the motion.
I conclude Petitioner is not entitled to a hearing, and I grant the Motion to Dismiss.

I. Background

Petitioner is a hospital, doing business in Tampa, Florida, that participates in the
Medicare program and is accredited by the Joint Commission on Accreditation of
Hospitals (JCAHO). The Florida Agency for Health Care Administration (state agency)
completed a complaint survey of Petitioner’s hospital on September 16, 2011. Based on
the survey findings, CMS determined Petitioner no longer met the requirements for
Medicare participation. CMS notified Petitioner on September 22, 2011, that its
deficiencies posed “an immediate and serious threat to the health and safety of patients,”
and its Medicare provider agreement would be terminated effective October 9, 2011 if the
immediate jeopardy was not removed by that date. CMS Ex. 2. The state agency
conducted a revisit survey on October 6, 2011. CMS notified Petitioner on October 24,
2011 that, based on the revisit findings, the immediate jeopardy had been removed. CMS
Ex. 3. As a result, the termination remedy never went into effect. CMS imposed no
other remedy. CMS Motion at 2.

CMS forwarded Petitioner’s November 18, 2011 request for hearing to the Civil
Remedies Division on November 28, 2011, and it was assigned to me on December 1,
2011 for hearing and decision.

CMS later moved to dismiss Petitioner’s hearing request on the grounds that Petitioner
does not have a right to a hearing. In addition to its motion to dismiss, CMS filed three
exhibits (CMS Exs. 1-3). Petitioner filed a response opposing CMS’s motion (P. Br.).

II. Issue

I consider whether Petitioner has a right to a hearing on CMS’s determination that it was
not in substantial compliance with Medicare conditions of participation where CMS
ultimately declined to terminate its Medicare provider agreement.

Til. Discussion

A. Petitioner is not entitled to a hearing because CMS did not terminate its
Medicare provider agreement.

With respect to CMS determinations that affect a hospital’s participation in the Medicare
program, a provider is entitled to an administrative law judge (ALJ) hearing where CMS
has made an adverse “initial determination” of a kind specified in 42 C.F.R. § 498.3(b).
42 C.F.R. § 498.3(a)(1). Administrative actions that do not constitute an initial
determination, and are therefore not subject to appeal, are specified at 42 C.F.R.

§ 498.3(d). Section 498.3(d)(9) specifically excludes an appeal for:

The finding that a hospital accredited by the Joint Commission on
Accreditation of Hospitals or the American Osteopathic Association is not
in compliance with a condition of participation, and a finding that that
hospital is no longer deemed to meet the condition of participation.

A CMS determination to terminate a provider agreement is an initial determination
reviewable by an administrative hearing. 42 C.F.R. § 498.3(d)(8). Nonetheless, CMS
ultimately did not terminate Petitioner’s provider agreement.

This is not a novel situation for Petitioner. Petitioner appealed a similar administrative
action by CMS based on findings from a 2008 survey where CMS proposed to terminate
Petitioner’s provider agreement and later rescinded that proposed action. See Florida
Health Science Ctr., Inc., d/b/a/ Tampa General Hospital, DAB No. 2263 (2009). In that
case, Petitioner also came into compliance prior to the termination date, and the
termination did not go into effect. The ALJ granted CMS’s motion to dismiss, and on
appeal the Board sustained the ALJ’s order to dismiss Petitioner’s request for hearing and
is ruling to deny reconsideration to vacate the dismissal. See Florida Health Science
Ctr., Inc., DAB No. 2263, at 5 (“A JCAHO-accredited hospital . . . has no right to an ALJ

earing solely to contest findings of noncompliance with the Medicare conditions of
participation . .. when a proposed termination has been rescinded.”’)

B. Petitioner’s inability to participate in the Hospital Value-Based Purchasing
program is not an enforcement remedy subject to review in this forum.

Petitioner argues that this request for hearing should not be dismissed because Petitioner
will “suffer pecuniary loss” as a consequence of CMS’s administrative actions.
Petitioner claims that these actions preclude its eligibility for the Hospital Value-Based
Purchasing (HVBP) credits for fiscal year 2013. Petitioner states that this “significant
monetary penalty” is a direct consequence of CMS’s findings of noncompliance. P.
Request for Hearing at 2; P. Br. at 1-3.

Petitioner explains that the HVBP program awards hospitals that meet certain
performance standards. Petitioner further explains that if a hospital has been cited for
deficiencies that pose immediate jeopardy to patient health or safety, the hospital is
excluded from participating in the program. P. Br. at 2, citing 42 U.S.C.

§ 1395ww(0)(C)(ii)(I1).

Petitioner now claims this harm is different from the argument it presented to the Board
in DAB No. 2263. Petitioner distinguishes the two cases by stating that the HVBP
program did not yet exist during its prior appeal in 2008, and the Board in DAB No. 2263
eld that the alleged harms Petitioner was advancing were “merely speculative.”
Petitioner now states that CMS imposed a severe remedy by depriving Petitioner of its
eligibility for the HVBP program and that this harm is more than speculative. P. Br. at 2-
4.

Even if I were to agree that this future exclusion was not speculative, CMS’s
administrative actions still do not create a right to a hearing where a provider would not
otherwise have a right to a hearing under the regulations. See Golden Living Ctr. —
Grand Island Lakeview, DAB No. 2364, at 5-6 (2010) (holding the impact of
noncompliance findings on a future designation as a Special Focus Facility does not give
a facility an appeal right); see also Columbus Park Nursing & Rehab. Ctr., DAB No.
2316, at 5-8 (2012) (holding that the negative impact of noncompliance findings on the
facility’s Five-Star Quality Rating does not create an appeal right).

Petitioner also argues that denying it a hearing infringes upon its due process rights.
Petitioner raised this Constitutional issue during its appeal in DAB No. 2263. The Board
made clear then that neither the Board nor ALJs can ignore unambiguous statutes or
regulations on the basis that they are unconstitutional. DAB No. 2263, at 6.

I find that there is no initial determination over which I have jurisdiction, and Petitioner
has no right to a hearing to contest CMS’s administrative actions resulting from the
September 16 and October 6, 2011 surveys of its hospital. An ALJ may dismiss a
hearing request where a party has no right to a hearing, and I therefore grant CMS’s
motion to dismiss pursuant to 42 C.F.R. § 498.70(b).

IV. Conclusion

I have no jurisdiction over Petitioner’s hearing request and therefore order it dismissed.
Parties may request that an order dismissing a case be vacated pursuant to 42 C.F.R. §
498.72.

/s/
Joseph Grow
Administrative Law Judge