Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)

Alexandria Place (CCN: 35-5441), ) Date: August 5, 2008
)
Petitioner, )
)

-v.- ) Docket No. C-07-477

) Decision No. CR1827
Centers for Medicare & Medicaid )
Services. )
)

DECISION

Petitioner, Alexandria Place, a skilled nursing facility that provides care to Medicare
beneficiaries in North Carolina, appeals the Centers for Medicare & Medicaid Services’
(CMS’s) determinations. The parties have agreed that this matter may be decided on the
written record, without an in-person hearing. For the reasons set forth below, I sustain
CMS’s determination to impose a civil money penalty (CMP) in the amount of $3050 per
day for the period of October 15, 2006 through February 21, 2007 and find that the
deficiencies posed immediate jeopardy to resident health and safety. I also sustain the
CMP in the amount of $150 per day for the period of February 22, 2007 through March
25, 2007.'

' Since I sustain the civil money penalties, the loss of the Nurse’s Aide Training

Program (NATCEP) is also sustained.
I. Background

On February 23, 2007, the North Carolina Department of Health and
state survey agency, conducted a recertification and complaint survey

Human Services, the
of Alexandria

Place. The state survey agency determined that Alexandria Place was not in substantial
compliance with eleven participation requirements, four of those deficiencies constituted
immediate jeopardy to residents’ health and safety for a period beginning October 15,

2006 through February 22, 2007, when the immediate jeopardy was a

ated, and that

substantial noncompliance continued at a lesser scope and severity until March 25, 2007.

I directed the parties to file a pre-hearing exchange consisting of their proposed exhibits,

including the written direct testimony of their proposed witnesses, an

brief. CMS filed

a brief and proposed exhibits identified as CMS Exhibits (Exs.) 1-32 and CMS

Attachment (Att.) A; Petitioner filed a brief and proposed exhibits ide

ntified as Petitioner

(P.) Exs. 1-36. The case was scheduled for an in-person hearing. Prior to the hearing, the

parties waived by joint written notice the in-person hearing and agree:

d that the case could

be heard and decided based on their written submissions. I then cancelled the hearing but

afforded each party the opportunity to file a final brief. Each party di
I receive into evidence all of the parties’ proposed exhibits.
II. Issues, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

dso.

1. Petitioner failed to comply substantially with Medicare

participation requirements;

2. CMS’s determination that Petitioner’s noncompliance
during the period from October 15, 2006 through February
21, 2007, at the immediate jeopardy level of noncompliance,

is clearly erroneous;

3. Petitioner remained noncompliant, albeit at a level of

noncompliance that is less than immediate jeopardy, fro
February 22, 2007 through March 25, 2007; and,

m

4. The civil money penalty amounts that CMS determined to

impose are reasonable.
3
B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision. I set
forth each Finding below as a separate heading.

1. Petitioner failed to comply substantially with Medicare participation
requirements during the period that ran from October 15, 2006 through
March 25, 2007.

a. Petitioner failed to comply substantially with the
requirements of 42 C.F.R. § 483.25.

The regulation requires a facility to provide each of its residents with the necessary care
and services to attain or maintain the highest practicable physical, mental, and
psychosocial well-being in accordance with that resident’s plan of care.

Resident # 19 was discharged to Petitioner’s facility from the hospital on December 29,
2006, where she had been treated for abdominal pain. At time of discharge, she was
wearing a “PICC line” (a catheter) that had been inserted into a vein near the bend of her
elbow. The hospital discharge instructions stated that the PICC line dressing “should be
changed weekly and as needed.” P. Ex. 13, at 159. However, no order was entered into
the resident’s facility records for changing the dressing. CMS Ex. 1, at 2.

The dressing wasn’t changed or removed at any time prior to January 22, 2007, when the
resident was transferred back to the hospital for evaluation of abdominal pain and
diarrhea. The attending physician noted that the last dressing change for the PICC line

ad been on December 29, 2006, the day the resident had been previously discharged
from the hospital to the facility. P. Ex. 13, at 150, 152. The physician observed a foul
smell when the bandage was removed and concluded that the PICC line was clearly
infected. Jd. at 153-154. The resident was noted to have all the signs and symptoms of
sepsis and the physician opined that the sepsis was likely caused by the resident’s infected
PICC line. Two days later sepsis was confirmed; Resident # 19 was found with “positive
acteremia” and the blood cultures, which were obtained through the PICC line, were
‘positive for gram-positive cocci.” P. Ex. 13, at 144-146. Resident # 19 was discharged
from the hospital and readmitted to Petitioner’s facility on January 24, 2007. The
discharge physician at the hospital confirmed the PICC line infection and sepsis in his
Discharge Diagnoses and only comfort measures were ordered for her as her condition
appeared terminal. P. Ex. 13, at 145; CMS Ex. 17, at 110. Petitioner’s readmission note
for Resident # 19 dated January 24, 2007 stated that the resident had “PICC line sepsis.”
P. Ex. 13, at 99. Resident # 19 died on January 30, 2007. CMS Ex. 17, at 64.

4

On its face this evidence establishes a clear case of noncompliance by Petitioner with
regulatory requirements. The prima facie evidence is that Petitioner’s staff failed to carry
out an explicit directive made to it by a hospital when Resident # 19 was discharged to
Petitioner’s care on December 29, 2006. That failure at the least exposed Resident # 19
to the possibility of a life-threatening infection.

A nursing facility’s essential function is to provide skilled nursing care to those residents
who are in its charge. The staff of a facility must be as attentive to the orders of
physicians or hospital staff as would be nurses in any other setting. Here, the prima facie
evidence shows a complete failure by Petitioner to discharge its responsibilities to
Resident # 19.

Petitioner makes the following arguments in response to this prima facie evidence of
noncompliance:

. It says that it followed hospital discharge orders, noting that it flushed the PICC
line with saline and heparin consistent with the hospital’s directive.

. It argues that it routinely assessed the area around the resident’s PICC line.

. It asserts that the resident never complained of soreness or pain around the PICC
line site.

. The physician saw the resident four times during the period at issue and never

ordered the PICC line dressing be changed.
. t contends that the resident was already on antibiotics

. t asserts that it attempted to send the resident to the hospital on January 6, 2007
and the resident refused to go.

: t contends that the resident’s PICC line wasn’t infected.

. Petitioner contends that “two experts” determined that Petitioner cared
appropriately for Resident # 19.

I find Petitioner’s arguments to be without merit. The hospital’s Discharge Instructions
for the PICC line stated that the dressing on the insertion site should be changed weekly
and as needed, and there was no other order for dressing changes in Resident # 19’s
medical record at the facility to contravene the Discharge Instructions. More importantly,
Petitioner does not dispute that the dressing was not changed and there were no orders

5

other than the Discharge Instructions given for the care of the dressing. P. Ex. 31. The
undisputed fact that Resident # 19 was returned to Petitioner from the hospital with a
PICC line was sufficient to place Petitioner on notice that it needed to take measures to
protect Resident # 19 against the possibility of infection.

Petitioner knew or should have known that a catheter can be a conduit for infection. But,
Petitioner failed to take any meaningful measures to protect Resident # 19. Specifically:

. It failed to carry out the directives in the Discharge Instructions of December 29,
2006 that the PICC line dressing be changed weekly or as needed. Consequently,
Petitioner failed to carry out all the hospital discharge orders.

. The failure to change the dressing at all from the time of Resident # 19’s discharge
on December 29, 2006 until her readmission to the hospital on January 22, 2007
plainly contravenes the professionally recognized standard for caring for PICC
lines. The standard mandates that gauze dressings (like the one Resident # 19
wore) be changed every 24-72 hours and that transparent dressings (also like the
one Resident # 19 wore) be changed every 7 days. CMS Ex. 1, at 4; CMS Ex. 17,
at 28.

. It failed to plan for, or to implement, any plans for caring for the PICC line. The
resident’s facility record is devoid of any orders concerning changing the PICC
line dressing.

. It had no policies in place governing care of residents’ PICC lines. It was only
after the incident involving Resident # 19 that Petitioner obtained a policy from a
sister facility that requires PICC line dressing changes every 72 hours unless
otherwise ordered by the resident’s physician. CMS Ex. 17, at 72. Their inaction
with respect to changing the dressing is contrary to every recognized standard of
care for the care of PICC line.’

. Petitioner’s assessing the area “around” the PICC line is no substitute for changing
the dressing. Obviously, the staff could not have possibly assessed the area
underneath the dressing because they never removed the dressing.

2 There are other additional professional guidelines that are consistent with
changing dressings at least every 72 hours; some suggest changing the gauze tape every
24 hours and the transparent dressing every 7 days. See CMS Ex. 17, at 72; P. Ex. 13, at
197, 204-205, 208.
6

t asserts that the resident never complained of soreness or pain around the PICC
line site. But, Petitioner’s obligations to the resident were not limited to
responding to the resident’s complaints. Petitioner had an affirmative duty to plan
to protect the resident against infection (especially this resident who had just been
treated for a significant infection) and to implement that plan, consistent with the
ospital discharge order and with professionally recognized standards of care and
that duty was not dependent on the resident’s complaints (or lack of complaints) of
pain.

Petitioner’s medical director, a physician, saw the resident four times during the
period at issue and never ordered the PICC line dressing be changed. However,
the physician apparently never noticed that the resident was wearing a PICC line.
CMS Ex. 1, at 6-7; CMS Ex. 19, at 28; P. Ex. 13, at 92-94. Moreover, Petitioner
ad an independent duty to assess the resident, including assessing the dressing
and the need to care for it. At a minimum, Petitioner’s staff should have raised the
issue of changing the dressing with the physician based on their knowledge of the
PICC line and professionally recognized standards governing dressing changes.
Furthermore, if the physician did not issue orders superseding the hospital
directive to change the dressing, then the hospital directive still governed and
Petitioner’s staff should have implemented it.

Whether the resident was on antibiotics is an irrelevant argument. The PICC line
was a potential source of infection even if the resident was on antibiotics and the
fact that the resident was receiving antibiotics did not relieve Petitioner from
discharging its duties to the resident.

Resident # 19’s refusal to go to the hospital earlier does not excuse Petitioner from
discharging its duties; it does not create an excuse for Petitioner simply to
disregard its obligation to provide care that meets professionally recognized
standards.

Petitioner’s contention that the resident’s PICC line was not infected is simply
wrong. It is premised on Petitioner’s contention that the staff saw no swelling or
redness around the line and that the resident did not complain of pain. But, in fact,
the staff could not have made meaningful observations about what was going on at
the insertion site because it never removed the dressing. And, of course, the
resident was determined to have a fatal infection when she finally arrived at the
hospital. P. Ex. 13, at 144-146; CMS Ex. 17, at 64, 110.
7

. Petitioner contends that its “two experts” determined that Petitioner cared
appropriately for Resident # 19. The first, Linda Howard, Petitioner’s corporate
manager, says that the resident was cared for appropriately because the care that
Petitioner gave was consistent with physician orders. P. Ex. 31, at 3. But, in fact,
there are no physician orders saying “don’t change the dressing.” Here, the only
orders governing this were issued by the hospital and they definitely told Petitioner
to change the dressing. Petitioner’s care thus was inconsistent with the only orders
extant that governed the dressing. The second expert, Dr. Michele Haber, also
opines that Petitioner’s staff followed the doctor’s orders. P. Ex. 32. That is not
correct; Petitioner’s staff clearly failed to follow the hospital discharge orders. She
also contends that it cannot be determined that infection to the PICC line was the
cause of the resident’s death. It is unnecessary that I decide that a PICC line-
related infection caused the resident’s death and, in fact, it’s unnecessary that I
decide even that the resident’s PICC line became infected. Petitioner’s
noncompliance is based on the facility’s failure to discharge its professional
responsibilities to the resident. An adverse outcome of Petitioner’s
noncompliance, while certainly not irrelevant, is not necessary in order for me to
find noncompliance.

b. Petitioner failed to comply substantially with the requirements
of 42 C.F.R. § 483.25(n).

The basis for the noncompliance allegations with respect to this regulation is that, at no
time between October 15, 2006 and February 22, 2007, did Petitioner have in place a
policy or procedure to ensure that each resident of Petitioner’s facility is offered
pneumococcal pneumonia vaccination (PPV). 42 C.F.R. § 483.25(n)(2)._ CMS contends
also that “as a result, 9 residents, who were eligible to receive the .. . [PPV] were not
offered and had not received the immunization.” CMS’s final brief at 9.

CMS amended the regulations at 42 C.F.R. § 483.25(n) specifically to increase
immunization rates in Medicare and Medicaid participating long-term care facilities by
requiring those facilities to offer each resident immunization against influenza annually as
well as lifetime immunization against pneumococcal disease with the intended result of
decreasing the morbidity and mortality rates from influenza and pneumococcal disease.
70 Fed. Reg. 58,833 (October 7, 2005). These regulations became effective October 15,
2006. See CMS Manual System, Pub. 100-07 State Operations, Transmittal 21, October
26, 2006.
8

The regulation requires each facility to develop policies and procedures that enure that:
each resident receive education regarding the benefits and potential side effects of the
immunization; each resident is offered a PPV unless it is medically contraindicated or the
resident has already been immunized; the resident or legal representative has the
opportunity to refuse immunization; and the resident’s medical record includes
documentation that indicates at a minimum that the resident received education and the
resident received the immunization or did not, due to medical contraindication or refusal.
42 C.F.R. § 483.25(n)(2). Nevertheless, the final rule requires every facility to offer
immunization because a goal of the regulation is to prevent the spread of preventable
illness. See 70 Fed. Reg. 58,840.

There is no dispute that at the time of the survey, Petitioner had no set policy or procedure
in place for PPV. CMS Ex. 1, at 22; CMS Ex. 19, at 31. Petitioner argues that it had put
in place a procedure by which it was obtaining residents’ consent for the PPV as part of
the admission process. But this is only one small part of the regulatory requirement for a
policy or procedure. Petitioner has not pointed to a specific policy that encompasses all
the specific requirements of the regulation. As a result, the medical records of the
residents were not always accurately documented with respect to whether the
immunization had been given and many of the residents who had previously consented to
the immunization did not receive it until the surveyors were in the facility and determined
that the facility had not actually offered the immunization to a significant number of the
residents. CMS Ex. 24.

The evidence clearly demonstrates that there was no systematic and comprehensive policy
in place to ensure that the requirements of 42 C.F.R. § 483.25(n) were effectuated; that
the necessary interventions for PPV administration were planned and implemented for
each resident. This failure by Petitioner to have in place policies and procedures to
implement the regulatory requirements is, in and of itself, noncompliance, and as I
discuss below, a reason for finding immediate jeopardy.

While not irrelevant, it is not necessary to establish that residents actually failed to
receive the vaccine. Thus, the centerpiece of CMS’s case is not the failure of residents to
receive the vaccine. Any failure to give residents the vaccine is the consequence of
Petitioner’s noncompliance. While not unimportant, that consequence is not a necessary
element of a finding of noncompliance.

The care of nine residents is at issue (Resident #s 3, 6, 7,10, 11, 12, 13, 17, and 20). The
single most salient point about these residents is that none of them were offered the PPV
during the period between October 15, 2006 and February 22, 2007 because Petitioner
had no system in place to assess whether any of these residents needed to be vaccinated.
Petitioner’s arguments that some of these residents did not actually need to be vaccinated
9

are irrelevant because Petitioner was in no position to make rational determinations about
these residents needs, nor was it able to meet their needs without a system in place in
compliance with regulatory requirements for assessing the residents and providing them
with the vaccine.

Petitioner argues that it had “put in place a procedure by which it was obtaining residents’
consent for the PPV as part of the admission process. . . .,”citing P. Ex. 31. Petitioner’s
final brief at 13. But, P. Ex. 31 is a copy of the CMS Form 2567, the Statement of
Deficiencies, and not a facility internal document. It is 95 pages long and Petitioner has
not cited to anything specific within the exhibit. The only language in the exhibit that is
even remotely relevant, aside from CMS’s allegations of noncompliance, is Petitioner’s
plan of correction for its noncompliance with 42 C.F.R. § 483.25(n). But, the plan of
correction states a completion date of February 23, 2007. So, the exhibit does not prove a
thing about Petitioner’s compliance as of October 15, 2006 or up until February 22, 2007.

Petitioner also says that the facility’s compliance is proven by the residents’ records.
Petitioner’s final brief at 13; P. Ex. 8, at 3°; P. Ex. 12, at 15; CMS Ex. 9. at 7°;
CMS Ex. 10, at 8°; CMS, Ex. 7, at 9’; CMS Ex. 12, at 8°; CMS Ex. 13, at 7’, and CMS

* Consent for the PPV was given on December 5, 2006, but there is no indication
that this resident was given the PPV prior to her discharge on December 27, 2006.

* Although this resident was readmitted to the facility in 2003, the PPV consent
form was signed on February 19, 2007 and the PPV given on February 22, 2007. CMS
Ex. 24

‘This resident’s consent form was signed November 28, 2006, but the PPV was not
administered to him until February 22, 2007. CMS Ex. 24.

® Resident’s consent form was signed on November 28, 2006, but the PPV was not
given to him until February 22, 2007. CMS Ex. 24

7 Resident originally signed a consent form on March 6, 2006 and then again on
November 30, 2006, but the PPV was not administered until February 22, 2007. CMS
Ex. 24

* Consent form for resident was signed December 4, 2006, but the PPV was not
administered to him until February 22, 2007. CMS Ex. 24

° Exhibit indicates that consent for the PPV was given on December 5, 2006, but
(continued...)
10

Ex. 14, at 6'°. But, all that the records “prove” is that the residents had signed consent
forms to be vaccinated. That says nothing about whether Petitioner was assessing its
residents or offering them the vaccine or whether it had a plan in place to manage
vaccinations. And, of course, nine of the residents were not vaccinated prior to February
22, 2007.

Petitioner argues that some of these residents (Residents #s 3, 6, 10, 12, and 20) had all
een vaccinated prior to October 15, 2006 and, therefore, it was not deficient in providing
care for them. But, the issue here is not only whether residents were vaccinated but
whether Petitioner had in place plans to assure that those residents who needed
vaccinating were offered the opportunity in a timely manner. That, in turn, required
Petitioner to have a system for assessing the needs of its residents with respect to the
PPV. But, the evidence is that Petitioner had neither and it has offered nothing to show
that it had such plans. Saying that some of the residents did not really need to be
vaccinated begs the question of whether Petitioner had the required systems in place.

Petitioner argues also that Resident #s 13 and 14 had been at the facility for less than 30
days and, therefore, were not required to be vaccinated. Again, this begs the question of
whether Petitioner had a system in place designed to address its residents’ needs. While
the facility may have succeeded in getting a signed consent form, there is nothing to
suggest that the PPV had been given or was planned to be offered to these residents. The
fact that they left the facility in less than 30 days was merely fortuitous.

Petitioner argues that Resident # 7 would not consent to receiving the vaccine and that
two additional residents suffered from aspiration pneumonia and would not have
benefitted from the vaccine. Again, these arguments are irrelevant to the issue of whether
Petitioner had the requisite systems in place. The entire purpose of the regulation was to
decrease the occurrence of disease preventable by vaccine and to mandate that facilities
have in place a procedure where by residents are offered the PPV. Just getting consent
for the PPV for the resident in and of itself is worthless if the PPV is then not given to the
resident in a timely fashion.

°(...continued)
there is no indication that it was given to resident. CMS Ex. 13, at 8; CMS Ex. 24.

'° Consent was given for resident for the PPV on December 11, 2006, but there is
no indication that it was given to resident. CMS Ex. 14, at 7; CMS Ex. 24.
11

c. Petitioner failed to comply substantially with the requirements
of 42 C.F.R. § 483.75(0)(1).

This deficiency was originally assessed at immediate jeopardy level of scope and severity
and, then, persisted at non-immediate jeopardy level until the facility attained full
compliance with participation requirements on March 25, 2007. The regulation that is at
issue requires a facility to maintain a quality assessment and assurance committee that
would meet at least quarterly to identify issues with respect to which quality assessment
and assurance activities are necessary; and develop and implement appropriate plans of
action to correct identified quality deficiencies. CMS asserts that Petitioner failed to
comply with the regulation in that it failed to identify the systematic problem that the
facility had in offering and administering the PPV to its residents. CMS premises this
assertion on Petitioner’s failure to identify a need to offer vaccination to four residents,
Resident #s 3, 10, 17, and 20.

Petitioner focuses on whether these residents actually needed to be vaccinated.
According to Petitioner, none of these residents needed to be vaccinated because:
Resident # 3 suffered from aspiration pneumonia and would not have benefitted by being
vaccinated; Resident # 10 suffered from an acute upper respiratory infection that was not
pneumonia; Resident # 17 had not consented to administration of the vaccine prior to the
survey and had not suffered from pneumonia after October 15, 2006; and Resident # 20
received the PPV in 2004.

Petitioner’s assertions, however, do not address the question of whether Petitioner’s
quality assurance committee was doing what it was required to do. The issue here is not
whether individual residents would have benefitted from being vaccinated. The issue is
whether Petitioner’s quality assurance committee was in a position to evaluate whether
residents were receiving appropriate care, and, if not, to take steps to assure that any
perceived problems would be corrected. At least two of the residents suffered bouts of
pneumonia after October 15, 2006, the date by which all facilities were to have in place
policies and procedures for administering a PPV program, and the quality assurance
committee failed to address those incidents in order to determine whether there were
problems regarding pneumonia prevention that the facility was not addressing but needed
to address. The fact that hindsight may prove that these episodes were not pneumococcal
pneumonia does not excuse Petitioner’s failure to act.
12

2. CMS’s determinations of immediate jeopardy are not clearly
erroneous.

Immediate jeopardy exists if the facility’s noncompliance has caused or is likely to cause
“serious injury, harm, impairment or death to a resident.” 42 C.F.R. § 488.301. CMS’s

determination as to the level of a facility’s noncompliance — which includes its immediate
jeopardy finding — must be upheld unless it is “clearly erroneous.” 42 C.F.R. § 498.60(c).

The Departmental Appeals Board has observed repeatedly that the “clearly erroneous”
standard imposes on facilities a “heavy burden” to show no immediate jeopardy, and has
sustained determinations of immediate jeopardy where CMS presented evidence “from
which ‘[o]ne could reasonably conclude’ that immediate jeopardy exists.” Barbourville
Nursing Home, DAB No. 1962, at 11 (2005); Florence Park Care Center, DAB No.
1931, at 27-28 (2004), citing Koester Pavilion, DAB No. 1750 (2000). Here, the facility
has not satisfied its burden.

With all three of the deficiencies discussed above, there was a high probability or
likelihood of serious injury, harm, or death to Petitioner’s residents. Petitioner’s
noncompliance with respect to Resident # 19 denied that resident the necessary care and
services to attain or maintain the highest practicable physical, mental, and psychosocial
well-being required by 42 C.F.R. § 483.25. It is evident that failure by Petitioner’s staff
to carry out the hospital’s directive regarding dressing changes created a high probability
that the resident would become infected. It is not necessary for me to find that the
resident’s sepsis was caused by Petitioner’s deficient care; rather, the fact that Petitioner
flagrantly violated professionally recognized standards of care by failing to change this
resident’s dressing is sufficient to establish immediate jeopardy. Petitioner offered no
evidence to prove the finding to be clearly erroneous.

As for the immediate jeopardy findings with respect to Petitioner’s deficient compliance
with 42 C.F.R. § 483.25(n) and § 483.75(0)(1), there is also a high probability of harm to
residents. The regulation was promulgated because of the fact that pneumococcal
pneumonia is a serious problem among the aged and in institutions that house aged and
debilitated residents. The purpose of the regulation is to require facilities to address this
problem systematically and forcefully in order to decrease morbidity and mortality rates
for a disease that can be prevented in large part by proper vaccination. By failing to
develop such policies, Petitioner greatly increased the risk that some of its residents
might succumb to pneumococcal pneumonia. The fact that Petitioner’s quality assurance
committee failed to address the lack of a policy and the resulting problems because ofa
lack of such a program created a situation in which Petitioner’s noncompliance was likely
to cause serious injury, harm, impairment, or death to a resident. Again, Petitioner
offered no evidence to prove these findings to be clearly erroneous.
13

3. Petitioner remained noncompliant, albeit at a level of noncompliance
that is less than immediate jeopardy, from February 22, 2007 through
March 25, 2007.

Petitioner offered no evidence to show that it corrected its noncompliance with 42 C.F.R.
§ 483.75(0)(1) prior to March 25, 2007. Therefore, it has not overcome the presumption
that its noncompliance continued from the date first established until the date that CMS
found it had re-attained compliance.

4. CMS’s penalty determinations are reasonable.

a. CMS’s determination to impose civil money penalties of $3050
per day during the period of Petitioner’s immediate jeopardy level
noncompliance is reasonable as a matter of law.

Regulations governing civil money penalty amounts provide for two ranges of penalties.
Penalties for deficiencies that are at the immediate jeopardy level fall within a range of
between $3050 and $10,000 per day. 42 C.F.R. § 488.438(a)(1)(i). The minimum daily
immediate jeopardy level penalty amount is $3050 and that is what CMS imposed against
Petitioner for its days of immediate jeopardy level noncompliance. Consequently, if I
conclude that immediate jeopardy existed then I must sustain that penalty amount as
reasonable as a matter of law.

I note that Petitioner talks about financial hardship as a basis for not imposing the
penalties. However, $3050 per day is the minimum immediate jeopardy level CMP and I
have no authority to impose a penalty amount that is less than the minimum, Petitioner’s
hardship argument notwithstanding. I find, moreover, that Petitioner offered no evidence
to show that it was unable financially to pay the penalty. There is no credible evidence
that describes Petitioner’s true financial condition or the financial impact on Petitioner’s
operations of the civil money penalties that I sustain here.

b. Civil money penalties of $150 per day for the period of
Petitioner’s non-immediate jeopardy level noncompliance are
reasonable.

The range of permissible civil money penalties for non-immediate jeopardy level
deficiencies is from $50 to $3000 per day. 42 C.F.R. § 488.438(a)(1)(ii). There are
regulatory criteria for deciding what is reasonable within this range. The criteria include:
the seriousness of a facility’s noncompliance; its compliance history; its culpability; and
its financial condition. 42 C.F.R. §§ 488.438(f)(1)-(4); 488.404 (incorporated by
reference into 42 C.F.R. § 488.438(f)(3)).
14

The undisputed material facts of this case provide ample support for a penalty amount of
$150 per day. I find that the seriousness of Petitioner’s noncompliance is, in and of itself,
sufficient to justify the penalty amount. The $150 per day CMP imposed by CMS after
Petitioner abated immediate jeopardy but before it attained full compliance is minimal
(five percent of the maximum allowable amount) and reasonable given the relative
seriousness of Petitioner’s noncompliance.

Petitioner’s noncompliance continued with respect to the above-discussed deficiencies at
a lower level of scope and severity. Therefore, there remained a significant risk to all of
Petitioner’s residents until Petitioner made certain that their corrective actions were
implemented consistent with regulatory requirements and substantial compliance was
achieved with respect to those deficiencies.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

Date: August 5, 2008

Saturn Nursing and Rehab Center,
(CCN: 34-5489),

Decision No. CR1826

)
)
)
)
)
) Docket No. C-06-468
Petitioner, )
)
)
)
)

DECISION

Petitioner, Saturn Nursing and Rehab Center, violated 42 C.F.R. § 483.25(I)(1)(iii)' with
regard to two residents during the period March 7 through 14, 2006. The determination
that the violation posed immediate jeopardy for Petitioner’s residents during the period of
March 7 through 14, 2006 is not clearly erroneous. A civil money penalty (CMP) of
$3050 per day for eight days, a total CMP of $24,400, is reasonable. Petitioner’s
authority to conduct a Nurse Aide Training and Compentency Evaluation Program
(NATCEP) was required to be withdrawn for the two year period March 16, 2006 through
March 15, 2008.

I. Background

Petitioner, located in Charlotte, North Carolina, is certified to participate in the Medicare
program as a skilled nursing facility (SNF) and the North Carolina Medicaid program as a
nursing facility (NF). Petitioner was subject to an annual survey by the North Carolina
State Survey Agency (the state agency), which began on March 14 and concluded on
March 16, 2006, the results of which are reported in a statement of deficiencies (SOD)
dated March 16, 2006. Joint Stipulations of Fact (Jt. Stip.); Petitioner Exhibit (P. Ex.) 1.

' References are to the Code of Federal Regulations (C.F.R.) effective at the time
of the survey unless otherwise indicated.
2

The Centers for Medicare and Medicaid Services (CMS) notified Petitioner by letter
dated March 30, 2006, that the survey concluded on March 16, 2006, found Petitioner
was not in substantial compliance with program participation requirements and that CMS
was imposing remedies, including a CMP of $3050 per day effective March 7, 2006
through March 14, 2006 and $50 per day thereafter until substantial compliance was
achieved; a denial of payments for new admissions (DPNA) effective June 16, 2006 until
substantial compliance was achieved; and termination of Petitioner’s provider agreement
effective September 16, 2006, unless substantial compliance was achieved prior to that
date. CMS Exhibit (CMS Ex.) 7, at 2-3; P. Ex. 2. CMS advised Petitioner by letter dated
May 4, 2006, that an April 19, 2006 revisit survey concluded that Petitioner returned to
substantial compliance on April 10, 2006, and the DPNA and termination remedies were
rescinded. CMS Ex. 7, at 5; P. Ex. 3. The $50 per day CMP also ceased accruing as of
April 9, 2006 due to Petitioner’s return to substantial compliance on April 10, 2006.

Petitioner requested a hearing by an administrative law judge (ALJ) by letter dated May
19, 2006. Petitioner requested a hearing only as to the alleged violation of 42 C.F.R.

§ 483.25(1)(1)(iii), the finding of substandard quality of care and immediate jeopardy
related to that violation, and the CMP of $3050 per day for the period of March 7 through
14, 2006, which was imposed based upon that violation.” The case was assigned to me
for hearing and decision on May 30, 2006. I convened a hearing in Charlotte, North
Carolina on November 8, 2006. CMS offered and I admitted CMS Exs. | through 22.
Transcript (Tr.) 16. Petitioner offered and I admitted P. Exs. 1 through 33. Tr. 17. CMS
called as witnesses Amy Barnes, Registered Nurse (R.N.) and Linda Felts, both
surveyors. Petitioner called as witnesses, Ted Clontz, M.D., Petitioner’s current Medical
Director, and Angela Conrade, Petitioner’s Administrator. The parties submitted post-
hearing briefs; Petitioner filed a post-hearing reply brief, but CMS elected not to file a
reply brief.

II. Discussion

A. Findings of Fact
The following findings of fact are based upon the exhibits admitted, the parties’
stipulations of fact, and the testimony received at hearing. Citations to exhibit numbers

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

? Petitioner specifies that it did not request review as to the violations of 42 C.F.R.
§§ 483.20(k)(3)(i) (Tag F281, scope and severity (s/s) D); 483.20(k)(3)(ii) (Tag F282, s/s
D); 483.25(g)(2) (Tag F322, s/s D); 483.25(m)(2) (Tag F333, s/s D); and 483.35(h)(2)
(Tag F371, s/s F). Request for Hearing at 2, n. 1.
3

Resident 10 had an order to receive Coumadin daily. CMS Ex. 10, at 10, 11; P.
Ex. 11, at 3; P. Ex. 12, at 1.

Resident 10's order dated March 3, 2006, required that he have blood drawn for
laboratory testing on March 7, 2006, for Prothrombin Time (PT) and International
Normalized Ratio (INR). CMS Ex. 10, at 11; P. Ex. 12, at 1.

Resident 17 also had a physician’s order for Coumadin. P. Ex. 26, at 2; P. Ex. 27,
at 1.

A physician’s order for Resident 17 dated February 28, 2006, required a laboratory
draw for PT/INR recheck in one week, which would have been March 7, 2006. P.
Ex. 27, at 1.

Blood draws from both Resident 10 and 17 occurred on March 7, 2006.

The laboratory completed the PT and INR testing for the March 7, 2006 samples
from Resident 10 and 17, but the results were not reported back to Petitioner the
next day as they should have been.

During the survey on March 15, 2006, the surveyors discovered that there were no
laboratory reports for PT/INR for Resident 10 and 17 from a blood draw on March
7, 2008, and that they reported the problem to Petitioner’s Director of Nursing
(DON) and the laboratory results were obtained. Tr. 99; CMS Ex. 5, at 11; P. Ex.
14, at 3; P. Ex. 31, at 2; CMS Post-Hearing Brief (CMS Brief) at 3-4; Petitioner’s
Post-Hearing Brief (P. Brief) at 9; Petitioner’s Reply Brief (P. Reply) at 6.

There is no dispute that the untimely delivery of the reports to Petitioner was the
fault of the laboratory. P. Ex. 33.

When the laboratory reports were received they showed that the laboratory
reported high results for both Residents 10 and 17. P. Ex. 14, at 3; P. Ex. 31, at 2.

Residents 10 and 17 suffered no harm due to delayed receipt of the laboratory
reports for PT/INR. Tr. 50, 68, 97-99.

Coumadin is a type of blood thinner used to decrease the risk of blood clots that
may develop in the body. Tr. 37.
4

f the Coumadin dose is too low, the blood is not adequately thinned and the
patient is not protected from risks posed by blood clots, but if the dose of
Coumadin is too high, the patient is at risk for spontaneous hemorrhages or other
leeding and bruising that may result from even minimal trauma. Tr. 38-39, 52.

Regular monitoring of Coumadin levels is a standard of care. Tr. 51.
Long-term Coumadin therapy was appropriate for both Residents 10 and 17 (Tr.
38) and the laboratory testing ordered for PT/INR on March 7, 2006 was necessary

ecause their dose of Coumadin was being adjusted (Tr. 50-51).

Petitioner’s staff did not notice that no laboratory results for PT/INR testing for
Residents 10 and 17 were received by March 8, 2006.

Petitioner failed to monitor the laboratory results from the samples drawn on
March 7, 2006, and failed to report the results to the treating physicians so that the
physicians could make decisions regarding adjusting the Coumadin dose for each

resident.

Residents 10 and 17 were at risk for serious harm or death because their Coumadin
levels were not monitored.

B. Conclusions of Law
Petitioner’s request for hearing was timely and I| have jurisdiction.

CMS made a prima facie showing of a violation of 42 C.F.R. § 483.25(I)(1)(iii)
(Tag F329) (unnecessary drugs).

Petitioner failed to rebut CMS’s prima facie showing of a violation of 42 C.F.R.
§ 483.25(1)(1)(iii) (Tag F329) either by showing by a preponderance of the
evidence that the facility was in substantial compliance or that Petitioner had an
affirmative defense.

CMS’s finding of immediate jeopardy was not clearly erroneous.

A CMP of $3050 per day for the period March 7 through 14, 2006, a total CMP of
$24,400, is reasonable.
C. Issues
The issues in this case are:

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

Whether the remedy imposed is reasonable.
D. Applicable Law

Petitioner is a long-term care facility participating in the federal Medicare program as a
SNF and in the state Medicaid program as a NF. The statutory and regulatory
requirements for participation by a long-term care facility are found at sections 1819 and
1919 of the Social Security Act (Act) and at 42 C.F.R. Part 483. Sections 1819 and 1919
of the Act vest the Secretary of the Department of Health and Human Services with
authority to impose civil money penalties against a long-term care facility for failure to
comply substantially with federal participation requirements.

Pursuant to the Act, the Secretary has delegated to CMS and the states the authority to
impose remedies against a long-term care facility that is not complying substantially with
federal participation requirements. “Substantial compliance means a level of compliance
with the requirements of participation such that any identified deficiencies pose no greater
risk to resident health or safety than the potential for causing minimal harm.” 42 C.F.R.

§ 488.301 (emphasis in original). A deficiency is a violation of a participation
requirement established by the Secretary through his regulations at 42 C.F.R. Part 483.
Facilities that participate in Medicare may be surveyed on behalf of CMS by state survey
agencies in order to determine whether the facilities are complying with federal
participation requirements. 42 C.F.R. §§ 488.10-488.28, 488.300-488.335. Pursuant to
42 C.F.R. Part 488, CMS may impose a per instance or per day CMP against a long-term
care facility when a state survey agency concludes that the facility is not complying
substantially with federal participation requirements. 42 C.F.R. §§ 488.406; 488.408;
488.430. The regulations also give CMS a number of other enforcement remedies that
may be imposed if a facility is not in compliance with Medicare requirements. 42 C.F.R.
§ 488.406.
6

The regulations specify that a CMP that is imposed against a facility on a per day basis
will fall into one of two ranges of penalties. 42 C.F.R. §§ 488.408, 488.438. The lower
range of CMP, from $50 per day to $3000 per day, is reserved for deficiencies that do not
constitute immediate jeopardy but either cause actual harm to residents, or cause no actual
harm, but have the potential for causing more than minimal harm. 42 C.F.R.

§ 488.438(a)(1)(ii). The upper range of CMP, from $3050 per day to $10,000 per day, is
reserved for deficiencies that constitute immediate jeopardy to a facility’s residents, and
in some circumstances, for repeated deficiencies. 42 C.F.R. §§ 488.438(a)(1)(i), (d)(2).
Pursuant to 42 C.F.R. § 488.301, “(i)mmediate jeopardy means a situation in which the
provider’s noncompliance with one or more requirements of participation has caused, or
is likely to cause, serious injury, harm, impairment, or death to a resident.” (emphasis in
original).

The Act and regulations make a hearing before an ALJ available to a long-term care
facility against which CMS has determined to impose an enforcement remedy. Act,
section 1128A(c)(2); 42 C.F.R. §§ 488.408(g); 498.3(b)(13). The hearing before an ALJ
is a de novo proceeding. Anesthesiologists Affiliated, et al., DAB CR65 (1990), aff'd, 941
F.2d 678 (8" Cir. 1991); Emerald Oaks, DAB No. 1800, at 11 (2001); Beechwood
Sanitarium, DAB No. 1906 (2004); Cal Turner Extended Care, DAB No. 2030 (2006);
The Residence at Salem Woods, DAB No. 2052 (2006). A facility has a right to appeal a
“certification of noncompliance leading to an enforcement remedy.” 42 C.F.R.

§ 488.408(g)(1); see also 42 C.F.R. §§ 488.330(e) and 498.3. However, the choice of
remedies by CMS or the factors CMS considered when choosing remedies are not subject
to review. 42 C.F.R. § 488.408(g)(2). A facility may only challenge the scope and
severity level of noncompliance found by CMS ifa successful challenge would affect the
range of the CMP that could be imposed by CMS or impact upon the facility’s Nurse Aid
Training and Competency Evaluation Program (NATCEP). 42 C.F.R. §§ 498.3(b)(14)
and (d)(10)(i). CMS’s determination as to the level of noncompliance “must be upheld
unless it is clearly erroneous.” 42 C.F.R. § 498.60(c)(2). This includes CMS’s finding of
immediate jeopardy. Woodstock Care Center, DAB No. 1726, at 9, 38 (2000), aff'd,
Woodstock Care Center v. Thompson, 363 F.3d 583 (6" Cir. 2003). The Departmental
Appeals Board (the Board) has long held that the net effect of the regulations is that a
provider has no right to challenge the scope and severity level assigned to a
noncompliance finding, except in the situation where that finding was the basis for an
immediate jeopardy determination. See, e.g., Ridge Terrace, DAB No. 1834 (2002);
Koester Pavilion, DAB No. 1750 (2000). Review of a CMP by an ALJ is governed by 42
C.F.R. § 488.438(e).
7

In this case, the state agency was required to withdraw Petitioner’s approval to conduct a
NATCEP. Pursuant to sections 1819(b)(5) and 1919(b)(5) of the Act, SNFs and NFs may
only use nurse aides who have taken a training and competency evaluation program.
Sections 1819(e) and 1919(e) of the Act impose upon the states the requirement to specify
what NATCEPs they will approve that meet the requirements established by the Secretary
and a process for reviewing and reapproving those programs using criteria set by the
Secretary. Pursuant to sections 1819(f)(2) and 1919(f)(2) the Secretary was tasked to
develop requirements for approval of NATCEPs and the process for review of those
programs. The Secretary promulgated regulations at 42 C.F.R. Part 483, subpart D.
Pursuant to 42 C.F.R. § 483.151(b)(2) and (e)(1) a state may not approve and must
withdraw any prior approval of a NATCEP offered by a skilled nursing or nursing facility
that: (1) has been subject to an extended or partial extended survey under sections
1819(g)(2)(B)(i) or 1919(g)(2)(B)(i) of the Act; (2) has been assessed a CMP of not less
than $5000; or (3) that has been subject to termination of its participation agreement, a
DPNA, or the appointment of temporary management. Extended and partial extended
surveys are triggered by a finding of “substandard quality of care” during a standard or
abbreviated standard survey and involve evaluating additional participation requirements.
“Substandard quality of care” is identified by the situation where surveyors identify one
or more deficiencies related to participation requirements established by 42 C.F.R.

§ 483.13 (Resident Behavior and Facility Practices), § 483.15 (Quality of Life), or

§ 483.25 (Quality of Care) that are found to constitute either immediate jeopardy, a
pattern of or widespread actual harm that does not amount to immediate jeopardy, ora
widespread potential for more than minimal harm that does not amount to immediate
jeopardy and there is no actual harm. 42 C.F.R. § 488.301.

When a penalty is proposed and appealed, CMS must make a prima facie case that the
facility has failed to comply substantially with federal participation requirements. “Prima
facie” means that the evidence is “(s)ufficient to establish a fact or raise a presumption
unless disproved or rebutted.” Black’s Law Dictionary 1228 (8" ed. 2004). See also
Hillman Rehabilitation Center, DAB No. 1611, at 8 (1997), aff'd Hillman Rehabilitation
Center v. U.S. Dept. of Health and Human Services, No. 98-3789 (GEB) (D.N.J. May 13,
1999). To prevail, a long-term care facility must overcome CMS’s showing by a
preponderance of the evidence. Evergreene Nursing Care Center, DAB No. 2069, at 7-8
(2007); Emerald Oaks, DAB No. 1800 (2001); Cross Creek Health Care Center, DAB
No. 1665 (1998); Hillman Rehabilitation Center, DAB No. 1611.

E. Analysis

1. Petitioner violated 42 C.F.R. § 483.25(l)(1)(iii) (Tag F329) for the
period of March 7 through March 14, which posed immediate jeopardy to
resident health and safety.

Petitioner is obligated by its participation in Medicare, to provide and ensure each
resident receives the “necessary care and services to attain or maintain the highest
practicable physical, mental, and psychosocial well-being, in accordance with the
comprehensive assessment and plan of care.” 42 C.F.R. § 483.25. The facility, as part of
its obligation to deliver quality care under 42 C.F.R. § 483.25, must ensure that a
resident’s drug regimen is free of unnecessary drugs, which includes any drug used
without adequate monitoring. 42 C.F.R. § 483.25(1)(1)(iii).

The surveyors concluded based upon staff interviews and records review that Petitioner
failed to monitor ordered laboratory studies for Coumadin levels for Residents 10 and 17,
with immediate jeopardy arising on March 7, 2006 and being abated on March 16, 2006.
CMS Ex. 5, at 9; P. Ex. 1, at 9.

Resident 10 had an order to receive Coumadin daily. CMS Ex. 10, at 10, 11; P. Ex. 11, at
3; P. Ex. 12, at 1. Coumadin is a type of blood thinner used to decrease the risk of blood
clots that may develop in the body. Tr. 37. Resident 10's order dated March 3, 2006,
required that she have blood drawn for laboratory testing on March 7, 2006, for PT/INR.
CMS Ex. 10, at 11; P. Ex. 12, at 1. Resident 17 also had a physician’s order for
Coumadin. P. Ex. 26, at 2; P. Ex. 27, at 1. A physician’s order for Resident 17, dated
February 28, 2006, required a laboratory draw for PT/INR recheck in one week, which
would be March 7, 2006. P. Ex. 27, at 1.

> This is a “Tag” designation as used in the State Operations Manual (SOM),
Appendix PP — Guidance to Surveyors for Long Term Care Facilities. The “Tag” refers
to the specific regulatory provision allegedly violated and CMS’s guidance to surveyors.
Although the SOM does not have the force and effect of law, the provisions of the Act
and regulations if interpreted clearly do have such force and effect. State of Indiana by
the Indiana Department of Public Welfare v. Sullivan, 934 F.2d 853 (7" Cir. 1991);
Northwest Tissue Center v. Shalala, | F.3d 522 (7" Cir. 1993). Thus, while the Secretary
may not seek to enforce the provisions of the SOM, he may seek to enforce the provisions
of the Act or regulations as interpreted by the SOM.
9

The parties agree that blood draws from both Residents 10 and 17 occurred on March 7,
2006. The parties also agree that the laboratory completed the PT and INR testing, but
the results were not reported back to Petitioner the next day as they should have been.
There is also no dispute that the surveyors discovered that there were no laboratory
reports for PT/INR for Residents 10 and 17 from a blood draw on March 7, 2006, and that
they reported the problem to Petitioner’s DON and the laboratory results were obtained.
Tr. 99; P. Ex. 14, at 3; P. Ex. 31, at 2; CMS Brief at 3-4; P. Brief at 9; P. Reply at 6.
There is no dispute that the untimely delivery of the reports to Petitioner was the fault of
the laboratory. P. Ex. 33. There is no question that, when the laboratory reports were
received they showed that the laboratory reported high results for both Residents 10 and
7. P. Ex. 14, at 3; P. Ex. 31, at 2.

Surveyor Amy Barnes, R.N. testified that the surveyors did not find that there was harm
to any resident due to the missing laboratory results. She testified that the surveyors
declared immediate jeopardy based upon the likelihood of harm or injury due to
Petitioner’s failure to monitor Coumadin levels. Tr. 68. Surveyor Linda Felts testified
that Resident 17 had a history of gastrointestinal bleed and too much Coumadin put her at
risk for bleeding. Tr. 89. On cross-examination she stated that the immediate jeopardy
determination was based upon the survey team’s conclusion that there was a risk for
serious injury or harm or death. Although she agreed that there was no harm to a
resident, she noted that Resident 17's history of gastrointestinal bleed placed her at risk
for serious harm due to an unmonitored Coumadin level. Tr. 97-99. CMS argues that
while there may have been no actual harm to Residents 10 and 17, the administration of
Coumadin to any resident without the laboratory results for blood testing posed the
potential for serious harm. Dr. Ted Clontz, Petitioner’s Medical Director, testified that it
is always important to review laboratory values when administering Coumadin. Tr. 37.
He testified that if the Coumadin dose is too low and the blood is not adequately thinned
the patient is not protected from risks posed by blood clots. If the dose of Coumadin is
too high the patient is at risk for spontaneous hemorrhages or other bleeding and bruising
that may result from even minimal trauma. Tr. 38-39, 52. In his opinion, there was no
question that long-term Coumadin therapy was appropriate for both Residents 10 and 17.
Tr. 38. He testified that INR is the indicator that he relied upon and that when it was in
the range of 4 or 4.4 he knew an adjustment in Coumadin level was necessary. He was
not concerned about the risk of bleeding until the INR level was in the range of 6. Tr. 45.
He did not consider either Resident 10 or 17 to be in the danger-zone based upon the
PT/INR results from March 7, 2006. Tr. 44-45; P. Ex. 24. He was aware of no harm to
either Resident 10 or 17 resulting from the missed laboratory report on March 7, 2006.
Tr. 50. On cross-examination Dr. Clontz testified he was not the Medical Director for the

10

facility at the time of the survey. However, he reviewed the charts for Residents 10 and
17. He noted that the Coumadin dose for the residents was being adjusted and orders for
laboratory tests for monitoring were appropriately ordered due to the adjustments. Tr. 50-
51. According to Dr. Clontz, regular monitoring of Coumadin levels is a standard of care.
Tr. 51.

The evidence shows that the physicians for Residents 10 and 17 ordered laboratory
testing for PT/INR to be done on March 7, 2006. Although the testing was done, the
results were not reported to the facility and Petitioner’s staff failed to recognize that no
results were received. Thus, the facility failed to monitor the laboratory results reflecting
the Coumadin level and failed to report the results to the treating physicians so that the
physicians could make decisions regarding adjusting the Coumadin dose for each
resident. Petitioner does not deny, and in fact, Petitioner’s Medical Director agreed that
the orders for laboratory testing were reasonable and necessary and consistent with
standard of practice. I have no difficulty concluding that Residents 10 and 17 were thus
deprived of a necessary care or service and did not receive the quality of care required.
Further, based upon the testimony of the surveyors and Petitioner’s Medical Director, I
conclude that there was a risk for more than minimal harm for both residents even though
neither suffered harm due to the missed laboratory reports. Furthermore, the evidence is
consistent with a conclusion that both residents were at risk for serious harm or death
because their Coumadin level was not monitored.

Petitioner raises several defenses.

Petitioner argues that the deficiency is not appropriately charged under 42 C.F.R.

§ 483.25(1) but would be appropriately charged under the laboratory services regulation
42 C.F.R. § 483.75(j) or the medication error regulation 42 C.F.R. § 483.25(m). P. Brief
at 2, 14-15; P. Reply at 4. Petitioner suggests that 42 C.F.R. § 483.25(1) primarily
governs use of psychoactive medications based upon the discussion at SOM, App. PP,
Tag F329. P. Brief at 14-15; P. Reply at 4. While Petitioner is correct that the bulk of the
discussion of Tag F329 in the SOM relates to psychoactive medications, Petitioner points
to no authority for the proposition that the application of 42 C.F.R. § 483.25(l) is limited
to psychoactive medications. The regulation includes two subsections: subsection (1) is
entitled “General” and subsection (2) is entitled “Antipsychotic Drugs.” Subsection (1)
which is cited by the surveyors and CMS in this case defines an unnecessary drug as “any
drug” when used without adequate monitoring. 42 C.F.R. § 483.25(1)(1)(iii). Thus, the
plain language of the subsection shows that its application is to any drug and not just
psychoactive drugs. The charge made by the surveyors is that Petitioner failed to monitor
the use of Coumadin because laboratory results were not received by Petitioner and
Petitioner’s staff failed to notice. CMS Ex. 5, at 9. The surveyors and Petitioner’s
Medical Director agreed in testimony that it is standard of practice to monitor Coumadin
11

use by laboratory testing for PT/INR. I conclude that the charge Petitioner failed to
monitor Coumadin use is appropriately alleged as a violation of 42 C.F.R. § 483.25(I)(1).
I need not determine whether Petitioner’s failure might also be charged as violation of
other regulations as Petitioner suggests.

Petitioner argues that it was the laboratory’s fault that the results were not received; that
the regular charge nurse was absent due to illness at the time the laboratory reports should
have been received; the Administrator was absent due to surgery when walking rounds
should have been done; and that Petitioner had an effective system in place but the
surveyors came before the system had time to catch that laboratory results were missing.
P. Brief at 2, 5, 8-12, 17; P. Reply at 4-8. None of these arguments excuse Petitioner’s
failure in this case.

CMS does not dispute that the laboratory failed to deliver reports to Petitioner for testing
the March 7, 2006 blood samples of Residents 10 and 17. However, the focus in this
matter is not upon the conduct of the laboratory. Rather, the surveyors appropriately
focused upon whether Petitioner was doing appropriate monitoring of Coumadin use for
Residents 10 and 17. Monitoring for Coumadin use requires PT/INR testing, not just
observing the residents as Petitioner suggests in argument. P. Brief at 11-12. PT/INR
testing was ordered for both residents. Petitioner did not receive reports after blood was
drawn and submitted for testing. Petitioner did not identify that it did not receive reports.
Because Petitioner did not receive reports, it could not adequately monitor Coumadin
levels for the two residents and because Petitioner could not report results of testing to the
treating physicians, Petitioner’s error prevented the treating physicians from assessing
whether the Coumadin dose in use was necessary. Although the laboratory may have
been at fault for not delivering test results to Petitioner, Petitioner was at fault for not
identifying that results were not received thus preventing it from doing required
monitoring of Coumadin levels.

There is also no dispute by CMS that Petitioner did have a system for monitoring receipt
of laboratory results for PT/INR. Both Surveyor Felts and Petitioner’s Administrator
Conrade testified that Petitioner had a system for the ensuring the return of laboratory
reports. The system involved using a PT/INR flow sheet and the medication
administration record (MAR). Surveyor Felts testified that the system Petitioner adopted
was commonly used in long-term care facilities. Tr. 92. The problem for Petitioner is
that the system failed in this case. Petitioner argues that the failure of its system was
attributable in part to the absence of the regular charge nurse from March 7 to March 9,
2006, and Administrator Conrade was absent for surgery and periodic walking rounds
were not done during the period from March 7 to 17, 2006. P. Brief at 10. I do not find
this an acceptable defense. Petitioner is responsible to deliver quality care, including
necessary care and services, whether or not some member of its staff is absent. If, as

12

Petitioner asserts, its system failed due to the absence of two individuals, the system is
clearly defective as the system must work all the time, not just when all staff are present
and attending to their duties.

Petitioner argues that there were backup systems that should have identified that
laboratory reports had not been received. Petitioner argues that both Residents 10 and 17
are required to receive weekly physician visits. However, Petitioner acknowledges that
the treating physicians did not mention following their visits that any laboratory results
were missing (P. Brief at 11), demonstrating that they did not provide an effective

ackup. Petitioner also argues that monthly pharmacist reviews are required and that, had
not the survey occurred first, the pharmacist would have caught the oversight. P. Brief at
1. There is no question that pharmacist reviews are required and that one did not occur
fore the surveyors discovered that the laboratory reports were missing. Petitioner,
owever, has not shown that a pharmacist review that would occur from a few days to 30
days after the results were due is a reasonable and effective means for monitoring
Coumadin level laboratory reports or would serve to prevent harm to the residents if
levels were too high or low at the time of testing. The blood samples were drawn on
March 7 and results for other samples were reported to Petitioner on either March 7 or
March 8. P. Ex. 7. The survey began on March 14, seven days later. The witnesses were
consistent in their testimony that a laboratory test result indicating a dangerous level of
Coumadin requires immediate action. Tr. 51-52, 66. Petitioner’s Medical Director, Dr.
Clontz, testified that Coumadin levels are generally monitored once every six or seven
days. Tr. 51. Given that Petitioner’s backup systems had not caught the error in this case
within seven days, it is apparent that those backup systems would not be effective to
prevent serious harm from a dangerous level of Coumadin.

Petitioner also argues that, even if it was deficient, there was no harm and no immediate
jeopardy. P. Brief at 18-20; P. Reply at 8-12. As I have already noted, there is no
allegation that either Resident 10 or 17 suffered actual harm. Rather the surveyors
testified that they cited immediate jeopardy due to the risk for serious harm or death that
failure to monitor Coumadin posed. Dr. Clontz also testified that a Coumadin level that
was too high or low posed the risk for serious harm either by blood clots or spontaneous
hemorrhage. CMS’s determination as to the level ofa facility’s noncompliance, which
includes its immediate jeopardy finding, must be upheld unless it is “clearly erroneous.”
42 C.F.R. § 498.60(c). The Board has observed repeatedly that the “clearly erroneous”
standard imposes on facilities a “heavy burden” to show no immediate jeopardy, and has
sustained determinations of immediate jeopardy where CMS presented evidence “from
which ‘[o]ne could reasonably conclude’ that immediate jeopardy exists.” Barbourville
Nursing Home, DAB No. 1962, at 11 (2005); Florence Park Care Center, DAB No.
1931, at 27-28 (citing Koester Pavilion, DAB No. 1750 (2000)). Immediate jeopardy
exists if the facility’s noncompliance has caused or is likely to cause “serious injury,

13

harm, impairment, or death to a resident.” 42 C.F.R. § 488.301. I conclude that the
finding of immediate jeopardy was not clearly erroneous in this case based upon the
testimony of the surveyors and Dr. Clontz regarding the potential for harm.

The evidence shows that the blood draws occurred on March 7, 2006. The laboratory
reports related to the March 7 samples were not received until March 15, 2006 when the
surveyors identified they were missing and Petitioner requested the results from the
laboratory. P. Ex. 14, at 3; P. Ex. 31, at 2. Thus, the period of immediate jeopardy
alleged by CMS, March 7 through 14, is consistent with and supported by the evidence.*
Indeed, the surveyors and CMS credit Petitioner with having abated the immediate
jeopardy immediately upon discovery of the deficiency. Petitioner argues that imposing a
large CMP has no remedial purpose. P. Brief at 20; P. Reply at 12. Contrary to
Petitioner’s assertions, the CMP serves a remedial purpose of encouraging Petitioner to
take reasonable steps to ensure that its delivery of necessary care and services does not
fail simply because a charge nurse and the Administrator are absent for a few days.

I conclude that during the eight-day period from March 7 through 14, 2006, Petitioner
was in violation of 42 C.F.R. § 483.25(1)(1)(iii) with respect to its residents on Coumadin
therapy. The regulatory violation posed immediate jeopardy. Accordingly, Petitioner
was not in substantial compliance with program participation requirements. Petitioner did
not demonstrate by a preponderance of the evidence that it was in substantial compliance
or that it had an affirmative defense.

2. The burden of persuasion is not an issue in this case.

Petitioner argues that it is inappropriate to impose upon Petitioner the burden of
persuasion by a preponderance of the evidence. Request for Hearing at 4-5; P. Prehearing
Brief at 15. The evidence in this case is not in equipoise and the allocation of the burden
of persuasion does not control the disposition of this case.

* The surveyors found that immediate jeopardy was abated on March 16, 2006.
CMS Ex. 5, at 9. CMS advised Petitioner by its March 30, 2006 notice that it proposed
imposing a $3050 daily CMP for March 7 through March 14, 2006 rather than through
March 15, 2006 as proposed by the state. I find it unnecessary to resolve the
inconsistency because I resolve it in Petitioner’s favor. The CMP of $3050 from March 7
through March 14, 2006, proposed by CMS is consistent with a determination by CMS
that immediate jeopardy was actually abated on March 15, 2006 rather than March 16,
2006 as alleged by the surveyors. I so find.
14

3. A per day CMP of $3050 for eight days from March 7 through March
14, 2006 is reasonable in this case.

I have concluded that the CMS finding of immediate jeopardy was not clearly erroneous
and it will not be disturbed. The CMP of $3050 per day is the lowest per day CMP
authorized for a deficiency that poses immediate jeopardy. 42 C.F.R. § 488.438(a)(1)(i).
Accordingly, a CMP of $3050 per day is reasonable as a matter of law. Because I have
concluded that the duration of the deficiency at the immediate jeopardy level was eight
days, the total CMP of $24,400 is reasonable.

Petitioner argues that it is deprived of due process because CMS is not required to offer
evidence that it considered the factors specified at 42 C.F.R. §§ 488.404 and 488.438(f).
P. Prehearing Brief at 15. However, Petitioner cites no authority in support of this
assertion. Further, my review of the reasonableness of the enforcement remedy is de
novo and does not turn upon whether CMS properly considered regulatory factors when
proposing remedies.

Ill. Conclusion

For the foregoing reasons I conclude that Petitioner violated 42 C.F.R. § 483.25(D(1),
with regard to two residents during the period March 7 through 14, 2006 and the violation
posed immediate jeopardy. Therefore, Petitioner was not in substantial compliance. A
CMP of $3050 per day from March 7 through 14, 2006, a total CMP of $24,400, is
reasonable.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Immanuel’s Healthcare, )
(CCN: 67-5052), ) Date: August 4, 2008
)
Petitioner, )
)
-Vv.- ) Docket No. C-08-159
) Decision No. CR1825
Centers for Medicare & Medicaid )
Services. )
)
DECISION

This matter is before me on a motion to dismiss (Motion) filed by the Centers for
Medicare & Medicaid Services (CMS). CMS filed a motion to dismiss dated January 7,
2008, seeking dismissal of Immanuel’s Healthcare (Petitioner or facility) November 30,
2007 hearing request. On April 7, 2008, CMS filed four exhibits that should have
accompanied CMS’s Motion. CMS Exhibits (CMS Ex.) 1-4 are admitted, without
objection. Petitioner submitted a response to the Motion on April 23, 2008. Petitioner
did not submit exhibits with its response. For the reasons discussed below, I grant CMS’s
Motion and dismiss Petitioner’s request for hearing.

I. Background

Petitioner is a skilled nursing facility in Fort Worth, Texas, and is authorized to
participate in the Medicare and Medicaid programs. Petitioner is required to be in
substantial compliance with program requirements to remain a participant. On August 2,
2007, the Texas Department of Aging and Disability Services (DADS or state agency)
completed a survey and found that the facility was not in substantial compliance with
program requirements. On September 12, 2007, CMS notified Petitioner that it was not in
substantial compliance with program requirements, and that it was imposing a per
instance Civil Money Penalty in the amount of $10,000 and that Petitioner would lose
approval of its Nurse Aide Training and Competency Evaluation Program. CMS further
informed Petitioner that if it disagreed with this determination, it may request a hearing
before an administrative law judge (ALJ) and that the procedures governing this process
are set out in 42 C.F.R. § 493.40, et seq. CMS Ex. 2. CMS informed Petitioner that “[a]
written request for a hearing must be filed no later than November 11, 2007.” Jd.
2

Petitioner requested a hearing by letter dated November 30, 2007, indicating that it would
like to appeal the findings of non-compliance related to Tags F-333 and F-425 that led to
the enforcement action. On December 13, 2007, I issued an Acknowledgment and Initial
Pre-Hearing Order that set forth procedures and a schedule for the initial development of
the case. On January 2, 2008, CMS counsel filed his notice of appearance. On January 8,
2008, CMS counsel filed a motion to dismiss for failure to file a timely request for
hearing. On or about April 1, 2008, I notified CMS that the exhibits referred to in its
motion to dismiss were not submitted along with its Motion in conformance with Civil
Remedies Division (CRD) Procedures. On April 8, 2008, CMS submitted an original and
two copies of its exhibits for the Motion to the CRD and a copy of the exhibits for the
Motion to Petitioner. On April 22, 2008, Petitioner faxed a response to CMS’s Motion.
CMS did not submit a reply to Petitioner’s response.

After consideration of the written arguments and documentary evidence submitted by the
parties, I grant CMS’s motion to dismiss. In doing so, I find that the hearing request was
untimely filed and the time for filing a request for hearing has not been extended as
Petitioner has not shown good cause for its failure to file a timely hearing request.

II. Issues
A. Whether Petitioner filed a timely request for hearing; and if not

B. Whether Petitioner has shown good cause for extending the time to file a
request for hearing.

Ill. Applicable Law and Regulations

In cases involving CMS, a party is entitled to a hearing only if that party files its request
within the time limits established by 42 C.F.R. § 498.40(a)(2), unless the period for filing
is extended. In order to be entitled to a hearing, a party must file its request within 60
days from receipt of a notice of a determination by CMS to impose a remedy. The date of
receipt of a notice is presumed to be five days after the date on the notice, unless there is a
showing of actual receipt on an earlier or later date. 42 C.F.R. § 498.22(b)(3). An ALJ
may extend the time within which a hearing request may be filed based on a showing of
good cause to justify an extension of time. 42 C.F.R. § 498.40(c)(2). An ALJ may
dismiss a request for hearing which is not timely filed. 42 C.F.R. § 498.70(c).

IV. Findings and Discussion
I make findings of fact and conclusions of law (Findings) to support my decision to

dismiss the request for hearing. Each finding is noted below in bold, italic face, followed
by a discussion of each Finding.
3

A, CMS notified Petitioner of its action on September 12, 2007.

By notice letter (notice) dated September 12, 2007, CMS sent Petitioner the notice of
penalties via facsimile. CMS Ex. 2. The notice is an “initial, reconsidered, or revised
determination” by CMS. 42 C.F.R. §§ 488.406, 498.3(b)(13), 498.5, 498.40. The notice
clearly indicates that it is being provided by facsimile and that “no hard copy [would]
follow.” CMS Ex. 2, at 1. This notice constituted agency action from which Petitioner’s
right to appeal arose.

B. Petitioner received CMS’s notice letter on September 12, 2007.

There is a regulatory presumption that the affected party has received the notice five days
after the date on the notice, unless it is shown that the notice was received earlier or later.
42 C.F.R. §§ 498.40(a)(2), 498.22(b)(3). Also, in light of Riverview Village, DAB No.
1840 (2002), notice is determined to be the date the facsimile is sent if the notice has not
been conveyed by any other means. CMS’s notice letter was sent only by facsimile, and
no evidence has been provided by Petitioner that the notice was received on any other
date other than the same day it was sent. Petitioner did not address in its hearing request
any delay in receiving the notice or when the notice was received. Therefore, Petitioner
received CMS’s notice on September 12, 2007.

Cc. Petitioner’s hearing request was filed on November 30, 2007.

Petitioner’s hearing request is dated November 30, 2007, and was received by the Civil
Remedies Division on that same date.

D. Petitioner’s hearing request was filed more than 60 days after receipt of
CMS’s notice letter, and was therefore untimely.

Section 498.40(a)(2) of 42 C.F.R. expressly provides that:

[an] affected party or its legal representative or other authorized official must file
the request for hearing in writing within 60 days from the receipt of the notice of
initial, reconsidered, or revised determination unless that period is extended... .

The latest date by which Petitioner could have filed a timely hearing request consistent
with 42 C.F.R. § 498.40(a)(2) was November 12, 61 days after September 12, 2007."
Petitioner’s hearing request was filed on November 30, 2007. The filing of Petitioner’s
request was clearly beyond the 60 days stipulated in the regulations. Therefore,
Petitioner’s hearing request was untimely.

* 60 days after September 12, 2007, was November 11, 2007, which was a Federal
holiday.
4

E. Petitioner has not shown good cause for its untimely hearing request.

Petitioner has not filed a request for an extension of time for filing its request for hearing
pursuant to 42 C.F.R. § 498.40(c)(1). To extend the period for filing, the affected party
“may file a written request for extension of time stating the reasons why the request was
not filed timely.” 42 C.F.R. § 492.40(c)(1). I may extend the time for filing the request
“for good cause shown.” 42 C.F.R. § 498.40(c)(2). Good cause has been interpreted by
the Departmental Appeals Board as circumstances beyond the ability of the party litigant
to control. Hillcrest Healthcare, L.L.C., DAB No. 1879 (2003); Hospicio San Martin,
DAB No. 1554 (1996).

Petitioner’s administrator asserted in her response to CMS’s motion that she thought that
the notice letter was from DADS and did not realize the notice letter was from Centers for
Medicare & Medicaid Services. She also acknowledges in her response that Petitioner’s
hearing request was untimely.

I find that Petitioner has not demonstrated good cause for its untimely hearing request.
Petitioner has not shown that it filed the hearing request after the 60-day requirement due
to circumstances beyond its control. The mistake as to whether CMS or the state agency
sent the notice letter cannot be considered as good cause, therefore I must grant CMS’s
motion to dismiss.

V. Conclusion

Based on the applicable law and undisputed facts, I conclude that Petitioner’s hearing
request was untimely filed, and good cause does not exist to extend the time for filing.
CMS’s motion to dismiss is granted.

/s/
José A. Anglada
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Palmetto GBA, ) Date: July 30, 2008

)
Petitioner, )
)

-Vv.- ) Docket Nos. C-06-127

) C-06-128

Villages of Bentleyville, Moreland ) C-06-129
Hills, and South Russell, )

) Decision No. CR1824
Respondents. )
)

DECISION

Palmetto GBA, Petitioner, appealed the decision by a carrier-hearing officer to allow the
Villages of Bentleyville, Moreland Hills, and South Russell, Ohio, Respondents, to retain their
Medicare Provider Identification Numbers (PINs). For the reasons discussed below, I
reverse the decision of the carrier-hearing officer and find that Petitioner was entitled to
revoke Respondents’ Medicare PINs.

I. BACKGROUND

Petitioner, the Centers for Medicare & Medicaid Services (CMS) contractor for provider
enrollments, is the Medicare carrier that processes, among other services, supplier
enrollment applications for Ohio ambulance suppliers and determines whether claims for
ambulance services meet Medicare requirements for payment. Each Respondent is a
municipal corporation in the State of Ohio. Each of the Respondents entered into a Fire
Protection and Emergency Medical Service Agreement with the Chagrin Falls Volunteer
Firemen’s Association (Association). See, e.g., Respondents’ Exhibit (R. Ex.) 1. Under
these agreements the Association provides emergency medical services, with leased
ambulance vehicles and EMS crew members employed by the Association, to
Respondents for a fixed rate.

2

Each Respondent submitted a Medicare Federal Health Care Provider Enrollment
Application to be an ambulance supplier to Petitioner. See, e.g., R. Ex. 2.

Based on the information submitted by each Respondent, Petitioner determined that each
Respondent was eligible as a Medicare ambulance supplier and issued a Medicare PIN to
each Respondent. R. Ex. 6. On March 23, 2005, however, Petitioner revoked
Respondents’ Medicare PINs on the basis that Respondents failed to meet the conditions
for coverage of ambulance services set forth at 42 C.F.R. § 410.41(c)(2).. R. Ex. 7.
Specifically, Petitioner stated that “Medicare has learned that licensure and ambulance
information submitted by [Respondents] actually belongs to the Chagrin Falls Suburban
Volunteer Fire Department.” Jd. On May 9, 2005, Respondents made a consolidated
request for a hearing before a carrier-hearing officer. R. Ex. 8. On June 9, 2005, the
carrier-hearing officer, finding that Respondents met the applicable Medicare
requirements as ambulance suppliers, issued a decision reinstating Respondents’
Medicare PINs. R. Ex. 9.

On August 4, 2005, Petitioner appealed the carrier-hearing officer’s decision. The case
was assigned to me for a hearing and a decision. On February 22, 2006, I conducted a
telephone pre-hearing conference with the parties, wherein the parties agreed that this
dispute involved purely legal issues which could be decided on the basis of written
submissions without the need for an in-person hearing. Respondents then filed a motion
to dismiss, accompanied by 13 exhibits (R. Exs. 1 - 13). Petitioner filed a reply to the
motion to dismiss and a cross-motion for summary disposition, accompanied by nine
exhibits (CMS Exs. | - 9). Respondents then filed a response to Petitioner’s cross-
motion.

As neither party objected to any of the opposing party’s exhibits, I admit into the record
Respondents’ exhibits 1 - 13 and Petitioner’s exhibits | - 9.
II. ISSUES
The issues presented in this case are:
1. Whether I have jurisdiction over this case.
2. Whether Petitioner’s appeal was timely filed.

3. Whether Respondents are entitled to PINs because they have met the
applicable legal standards to qualify as Medicare ambulance suppliers.
3

Ill. FINDINGS OF FACT AND CONCLUSIONS OF LAW

I make findings of fact and conclusion of law (Findings) to support my decision in this
case. I set forth each Finding below in boldface italics as a separate heading and I discuss
each finding in detail.

1. Ihave jurisdiction to resolve this dispute.

Part 498 of 42 C.F.R. sets out the appeals procedures for determinations that affect
participation in the Medicare program. Subpart D of Part 498 further sets out the
procedures for a hearing before an administrative law judge (ALJ). Respondents argue
that I do not have jurisdiction to review this matter because Petitioner is not an affected
party, under 42 C.F.R. § 498.40, that may request a hearing before an ALJ. An “affected
party” is defined at 42 C.F.R. § 498.2 as “a provider, prospective provider, supplier,
prospective supplier, or practitioner that is affected by an initial determination or by any
subsequent determination or decision issued under this part, and ‘party’ means the
affected party or CMS . . ., as appropriate.” Respondents contend that Petitioner, as a
CMS contractor, does not fall within this definition of an “affected party” with the
consequence that I do not have the authority to resolve any dispute between Respondents
and Petitioner.

In response, Petitioner correctly points out that I have jurisdiction over this matter not
directly through Part 498, but rather pursuant to 42 C.F.R. § 405.874. This regulation sets
out the procedures for the appeals of carrier decisions that Medicare supplier standards
have not been met. Originally, jurisdiction over the supplier enrollment appeals resided
with CMS, as detailed in 42 C.F.R. § 405.874(c). As to what party may initiate the
appeals procedure, the regulations provide that after a hearing officer’s decision, the
notice of the hearing officer’s decision --

must include information about the supplier’s further right to appeal, the
carrier’s right to appeal, the date by which the appeal must be filed . . . and
the address to which the appeals must be sent in writing. Either the carrier
or the entity may appeal the hearings officer’s decision to CMS.

42 C.F.R. § 405.874(c) (emphasis added).

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA),
section 936 (Pub. L. No. 108-173) modified the process for appealing decisions by
hearing officers involving the awarding of a Medicare PIN. The MMA transferred that
jurisdiction from CMS to the Departmental Appeals Board and required that the appeals
be governed by the procedures set forth in 42 C.F.R. Part 498.
4

This change in authority over the appeals process is detailed in the Medicare Program
Integrity Manual, IOM 100-8. Discussing the appeals procedures for suppliers, this
Manual provides:

The appeals process can be found at 42 CFR § 405.874. The administrative
appeals process includes the right to a Medicare contractor hearing before a
hearing officer who was not involved with the original contractor
determination, the right to seek a hearing before an Administrative Law
Judge (ALJ), the right to review of the ALJ decision by the Departmental
Appeals Board, and the right to judicial review.

Chapter 10, § 19.

Thus, Petitioner, as a carrier, had the right under 42 C.F.R. § 405.874 to appeal an
adverse decision by a hearing officer, and, pursuant to the changes made by the MMA,
that appeal will be heard by an ALJ under the procedures set forth in 42 C.F.R. Part 498.
Accordingly, I find that I have jurisdiction over this matter.

2. Petitioner’s appeal was timely filed.

Respondents contend that, even if I were to find that I had jurisdiction over this matter,
Petitioner nevertheless filed its hearing request in an untimely manner under 42 C.F.R.
Part 498. Respondents cite to 42 C.F.R. § 498.40(a)(2), which requires that a hearing
request be filed within 60 days from receipt of an adverse determination. Indeed, the
earing officer’s decision was dated June 9, 2005, and directed Petitioner that, if it wished
to appeal the decision, it had to file its appeal within 60 days (by August 6, 2005). R. Ex.
9, at 3. Respondents argue that Petitioner, however, did not file a procedurally proper
earing request until December 1, 2005. R. Ex. 4. Respondents acknowledge that
Petitioner did file an initial hearing request on August 4, 2005 (R. Ex. 10), but maintain
that the request was rejected on procedural grounds (R. Ex. 11) and that Petitioner did not
request an extension to file its appeal until October 27, 2005, 51 days after the rejection
was sent. R. Ex. 12. According to Respondents, it was not until December 1, 2005, that
Petitioner submitted a formal request for an ALJ review of the hearing officer’s decision.
P. Ex. 5.

Respondents’ arguments are not persuasive. Petitioner did file a timely appeal on August
4, 2005. That letter identified the issues in the hearing officer’s decision with which
Petitioner disputed and specified the basis for its position, thereby conforming with the
requirements set forth at 42 C.F.R. § 498.40(b). The September 6, 2005 letter from a
Civil Remedies Division (CRD) staff paralegal, characterized by Respondents as a
rejection of Petitioner’s appeal request, was not, in fact, an explicit rejection of

5

Petitioner’s hearing request, but rather constituted directions on how Petitioner could
perfect its appeal in light of new procedures and guidelines for appeals in Medicare
supplier enrollment cases instituted by the CRD. Upon receipt of this letter, Petitioner
requested an extension of time in which to perfect its hearing request. This office,
however, failed to respond to Petitioner’s request. It was not until Petitioner re-filed its
appeal, in accord with the new procedures, that the CRD subsequently docketed and
formally acknowledged this matter on January 19, 2006. This delay in acknowledging
Petitioner’s appeal was due to circumstances beyond Petitioner’s control and in no way
was Petitioner’s fault, and thus constitutes “good cause” under 42 C.F.R. § 498.40(c) for
accepting Petitioner’s hearing request. Hillcrest Healthcare, LLC, DAB CR976, at 6
(2002). I thus find that Petitioner’s appeal was timely filed.

3. Respondents are not entitled to Medicare billing numbers because they
failed to meet the applicable legal standards to qualify as Medicare
ambulance suppliers.

Among the benefits provided under Medicare Part B are ambulance services. 42 C.F.R.

§ 410.10(). Medicare Part B covers ambulance services provided that “[t]he supplier
meets the applicable vehicle, staff, and billing and reporting requirements of § 410.41...
.” 42 C.F.R. § 410.40(a)(1). The requirements for a supplier of ambulance services are
accordingly set forth at 42 C.F.R. § 410.41. The vehicle used as an ambulance must meet
certain requirements, as do the crew that staffs the ambulance. 42 C.F.R. § 410.41(a) and
(b). Additionally, an ambulance supplier must comply with the following billing and
reporting requirements:

(2) Upon a carrier’s request, complete and return the ambulance supplier
form designated by CMS and provide the Medicare carrier with
documentation of compliance with emergency vehicle and staff licensure
and certification requirements in accordance with State and local laws.

42 C.F.R. § 410.41(c)(2). Most significant to this matter, the services must be furnished
by the entity specified in 42 C.F.R. § 410.40. 42 C.F.R. § 410.12(a)(2).

CMS revoked Respondents’ PINs because both the ambulance and pharmacy licenses
involved in the delivery of the ambulance services at issue belonged to the Chagrin Falls
Volunteer Firemen’s Association and not to Respondents.

Respondents argue that they are entitled to Medicare PINs because they met all the legal
and regulatory requirements for Medicare participation as an ambulance supplier and
because Petitioner has provided no legal basis for the revocation of their Medicare PINs.
6

Respondents maintain that Petitioner has taken a position here that conflicts with the
stated CMS intention to defer to state and local laws governing ambulance vehicles and
their staffing. Respondents further argue that Petitioner’s position thus raises federalism
issues, as well as estoppel issues, as Petitioner was aware of the applicable license
information when it first approved Respondents’ PINs.

I find Respondents’ arguments unavailing.

At the heart of Respondents’ arguments is their belief that they have met all the
regulatory requirements as ambulance services providers. Respondents maintain that it is
undisputed that the emergency vehicles they used are registered in the State of Ohio and
are designed and equipped to comply with state and local laws governing emergency
vehicles. Furthermore, according to Respondents, it is likewise undisputed that the
ambulance crews are properly certified by the State of Ohio and legally authorized to
operate any and all lifesaving equipment onboard the ambulances. Therefore, in
Respondents’ view, there is no question that the ambulance services provided under their
agreements with the Association qualified as ambulance services under 42 C.F.R.

§ 410.41, and thus eligible for Medicare reimbursement. Respondents contend that there
is no requirement under the regulations that the supplier of ambulance services actually
own the vehicles or actually employ the ambulance staff, but only that the supplier submit
documentation showing compliance with vehicle and staff license and certification
requirements. Respondents analogize their situation to Part A of Medicare, which allows
hospitals to bill for ambulance services whether the hospitals themselves furnish the
ambulances directly or use them under arrangements with other entities actually holding
the relevant licenses. Respondents suggest that, since the regulations permit such
arrangements under Part A, the same rules and benefits should equally be permitted under
Part B.

In their arguments, however, Respondents overlook the connection in the regulations
between the requirements of ambulance services stated in 42 C.F.R. § 410.41 and the
regulatory requirement as to who must provide those ambulance services. Nowhere in
their arguments do Respondents address 42 C.F.R. § 410.12, which requires, at subsection
(a)(2), that the ambulance services must, in order to qualify as Medicare services, be
furnished by the entity specified at 42 C.F.R. § 410.40, the entity that meets the
requirements of section 410.41 and that actually furnishes the ambulance services.
Therefore, when read as whole, the regulations clearly require that the only entity that
qualifies as an ambulance supplier is the entity that meets the requirements of section
410.41 and that actually furnishes the ambulance services.
7

This interpretation is bolstered by the definition in the regulations of a “supplier” as an
entity other than a provider that furnishes health care services under Medicare. 42 C.F.R.
§ 400.202. Thus, by definition, the supplier is the entity that furnishes the services, not
the entity that contracts with another entity such as the Association to furnish the services.
Furthermore, this interpretation is consistent with CMS’s ambulance coverage policy set
forth in Chapter 10 of the Medicare Benefit Policy Manual, which fortifies Petitioner’s
argument that Respondents do not qualify as Medicare Part B suppliers of ambulance
services:

The Medicare ambulance benefit is a transportation benefit and without a
transport there is no payable service. When multiple ground and/or air
ambulance providers/suppliers respond, payment may be made only to the
ambulance provider/supplier that actually furnishes the transport.

CMS. Ex. 8 (emphasis added).

Thus, I find that under the regulations the Respondents did not furnish the ambulance
services and accordingly are not entitled to Medicare PINs. It is in fact the Association
that owned the vehicles, employed the ambulance crews, and actually furnished the
ambulance services. Thus, only the Association, provided it has a Medicare PIN, may bill
Medicare and receive Medicare payments for services it furnishes to Respondents’
citizens.

Additionally in their motion to dismiss, Respondents advanced several arguments that I
find that I am either without authority to address or are not relevant to the central issue
before me. For example, Respondents put forth the argument that Petitioner’s actions
violate standards of federalism, in that the Medicare ambulance supplier standards set
forth at 42 C.F.R. § 410.41 impose additional licensure and certification standards not
required by Ohio state law, thereby violating Ohio’s police powers. Petitioner, however,
does not dispute that under section 410.41 Medicare does defer to state law in the
determination whether a vehicle or staff members meet licensure standards. Rather, the
issue, again, is who can be paid for those services. I thus find that Respondents’
federalism argument is not relevant to this inquiry.

Respondents also raise arguments concerning the reassignment rights to Medicare
payments. Once again, that is not the issue before me. The basis for the revocation of
Respondents’ PINs was the determination that Respondents were not the ambulance
suppliers that actually provided services. Furthermore, any overpayment to Respondents
that might have resulted from their claims for ambulance services is not before me.
8

Respondents further maintain that Petitioner should be estopped from now revoking
Respondents’ PINs since Petitioner initially determined that they were qualified to
provide ambulance services and Respondents reasonably relied on that guidance. As
Petitioner points out, the fact that Petitioner may have mistakenly granted PINs to
Respondents does not mean that Respondents are entitled to continue using those PINs.
The sole issue before me is whether Respondents are entitled to Medicare PINs.
Furthermore, it is well settled that, while the Supreme Court has not ruled that estoppel
will never lie against the government, the decisions of the Court make clear that equitable
estoppel will not lie against the government, or here the government’s contractor, in cases
involving benefits to be paid from the Treasury, particularly in the complicated area of
Medicare. See Office of Personnel Management v. Richmond, 496 U.S. 414 (1990);
Heckler v. Community Health Services of Crawford County, Inc., 467 U.S. 51 (1984).

IV. CONCLUSION

For the reasons discussed above, I reverse the decision of the carrier-hearing officer and
find that Respondents are not entitled to Medicare PINs as suppliers of ambulance
services.

/s/
Alfonso J. Montano
Administrative Law Judge