Department of Health and Human Servi

ces

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Mikhail Strutsovskiy, M.D.,
(NPI No. 1699970491),
Petitioner,
Vv.
Centers for Medicare & Medicaid Services.
Docket No. C-10-48
Decision No. CR2109
Date: April 9, 2010
DECISION

The Centers for Medicare & Medicaid Services’ (CMS’s) motion
is granted, and CMS’s determination to revoke Petitioner’s billing

I. Procedural Background

This matter is before me based on the challenge of Petitioner, Mik

‘or summary judgment
privileges is upheld.

hail Strutsovskiy,

M.D., to the revocation of his Medicare billing privileges. At the time of the billing
privileges revocation at issue, Petitioner was a licensed physician in the State of New
York, who was enrolled in the Medicare program as a supplier of services.' National

Government Services (NGS), a Medicare contractor, notified Petit
June 17, 2009, that his Medicare billing privileges were revoked e:
as a result of his conviction within the 10 years preceding his enro!

ioner by letter, dated
fective March 9, 2009,
Ilment, or revalidation

of his enrollment, of a felony offense that CMS determined to be detrimental to the best

interests of the Medicare program. The letter further advised Petit

ioner that he failed to

' “Suppliers” include physicians and other non-physician health care practitioners, or an
entity, other than a provider, that furnishes health care services under Medicare.

“Providers” are hospitals, nursing facilities, or other medical entiti
§ 400.202.

es. 42 C.F.R.
notify the Medicare contractor of the adverse action — his guilty plea to a felony charge
of filing false statements in connection with payments for health care benefits.”

Petitioner was afforded an opportunity to submit a corrective action plan within 30 days
of the date of the letter to show he was able to correct the deficiency and thus establish
his program eligibility. Petitioner was also advised that he could request reconsideration
of the determination with a Medicare contractor hearing officer. CMS Ex. 4. Petitioner
sought reconsideration by request letter, dated July 11, 2009. CMS Ex. 6. A contractor
hearing officer issued an unfavorable decision on August 12, 2009, finding NGS properly
revoked Petitioner’s billing privileges.

Petitioner then requested a hearing before an administrative law judge (ALJ) by letter,
dated September 28, 2009, seeking a reversal of the hearing officer’s unfavorable
decision. I held a prehearing conference by telephone on November 24, 2009, and
established a schedule for further proceedings. CMS filed a motion for summary
judgment and CMS exhibits (Exs.) | through 9 on December 16, 2009. On January 15,
2010, Petitioner moved for leave to file his response brief after the deadline date outlined
in my Order of November 24, 2009. Petitioner’s request was granted by Order of
January 19, 2010. Petitioner filed its Brief in Opposition to Summary Judgment Motion
and in Support of the Cross-Motion (P. Brief), accompanied by the proffer of one exhibit,
identified as P. Ex. 10, on January 22, 2010. Petitioner’s proffered exhibit was not
marked in conformity with the Civil Remedies Division Procedures § 9, in spite of
explicit instructions provided to the parties on the importance of correctly marking
exhibits in the Order of November 24, 2008. By Order of January 27, 2010, Petitioner
was directed to re-mark his exhibit and proffer it again within 10 days of the date of the
Order. Petitioner was clearly cautioned that “failure to do so in a complete and timely
fashion will result in the exhibit being excluded from the evidentiary record in this case.”
Petitioner failed to re-file his exhibit, and for that reason, it is excluded from the
evidentiary record in this case. CMS filed a reply brief on February 12, 2010.

Petitioner objects to the admission of CMS Ex. 8, stating that it is not a complete copy of
his sentencing memorandum on file with the District Court. Although Petitioner
proffered P. Ex. 10 — which he states is a complete copy of his sentencing memorandum
(P. Brief at 8) — as noted above, P. Ex. 10 is not admitted into the evidentiary record.
Accordingly, I overrule Petitioner’s objection to CMS Ex. 8 and admit CMS Exs. |
through 8 as evidence.

My decision is based on the record before me, which includes the documentary evidence
admitted and the parties’ pleadings.

“ Because I find Petitioner’s felony conviction a sufficient basis for CMS or its
Medicare contractor NGS to revoke Petitioner’s billing privileges, I do not discuss in this
decision the second basis outlined in NGS’s March 9, 2009 notice letter to Petitioner.
II. Issue

The issue before me in this case is whether Petitioner satisfied the requirements necessary
to participate in the Medicare program as a supplier of services. In order to do so, an
entity or individual must meet the standards set forth in 42 C.F.R. § 424.535(a)(3), inter
alia.

III. Controlling Statutes and Regulations

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) established the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Payment under the program for services rendered to Medicare-eligible
beneficiaries may only be made to eligible providers of services and suppliers. Act

§§ 1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395(u)(h)(1)). Contractors
administer the Part B program. Act § 1842(a) (42 U.S.C. § 1395u(a)). The Act requires
the Secretary of the Department of Health and Human Services (Secretary) to issue
regulations that establish a process for the enrollment of providers and suppliers.
Pursuant to 42 C.F.R. § 424.505, a provider or supplier must be enrolled in the Medicare
program and be issued a billing number to have billing privileges to be eligible to receive
payment for services rendered to a Medicare-eligible beneficiary. See Medicare Program
Integrity Manual (MPIM), CMS Pub. 100-08, Chapter 10, Healthcare Provider/Supplier
Enrollment, § 6.1.1. To maintain Medicare billing privileges, a provider or supplier must
resubmit and recertify the accuracy of its enrollment information every five years. This
process is referred to as “revalidation.” 42 C.F.R. § 424.515. An “off cycle” revalidation
may be triggered as a result of random checks that reveals information indicating local
health care fraud problems, national initiatives, complaints, or other reasons that cause
CMS to question the compliance of the provider or supplier with Medicare enrollment
requirements. 42 C.F.R. § 424. 515(d).

Section 1842(h)(8) of the Act (42 U.S.C. § 1395u(h)(8)) grants the Secretary discretion to
refuse to enter into an agreement, or to terminate or refuse to renew an agreement, with a
provider or supplier that “has been convicted of a felony under Federal or State law for an
offense which the Secretary determines is detrimental to the best interests of the
program.” CMS may revoke an enrolled provider or supplier’s Medicare billing
privileges and any provider or supplier agreement for any of the reasons listed in 42
C.F.R. § 424.535, which provides in pertinent part:

(a) Reasons for revocation. CMS may revoke a currently enrolled provider or
supplier’s Medicare billing privileges and any corresponding provider agreement
or supplier agreement for the following reasons:

oR RK
(3) Felonies. The provider, supplier, or any owner of the
provider or supplier, within the 10 years preceding enrollment
or revalidation of enrollment, was convicted of a Federal or
State felony offense that CMS has determined to be
detrimental to the best interests of the program and its
beneficiaries.

(i) Offenses include —

oR

(B) Financial crimes, such as extortion, embezzlement,
income tax evasion, insurance fraud and other similar crimes
for which the individual was convicted, including guilty pleas
and adjudicated pretrial diversions.

The regulation is clear on its face that if a provider or supplier, or the owner of a provider
or supplier, is convicted of a federal or state felony that the Secretary has determined is
detrimental to the program or its beneficiaries, CMS may revoke billing privileges. See
42 CFR. § 424. 535(a)(3); see also Act § 1866(b)(2)(D) (42 U.S.C. § 1395ce(b)(2)(D)).
The regulation specifies that the conviction must have occurred within the 10 years
preceding enrollment, or revalidation of enrollment, in Medicare.

A revocation determination by CMS or its contractor is an “initial determination” that
may be appealed under the procedures found at 42 C.F.R. Part 498, subparts B-E. See 42
C.F.R. §§ 498.3(b)(17); 424.545(a).

IV. Burden of Proof

The procedures for hearings and appeals are set out in 42 C.F.R. Part 498. Section
1866(j)(2) of the Act allows providers and suppliers equal appeal rights as described by
section 1866(h)(1) of the Act. The hearing before an ALJ is a de novo proceeding.
Anesthesiologists Affiliated, DAB CR65 (1990), aff'd, 941 F.2d 678 (8th Cir. 1991);
Emerald Oaks, DAB No. 1800 at 11 (2001); Beechwood Sanitarium, DAB No. 1906
(2004); Cal Turner Extended Care, DAB No. 2030 (2006); Residence at Salem Woods,
DAB No. 2052 (2006). The procedures for hearings and appeals pursuant to 42 C.F.R.
Part 498 do not include specific provisions regarding the burden of going forward with
the evidence or the burden of persuasion. However, in cases subject to Part 498, the
Departmental Appeals Board (Board) has found that CMS must establish a prima facie
showing of a regulatory violation, and the regulated entity then bears the burden of
persuasion by a preponderance of the evidence to show that it was compliant with the Act
or regulations, or that it had a defense. Batavia Nursing & Convalescent Ctr., DAB No.
1904 (2004); Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004), aff'd, Batavia
Nursing & Convalescent Ctr. v. Thompson, 129 Fed. Appx. 181 (6th Cir. 2005); Emerald
Oaks, DAB No. 1800 (2001); Cross Creek Health Care Ctr., DAB No. 1665 (1998);

Evergreene Nursing Care Center, DAB No. 2069 at 7-8 (2007). The Board has found
this allocation of the burden of going forward with the evidence and the burden of
persuasion properly applied in supplier cases. MediSource Corp., DAB No. 2011 at 2-3
(2006). The parties have urged no different allocation in this case.

V. Findings and Conclusions
I find and conclude as follows:

1. On March 2, 2009, Petitioner pleaded guilty and was convicted of a felony in the
United States District Court for the Western District of New York on one count of
“Aiding and Abetting a False Statement Related to Health Care Fraud,” in violation of 18
U.S.C. § 1035(a)(2). CMS Ex. 3 at 1; CMS Ex. 9 at 1.

2. Petitioner was sentenced to probation for a term of three years and ordered to pay
restitution in the amount of $131,138. CMS Ex. 9 at 4.

3. By letter, dated June 17, 2009, the Medicare contractor NGS notified Petitioner that
is Medicare billing privileges were being revoked effective March 9, 2009, based on his
felony conviction of a charge of filing false statements in connection with payments for
ealth care benefits pursuant to 42 C.F.R. § 424.535(a)(3). Petitioner was also advised
that he failed to notify the contractor within 30 days of a final adverse action, as required
by 42 C.F.R. § 424.535(a)(9). CMS Ex. 4.

4. Petitioner requested reconsideration of the revocation of his billing privileges before a
contactor hearing officer, and an unfavorable decision, dated August 12, 2009, was issued
by the hearing officer. CMS Ex. 7.

5. CMS may revoke the billing privileges of a Medicare provider or supplier if the
provider, supplier, or owner of the provider or supplier is convicted of a federal or state
felony offense that CMS determines to be detrimental to the best interests of the program
and its beneficiaries (including financial crimes), but not if the conviction was more than
10 years preceding enrollment, or revalidation of enrollment. 42 C.F.R. § 424.535(a)(3).

6. Petitioner’s crime, aiding and abetting a false statement related to health care fraud,
constitutes a financial crime. 42 C.F.R. § 424.535(a)(3)(i)(B).

7. CMS was authorized to revoke the billing privileges of Petitioner, upon determining
that the felony conviction of “Aiding and Abetting a False Statement Related to Health
Care Fraud” is a crime that CMS has found is detrimental to the Medicare program or its
beneficiaries.

8. Petitioner’s Medicare billing privileges were properly revoked by CMS.
6

VI. Discussion
A. Summary judgment is appropriate.

CMS filed a motion for summary judgment to which Petitioner filed a response.
Petitioner argues that there are triable issues of fact that preclude summary judgment and
argues for an evidentiary hearing, stating that there were extraordinary circumstances
involved in his participation in the criminal scheme that formed the basis of his
conviction. P. Brief at 9. However, Petitioner does not dispute that on March 2, 2005, he
was convicted in the United States District Court for the Western District of New York of
one count of “Aiding and Abetting a False Statement Related to Health Care Fraud,” in
violation of 18 U.S.C. § 1035(a)(2). In particular, he does not dispute the fact that his
conviction was based on a fully-informed, voluntary, and counsel-assisted plea of guilty.
P. Brief at 4; Request for Hearing at 1-2; CMS Ex. 2; CMS Ex. 6 at 1; CMS Ex. 9 at 1.
Petitioner identifies no other material fact that is in dispute but rather advances only
arguments that I may not consider in deciding this case.

Summary judgment is appropriate, and no hearing is required, where either: there are no
disputed issues of material fact and the only questions that must be decided involve
application of law to the undisputed facts; or, the moving party must prevail as a matter
of law even if all disputed facts are resolved in favor of the party against whom the
motion is made. See White Lake Family Med., P.C., DAB No. 1951 (2004); Lebanon
Nursing & Rehab. Ctr., DAB No. 1918 (2004). A party opposing summary judgment
must allege facts which, if true, would refute the facts relied upon by the moving party.
See, e.g., Fed. R. Civ. P. 56(c); Garden City Med. Clinic, DAB No. 1763 (2001); Everett
Rehab. & Med. Ctr., DAB No. 1628 at 3 (1997) (in-person hearing required where non-
movant shows there are material facts in dispute that require testimony); Thelma Walley,
DAB No. 1367 (1992); see also New Millennium CMHC, Inc., DAB CR672 (2000); New
Life Plus Ctr., CMHC, DAB CR700 (2000).

The undisputed facts before me establish that Petitioner did not satisfy the requirements
necessary to participate in the Medicare program as a supplier. The Board has on
multiple occasions discussed the well-settled principles governing summary judgment.
See, e.g., 1866I1CPayday.com, L.L.C., DAB No. 2289 at 2-3 (2009). Summary judgment
is appropriate if a case presents no genuine issue of material fact, and the moving party is
entitled to judgment as a matter of law. Id. at 2; Illinois Knights Templar Home, DAB
No. 2274 at 3-4 (2009), and cases cited therein.

The moving party may show the absence of a genuine factual dispute by presenting
evidence so one-sided that it must prevail as a matter of law, or by showing that the non-
moving party has presented no evidence “sufficient to establish the existence of an
element essential to [that party’s] case, and on which [that party] will bear the burden of
proof at trial.” Livingston Care Ctr. v. Dep’t of Health & Human Servs., 388 F.3d 168,
173 (6th Cir. 2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). To
avoid summary judgment, the non-moving party must then act affirmatively by tendering
evidence of specific facts showing that a dispute exits. Matshushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986); see also Vandalia Park, DAB No.
1939 (2004); Lebanon Nursing & Rehab. Ctr., DAB No. 1918 (2004). To defeat an
adequately supported summary judgment motion, the non-moving party may not rely on
the denials in its pleading or briefs but must furnish evidence of a dispute concerning a
material fact. I/linois Knights Templar, DAB No. 2274 at 4; Livingston Care Ctr., DAB
No. 1871 at 5 (2003).

In examining the evidence for purposes of determining the appropriateness of summary
judgment, I must draw all reasonable inferences in the light most favorable to the non-
moving party. Livingston Care Ctr., 388 F.3d at 172; 18661CPayday.com, L.L.C., DAB
No. 2289 at 3; Brightview Care Ctr., DAB No. 2132 at 2, 9 (2007); Guardian Health
Care Ctr., DAB No. 1943 at 8 (2004); but see Brightview, DAB No. 2132 at 10 (entry of
summary judgment upheld where inferences and views of non-moving party are not
reasonable). Moreover, drawing factual inferences in the light most favorable to the non-
moving party does not require that I accept the non-moving party’s legal conclusions. Cf
Guardian Health Care Center, DAB No. 1943 at 11 (“A dispute over the conclusion to
be drawn from applying relevant legal criteria to undisputed facts does not preclude
summary judgment if the record is sufficiently developed and there is only one
reasonable conclusion that can be drawn from those facts.”).

This case requires an application of the law to the undisputed facts. The issue in this case
turns on the legal interpretation of the regulations, specifically, 42 C.F.R. §§ 424.535 and
424.530. This case must be decided against Petitioner as a matter of law based on the
undisputed material facts. Accordingly, summary judgment is appropriate.

B. Petitioner did not satisfy the requirements necessary to participate in the
Medicare program as a supplier of services.

1. Petitioner’s conviction is a sufficient basis for the revocation of his
billing privileges pursuant to 42 C.F.R. § 424.535(a)(3).

The essential elements necessary to support revocation of a provider or supplier’s billing
privileges, based on a qualifying felony as outlined in 42 C.F.R. § 424.535(a)(3), are that:
(1) the provider, supplier, or any owner of the provider or supplier be convicted of a
federal or state felony offense that CMS has determined to be detrimental to the best
interests of the program and its beneficiaries; and (2) the felony conviction occurred
within 10 years preceding the provider or supplier’s enrollment, or revalidation of
enrollment, in the Medicare program. Abdul Razzaque Ahmed, M.D., DAB No. 2261 at
19 (2009). I find that the two essential elements necessary to support the revocation of
Petitioner’s billing privileges, pursuant to 42 C.F.R. § 424.535, are patent in the record
before me.

a. Petitioner was convicted of a qualifying felony, which CMS
has determined is detrimental to the best interests of the
Medicare program and its beneficiaries.

The undisputed facts in the record before me establish that the first essential element
listed above has been met. Specifically, on March 2, 2009, in the United States District
Court for the Western District of New York, Petitioner was convicted of a felony after
pleading guilty to one count of “Aiding and Abetting a False Statement Related to
Health Care Fraud” in violation of 18 U.S.C. § 1035(a)(2). CMS Ex. 9 at 1. Further,
Petitioner does not dispute that the criminal activities for which he was convicted were a
“financial crime,” as outlined in 42 C.F.R. § 424.535(a)(3)(i)(B). As a matter of law, I
find that a violation of 18 U.S.C. § 1035(a)(2) is a “financial crime” within the
regulation’s meaning.

Moreover, Petitioner has admitted to participating in a scheme where false claims
regarding medical treatment provided to beneficiaries were filed to the Medicare
program. He admitted that he falsely certified Medicare forms stating that he provided
medical services, when, in fact, he knew that he had not and acknowledged that the
purpose of the scheme was to “receive money from Medicare.” CMS Ex. 1; CMS Ex. 2
at 6.

The information against Petitioner charged that from January 2003 through September
2004, Petitioner knowingly and willfully made materially false and fraudulent statements
and misrepresentations in connection with the payment and delivery of health care
services. Specifically, Petitioner caused Medicare claim forms to be submitted for
reimbursement in which he falsely represented that he had rendered treatment to
Medicare beneficiaries. CMS Ex. 1. In his plea agreement, Petitioner admitted to
submitting reimbursement claim forms to the Medicare program, which falsely certified
that medical care provided to program beneficiaries was medically necessary, and
certifying that he personally provided services to beneficiaries when he had not.
Petitioner also admitted that his criminal activities were part of a larger scheme devised
by his former employer to defraud the Medicare program. P. Brief at 5; CMS Ex. 2. The
court accepted Petitioner’s guilty plea. CMS Ex. 9 at 1. Petitioner was sentenced to
three years probation and ordered to pay restitution in the amount of $131,138 to the
Medicare program CMS Ex. 9 at 2, 4.

It is undisputed that the crime Petitioner admitted to committing is a felony under federal
law and is a financial crime within the plain meaning of the regulation. Applying the
same analysis as the Board in Ahmed, I find that the crime which Petitioner was
convicted of is similar to insurance fraud and within the regulation’s reach.?_ Ahmed,
DAB No. 2261. Thus, the first essential condition to support revocation of Petitioner’s
billing privileges, as outlined in section 424.535, has been satisfied based upon
Petitioner’s plea and conviction of a felony pursuant to 42 C.F.R. § 424.535(a)(3)(i)(B).

b. Petitioner’s conviction was within 10 years preceding
his revalidation enrollment.

The revalidation of Petitioner’s enrollment occurred when the CMS contractor NGS
obtained information that Petitioner was convicted of a felony offense. See Robert R.
Tzeng, M.D., DAB No. 2169 (2008). NGS was then authorized to make the
determination to revoke Petitioner’s enrollment and billing privileges. The parties do not
dispute that Petitioner’s March 2, 2005 conviction occurred within 10 years preceding his
enrollment, or revalidation of enrollment, and, therefore, the second essential element to
support revocation of Petitioner’s billing privileges, based on section 424.535, has been
satisfied.

C. CMS is authorized to revoke Petitioner’s Medicare billing
privileges.

CMS revoked Petitioner’s Medicare billing privileges pursuant to the authority granted
by section 1866(j) of the Act, and by implementing regulations at 42 C.F.R. § 424.535.
The regulations governing provider and supplier enrollment or revalidation of enrollment
specifically afford CMS discretionary authority to revoke Petitioner’s enrollment, where,
as in this case, CMS determines the offense to be detrimental to the best interests of
Medicare and its beneficiaries. 42 C.F.R. § 424.535(a)(3)(i). As noted, subsection (B)
specifically identifies financial crimes as a basis for revocation of supplier enrollment and
billing privileges. 42 C.F.R. § 424.535(a)(3)(i)(B). Moreover, section 1842(h) of the Act
authorizes the Secretary to make the determination of whether an offense is detrimental,
and the implementing regulations at section 424.535 delegate that authority to CMS. I
have no authority to look behind CMS’s exercise of its discretion, nor do I have the
authority to look behind CMS’s decision that Petitioner’s offense is detrimental to the
best interest of Medicare and its beneficiaries. Letantia Bussell, M.D., DAB No. 2196 at
12-13 (2008); see also Michael J. Rosen, M.D., DAB No. 2096 at 14 (2007).

When a provider or supplier whose billing privileges are revoked by CMS for one of the
reasons enumerated at 42 C.F.R. § 424.535 challenges the determination by requesting a

> T do not suggest that CMS is necessarily precluded from finding that a “financial

crime” might be a felony not specifically listed in section 424.535(a)(3)(i)(B). Although
the regulation provides examples of the types of crimes CMS has determined to be
financial crimes, the use of the words “such as” clearly indicates that CMS did not intend
the listed crimes to represent, or constitute, an all-inclusive catalogue.
hearing, what may be challenged in such a hearing is whether a regulatory basis exists to
revoke the provider or supplier’s billing privileges. However, what may not be
challenged is whether CMS properly exercised its discretion to invoke that authority in an
individual case. Nothing in the regulations suggests that I may look behind CMS’s
exercise of discretion and substitute my judgment for that of CMS in deciding whether to
revoke billing privileges in an individual case, where the authority to revoke is present.

D. Petitioner’s extenuating-circumstance defense is not a bar to CMS’s
authority to revoke Petitioner’s billing privileges.

In his request for hearing and his response brief, Petitioner argues that there were extreme
and unusual circumstances that forced him to participate in the crime for which he was
convicted. Specifically, Petitioner states that he provided crucial information for the
prosecution of the principles of his employer, All Care Medical Clinic (All Care).
Petitioner also avers that All Care had ties to, and was controlled by, the “Russian
Mafia,” which posed a risk to Petitioner’s life and the lives of his loved ones. P. Brief at
1,4. Petitioner further states that he broke his ties to All Care on September 27, 2004. P.
Brief at 6; CMS Ex. 2 at 6. Petitioner relies on the following pertinent language in 42
C.F.R. § 424.535(e) to argue that CMS should have reversed his revocation:

If the revocation was due to adverse activity (sanction, exclusion, or felony)
against an owner, managing employee, or an authorized or designed
official; or a medical director, supervising physician, or other personnel of
the provider or supplier furnish Medicare reimbursable service, the
revocation may be reversed if the provider or supplier terminates and
submits proffer that it had terminated its business relationship with that
individual within 30 days of the revocation notification.

Petitioner misreads the regulation. It is not applicable in instances in which the “adverse
activity” is taken against the Medicare provider or supplier itself. CMS argues that the
regulation’s preamble specifically indicates that the provision applies to situations where
a provider or supplier’s billing privileges are revoked “due to adverse activity.” CMS
Reply at 4. I find that CMS is correct in that there is specific language in the provision
reserving a reversal of a revocation decision to CMS’s discretion. I also agree with CMS
that Petitioner’s revocation was the result of his own felony conviction and not the
actions of his former employer’s. CMS maintains that the Medicare contractor did take
into consideration Petitioner’s explanation for the commission of his crime in rendering
its reconsideration, although it was not under any obligation to do so. CMS Reply at 4-6.
However, even if CMS did not take into consideration the mitigating factors, this does
not, in and of itself, create a reviewable issue for me. The regulation at section
424.535(a)(3) permits CMS to make a case-specific determination and to revoke a
supplier’s billing privileges based on that determination. Furthermore, whether a crime is
detrimental to Medicare is a matter of agency discretion that an ALJ is not authorized to
review or look behind.

Petitioner argues that there are equitable considerations here that CMS should have, but
failed to, take into account. It is well-settled that I am not authorized to address
Petitioner’s equitable arguments. I also may not second-guess CMS’s judgment in this
case, once I have determined that CMS has the authority to revoke Petitioner’s billing
privileges. Petitioner states that neither CMS nor its Medicare contractor considered as
“mitigating factors” that he cooperated with the federal government in providing
information regarding another employee of All Care, and that he had a limited role in the
scheme. P. Brief at 5. CMS is not required to take into consideration “mitigating
factors.” The Board in Ahmed has stated that, pursuant to 42 C.F.R. § 424.535(a)(3),
“CMS may - in its discretion — revoke a supplier’s billing privileges based solely on its
receiving notice of a conviction or a guilty pleas to a felony that it has determined to be
detrimental to Medicare and its beneficiaries.” Ahmed, DAB No. 2261 at 17-18
(emphasis in original). Petitioner has received the due process afforded him under the
statute and regulations. Therefore, I am not required to consider mitigating, or other,
factors in deciding whether to uphold a revocation.*

In this case, the record establishes that CMS had a valid legal predicate — namely, a
qualifying conviction for a felony that CMS determined to be detrimental to Medicare —
to revoke Petitioner’s billing privileges. CMS’s decision to revoke Petitioner’s billing
privileges based on the existence of that legal predicate is a discretionary judgment that I
may neither review nor substitute my discretion for that of CMS. Ahmed, DAB No. 2261
at 19 (citing Letantia Bussell, M.D., DAB No. 2196 at 12-13 (2008) (ALJ review is
limited to deciding whether CMS “established a legal basis for its actions.”)).

CMS has established a basis for the revocation of Petitioner’s billing privileges that
Petitioner has not overcome. Accordingly, I conclude that Petitioner did not satisfy the
requirements necessary to participate in the Medicare program as a supplier of services.

+ Petitioner claims that to be denied a hearing regarding extenuating circumstances is
“unconscionable and violative of due process.” Petitioner states that it recognizes that I
do not have jurisdiction over claims of violation of due process. Petitioner’s arguments
are duly noted and preserved for another forum.
VII. Conclusion

For the reasons stated above, CMS’s motion for summary judgment is granted, and
CMS’s determination to revoke Petitioner’s billing privileges is upheld.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Embassy Health Care Center
(CCN: 14-5316)
Petitioner,
Vv.
Centers for Medicare & Medicaid Services.
Docket No. C-09-206
Decision No. CR2107

Date: April 7, 2010

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
impose remedies against Embassy Health Care Center (Petitioner or facility).

For the reasons that follow, I uphold the CMP of $350 per day from November 7 through
December 11, 2008, for a total of $12,250.

I. Background

Petitioner is a long-term care facility located in Wilmington, Illinois. Petitioner is
authorized to participate in the federal Medicare program as a skilled nursing facility
(SNF) and in the Medicaid program as a nursing facility (NF). On November 7,
2008, the Illinois Department of Public Health (IDPH or state agency) conducted

a survey of the facility. IDPH determined that Petitioner was not in substantial
compliance with the following 19 Medicare participation requirements:

+ 42 CFR. § 483.25, Tag F309 (Quality of Care) at a “G” level of scope and
severity;!

* 42 C.F.R. § 483.25(h), Tag F323 (Accidents and Supervision) at a “G” level of
scope and severity;

* 42 C.F.R. § 483.65(a), Tag F441 (Infection Control) at a “F” level of scope and
severity;

* 42 CER. § 483.65(b)(3), Tag F444 (Preventing Spread of Infection) at a “F”
level of scope and severity;

+ 42 CER. § 483.10(f)(1), Tag F165 (Grievances) at an “E” level of scope and
severity;

* 42 C.E.R. § 483.15(b), Tag F242 (Self-Determination and Participation) at an
“E” level of scope and severity;

* 42 CER. § 483.15(e)(1), Tag F246 (Accommodation of Needs) at an “E” level
of scope and severity;

* 42 C.F.R. § 483.15(h)(1), Tag F252 (Environment) at an “E” level of scope and
severity;

* 42 C.F.R. § 483.20, Tag F272 (Comprehensive Assessments) at an “E” level of
scope and severity;

' According to the scope and severity matrix published in the State Operations Manual
(SOM) section 7400E, a scope and severity level of A, B, or C indicates that a deficiency
has the potential for no actual harm and has the potential for no more than minimal harm.
A scope and severity level of D, E, or F indicates a deficiency that presents no actual
harm but has the potential for more than minimal harm that does not amount to
immediate jeopardy. A scope and severity level of G, H, or I indicates a deficiency that
involves actual harm that does not amount to immediate jeopardy. A scope and severity
level of J, K, or L indicates that a deficiency poses immediate jeopardy to resident health
or safety. The matrix, which is based on 42 C.F.R. § 488.408, specifies which remedies
are required and optional at each level based upon the frequency of the deficiency. See
SOM section 7400E.

> This deficiency was subsequently deleted and is not a subject of this appeal. See CMS
Ex. 2 at 1.
* 42 C.F.R. § 483.35(c), Tag F363 (Menus and Nutritional Adequacy) at an “E”
level of scope and severity;

* 42 C.E.R. § 483.35(d), Tag F364 (Food) at an “E” level of scope and severity;

* 42 C.F.R. § 483.35(i), Tag F371 (Sanitary Conditions) at an “E” level of scope
and severity;

+ 42 CER. § 483.65(b)(1), Tag F442 (Preventing Spread of Infection) at an “E”
level of scope and severity;

+ 42 CER. § 483.70(d)(1)(ii), Tag F458 (Resident Rooms) at an “E” level of
scope and severity;

+ 42 C.F.R. § 483.10(j), Tag F172 (Access and Visitation Rights) at a “D” level of
scope and severity;

+ 42 C.F.R. § 483.13(a), Tag F221 (Physical Restraints) at a “D” level of scope
and severity;

* 42 C.F.R. § 483.20(k)(3)(i), Tag F281 (Comprehensive Care Plans) at a “D”
level of scope and severity;

* 42 C.E.R. § 483.25(i), Tag F325 (Nutrition) at a “D” level of scope and severity;
and

* 42 CER. § 483.25(n), Tag F334 (Influenza and Pneumococcal Immunization)
at a “D” level of scope and severity.

See CMS Ex. 1.

By letter, dated November 18, 2008, the IDPH notified Petitioner that it had imposed
directed in-service training, effective December 8, 2008, and would impose a mandatory
denial of payment for new admissions (DPNA), effective February 7, 2009. See CMS
Ex. 3 at 1. The IDPH also recommended that CMS impose a CMP. See CMS Ex. 3 at 1.

By letter, dated December 8, 2008, CMS notified Petitioner that, based on its compliance
history, it was changing the recommended remedy and imposing a discretionary DPNA
effective, December 28, 2008, and a CMP of $350 per day beginning November 7, 2008,
until compliance was achieved. CMS Ex. 3.
By letter, dated January 16, 2009, Petitioner timely requested a hearing. In its

earing request, Petitioner listed the 19 tags cited during the November 7, 2008 survey
but stated that it was challenging only the citation under Tag F309, Quality of Care.
Petitioner stated that it had submitted documentation to refute the deficiencies and that
the deficiency under Tag F323 was deleted. Petitioner’s Hearing Request.

By letter dated February 4, 2009, CMS notified Petitioner of the final status of the
remedies. CMS Ex. 2. CMS stated that the deficiency cited at Tag F323 had been
deleted. CMS stated further that a revisit, conducted on January 13, 2009, found the
acility to be in substantial compliance with participation requirements effective
December 12, 2008. CMS advised Petitioner that it was rescinding the DPNA and
imposing a CMP of $350 per day from November 7 through December 11, 2008 (35
days), for a total of $12,250. CMS Ex. 2.

I conducted an in-person hearing in Chicago, Illinois on August 7-8, 2009. CMS offered
exhibits (CMS Exs.) 1 through 16, and Petitioner offered exhibits (P. Exs.) 1 through 4. I
admitted all of the exhibits into evidence. Hearing Transcript (Tr.) 16, 18. CMS elicited
testimony from Joella Daniels, state agency surveyor. Petitioner elicited testimony from
Jodi Foster, Petitioner’s Director of Nursing, and Roslyn Riley, a Licensed Practical
Nurse, employed by the facility.

Each party submitted a post-hearing brief (CMS Brief and P. Brief, respectively) and a
reply brief (CMS Reply and P. Reply, respectively), and each party received a copy of the
hearing transcript.

II. Issues
The issues before me are:

(1) whether the facility was in substantial compliance with 42 C.F.R. § 483.25 at
the time of the November 7; 2008 survey; and

(2) ifthe facility was not in substantial compliance, whether the penalty imposed,
$12,250, was reasonable.

Ill. Applicable Law and Regulations

Petitioner is considered a long-term care facility under the Social Security Act (Act) and
regulations promulgated by the Secretary of the Department of Health and Human
Services (Secretary). The statutory requirements for participation by a long-term care
facility are found at sections 1819 and 1919 of the Act, and at 42 C.F.R. Part 483.
Sections 1819 and 1919 of the Act vest the Secretary with authority to impose civil
money penalties (CMPs) and other remedies against a long-term care facility for failure
to comply substantially with participation requirements.

Pursuant to the Act, the Secretary has delegated to CMS the authority to impose various
remedies against a long-term care facility that is not complying substantially with federal
participation requirements. Facilities that participate in Medicare may be surveyed on
behalf of CMS by State survey agencies to ascertain whether the facilities are complying
with participation requirements. 42 C.F.R. §§ 488.10-488.28; 42 C.F.R. §§ 488.300-
488.335. Under Part 488, CMS may impose a per instance, or per day, CMP against a
long-term care facility when a State survey agency ascertains that the facility is not
complying substantially with participation requirements. 42 C.F.R. §§ 488.406, 488.408,
488.430. The regulations in 42 C.F.R. Part 488 also give CMS a number of other

remedies that can be imposed if a facility is not in compliance wit
requirements.

Pursuant to 42 C.F.R. Part 488, CMS may terminate a long-term ci
agreement when a survey agency concludes that the facility is not
substantially with federal participation requirements. CMS may a

Medicare

are facility’s provider
complying
so impose a number of

alternative enforcement remedies in lieu of, or in addition to, termination. 42 C.F.R.
§§ 488.406; 488.408; 488.430. In addition to termination and the alternative remedies
that CMS is authorized to impose, pursuant to section 1819(h)(2)(D) of the Act and 42

C.F.R. § 488.417(b), CMS must impose the “mandatory” or “statut

1819(h)(2)(D) require:
to a SNF, beginning 3

tory” DPNA. Section
s the Secretary to deny Medicare payments for all new admissions
months after the date on which such facility is determined not to be

in substantial compliance with program participation requirements. The Secretary has

codified this requirem
The regulations speci
CMP for each day the
each instance that a fa

The regulations speci

ent at 42 C.F.R. § 488.417(b).
'y that a CMP imposed against a facility can be either a per day
facility is not in substantial compliance, or a per instance CMP for

cility is not in substantial compliance. 42 C.F.R. § 488.430(a).

'y that a CMP that is imposed against a facility on a per day basis

will fall into one of two broad ranges of penalties. 42 C.F.R. §§ 488.408, 488.438. The
upper range of the CMP, from $3,050 per day to $10,000 per day, is reserved for

deficiencies that const
circumstances, for rep
lower range of CMP,

itute immediate jeopardy to a facility’s residents, and, in some
eated deficiencies. 42 C.F.R. §§ 488.438(a)(1)(i), (d)(2). The
tom $50 per day to $3,000 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 ha’

ve the potential for causing more than minimal harm. 42 C.F.R.

§ 488.438(a)(1)(ii). T

ere is only a single range of $1,000 to $10,000 for a per instance

CMP, which applies whether or not immediate jeopardy is present. 42 C.F.R.
§§ 488.408(d)(1)(iv); 488.438(a)(2).
The regulations define the term “substantial compliance” to mean “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. Non-compliance that is immediate jeopardy is defined as “‘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.”
Id. The Act and regulations make a hearing before an administrative law judge (ALJ)
available to a long-term care facility against whom CMS has determined to impose a
CMP. 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, DAB CR65 (1990),
aff'd, 941 F2d. 678 (8th Cir. 1991).

A facility has a right to appeal a “certification of noncompliance leading to an
enforcement remedy.” See 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 if a
successful challenge would affect the amount of the CMP that CMS could collect or

impact upon the facility’s nurse aide training
(ii). CMS’s determination as to the level of n
clearly erroneous.” 42 C.F.R. § 498.60(c)(2).
jeopardy. Woodstock Care Ctr., DAB No. 17.

program. 42 C.F.R. §§ 498.3(b)(14)(i) and
joncompliance “must be upheld unless it is
This includes CMS’s finding of immediate
26 at 9, 38 (2000), aff'd, 363 F.3d 583 (6th

Cir. 2003). The Departmental Appeals Board (the Board or DAB) has long held that the

net effect of the regulations is that a provider

as 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).

In a CMP case, CMS must make a prima facie case that the facility has failed to comply
substantially with participation requirements. To prevail, a long-term care facility must
overcome CMS's showing by a preponderance of the evidence. Hillman Rehabilitation
Center, DAB No. 1611 (1997), aff'd, Hillman Rehab. Ctr. v. U. S. Dep’t of Health &
Human Servs., No. 98-3789, 1999 WL 34813783 (D.N.J. May 13, 1999).

IV. Findings of Fact, Conclusions of Law, and Discussion

I make two findings of fact and conclusions of law to support this decision. I set them
forth below as separate headings in bold type and then discuss each in detail.
1. Petitioner failed to comply substantially with the requirement at 42
C.F.R. § 483.25 (Tag F309).

As a threshold matter, Petitioner has not appealed 17 of the 19 deficiencies cited in the
November 7, 2008 survey, any one of which would justify the imposition of penalties
(see discussion below). The unappealed deficiencies are the following: Tags F165;
F172; F221; F242; F246; F252; F272; F281; F325; F334; F363; F364; F371; F441; F442;
F444; and F458. Petitioner’s Hearing Request; Tr. 18-20.

As to the 17 unappealed deficiencies, CMS’s determinations that Petitioner was out of
compliance with those Medicare requirements are final and binding. 42 C.F.R.

§ 498.20(b). CMS was therefore authorized to impose penalties. As discussed below, the
unappealed deficiencies, by themselves, provide a sufficient basis for the imposition of a
$350 per day CMP from November 7 through December 11, 2008.

The only deficiency Petitioner has challenged is Tag F309, 42 C.F.R. § 483.25. The
regulation at 42 C.F.R. § 483.25 provides that:

Each resident must receive and the facility must provide the necessary care and
services to attain or maintain the highest practicable physical, mental, and
psychosocial well-being, in accordance with the [resident’s] comprehensive
assessment and plan of care.

CMS’s allegations of noncompliance with 42 C.F.R. § 483.25 centers on the care
provided to Resident 27 (R27) during an eight-day period, October 24-31, 2008. With
respect to this citation, the Statement of Deficiencies (SOD) alleges that, based upon
observation, record review, and interview, Petitioner failed to:

-- closely monitor oxygen saturation and respiratory status on [R27] with
compromised respiratory status;

-- obtain timely medical evaluation after any of 3 separate episodes of respiratory
distress in an 8-day period;

-- follow physician orders to maintain oxygen saturation levels greater than 90%
and to encourage oxygen use; and

-- obtain orders for resident access as needed to his bronchodilator inhaler.

CMS Ex. | at 18-19.
The SOD alleges further that those failures “resulted in recurrent episodes of respiratory
distress with oxygen saturations dropping into the 70s and re-occurrence of infiltrates in
the lung.” CMS Ex. | at 19.

R27 was a 52-year old male, who was admitted to the facility from the hospital on
September 25, 2008, with diagnoses that included asthma and chronic obstructive
pulmonary disease (COPD). See CMS Exs. 9, 10. R27 had a recent episode of
pneumonia. See CMS Ex. | at 19; Tr. 32, 44. The record shows that on September 26,
2008, his physician, Dr. Jurak, ordered, among other things, a Combivent inhaler to be
used every four to six hours as needed for shortness of breath. CMS Ex. 12 at 9.

R27’s care plan, dated September 28, 2008, noted that he had “altered respiratory
function secondary to” COPD and asthma. CMS Ex. 9. The care plan’s goal was for
R27 to “be free from signs of respiratory distress” through December 28, 2008, the date
of the next review. The care plan stated, inter alia, the following interventions:

Observe and report signs of congestion, lethargy, labored breathing, wheezing,
etc.; oxygen as ordered by physician; ausculate the lung fields for diminished and
abnormal breath sounds; notify the physician, as needed; assess for signs and
symptoms of dyspnea and/or cyanosis, administer medications, as ordered; and
check oxygen saturation as ordered and PRN.

CMS Ex. 9.

R27’s Minimum Data Set Assessment (MDS), dated October 6, 2008, indicates that he
displayed resistance to care in the last seven days, but his behavior was easily altered.
CMS Ex. 10 at 4.

The facility’s nurse’s notes show that, on October 23, 2008, at 11:00 a.m., R27
complained of weakness all over his body and not feeling well. R27’s lungs were
congested on expiration, and his oxygen (02) saturation level was 66% on room air. Staff
administered oxygen to R27 by mask, and his 02 saturation level increased to 98%. Staff
paged his physician Dr. Jurak. P. Ex. 3 at 4; CMS Ex. 8 at 5.

On October 23, 2008, Dr. Jurak gave orders for Albuterol, back-to-back nebulizer
treatments, a chest x-ray, a course of Prednisone over eight days, and ordered that R27’s
oxygen be titrated to keep saturation levels above 90%. P. Ex. 4 at 2; CMS Ex. 12 at 6.
According to the SOD, R27’s chest x-ray showed a normal examination. See CMS Ex. |
at 20. There does not, however, appear to be a copy of the x-ray report itself in the
exhibits before me.

At 11:30 a.m. on October 23, 2008, a nurse’s note indicates that staff had received and
carried out Dr. Jurak’s orders. According to the note, R27 had received nebulizer
treatments, his lungs were still congested, and staff would continue to monitor. The
nurse’s note stated that R27’s 02 saturation level was at 98% on 6 liters per mask. P. Ex.
3 at 5; CMS Ex. 8 at 8. At 1:30 on October 23, 2008, R27’s skin was noted to be warm
and dry, and his 02 saturation level was at 90% on room air. P. Ex. 3 at 5; CMS Ex. 8 at
8. A little while later, at 2:15 p.m., staff noted that R27’s 02 saturation level was at 92%
on room air. P. Ex. 3 at 5; CMS Ex. 8 at 8. Several hours later, at 10:00 p.m., another
entry in the nurse’s notes indicates that R27’s 02 saturation level was at 92%. The note
states that R27 requested breathing treatment, and staff gave him a nebulizer.

A nurse’s note, dated October 24, 2008, but unclear as to the precise time of day,
indicates that R27’s 02 saturation level was at 90% on room air and that he had his
nebulizer at his side. P. Ex. 3 at 7; CMS Ex. 8 at 7.

There are no nurse’s notes entries for October 25, 2008. On October 26, 2008, an entry
in the nurse’s notes indicates that, at 1:00 a.m., R27 was resting in bed, and his
respirations were full and unlabored. P. Ex. 3 at 7; CMS Ex. 8 at 7. A 7:00 p.m. nurse’s
note states that R27’s lung sounds were clear, his respirations were unlabored, and his
color was “good.” P. Ex. 3 at 7; CMS Ex. 8 at 7. Another nurse’s note, at 7:30 p.m.,
indicates that R27’s lungs were clear, with no respiratory distress noted, and no concerns
voiced. P. Ex. 3 at 5; CMS Ex. 8 at 8.°

A nurse’s note entry on October 27, 2008, at 1:55 a.m., states that R27 was resting, and
his respirations were full and unlabored. P. Ex. 3 at 5; CMS Ex. 8 at 8. R27’s skin was
warm and dry, and he had no complaints of pain or discomfort. P. Ex. 3 at 5; CMS Ex. 8
at 8. Later that day at 6:00 p.m., the nurse’s notes indicate that R27 had no complaints of
pain or discomfort, his skin was warm, dry, and pink, and his lungs were clear. P. Ex. 3
at 7; CMS Ex. 8 at 7; see Tr. 86.

On October 28, 2008, the surveyor, Joella Daniels, entered R27’s room. Tr. 24; see CMS
Ex. 1 at 20. Ms. Daniels testified that his door was closed, so she knocked before
entering. She stated that R27 was alone in the room, which was dark. Ms. Daniels
testified that R27 appeared to be in distress and that he stated that he was “having
difficulty breathing.” She stated that R27 was “having trouble talking” and that she
“could hear from across the bed his respirations were wet and gurgling, and when he
would try and talk, he was coughing . . . nonproductively.” Tr. 24; see Tr. 43; see also
CMS Ex. | at 20. Ms. Daniels noted in the SOD that R27 complained that staff would
not allow him to have his inhaler at his bedside. See CMS Ex. 1 at 20; CMS Ex. 7 at 1.

Ms. Daniels testified that she immediately called a nurse to check R27, and a nurse came
and evaluated his vital signs and checked his oxygen saturation level, which was in the
70s. Tr. 24.

The nurse’s notes indicate that, on October 28, 2008, a nurse was summoned to R27’s
room, because he had complaints of shortness of breath. The nurse gave R27 his

> This October 26, 2008, 7:30 p.m. entry appears to have been written out of sequence.
10

Combivent inhaler and instructed him to take two puffs. R27 self-administered the
inhaler and took three puffs. The nurse checked his 02 saturation level and noted that it
was at 71% on room air. R27’s lung sounds showed inspiratory and expiratory wheezing,
as well as a non-productive cough. The nurse administered oxygen to R27 at two
liters/minute, and his oxygen saturation level increased to 96-99 %. The nurse paged
R27’s physician, Dr. Jurak, at noon. P. Ex. 3 at 5; CMS Ex. 8 at 8; see CMS Ex. | at 20-
21; see also Tr. 87-88.

A nurse’s note at 12:30 p.m. states that R27 was resting comfortably, and his 02
saturation level was at 99% on two liters/minute. The note states further that R27 wished
to remove the oxygen, and, when it was removed, his oxygen level went down to 87%.
The nurse advised R27 to keep the oxygen on and noted that she would provide a
portable oxygen tank if he wished to get up. P. Ex. 3 at 6; CMS Ex. 8 at 9; see Tr. 88.

At 1:00 p.m., staff paged Dr. Jurak. At this time, R27 was receiving oxygen at two
liters/minute, and his 02 saturation level was at 97%. P. Ex. 3 at 6; CMS Ex. 8 at 9. At
1:20 p.m., Dr. Jurak’s office called, and staff described R27’s condition. R27 was stable
at this time, but staff noted that he refused to wear his oxygen. P. Ex. 3 at 6; CMS Ex. 8
at 9.

At 2:00 p.m., Dr. Jurak returned the call. The record shows that, on October 28, 2008,
Dr. Jurak ordered staff to continue to monitor R27 and encourage him to wear his
oxygen. Dr. Jurak also ordered that R27 keep his Combivent inhaler at his bedside for
use every six hours, two puffs. CMS Ex. 12 at 2, 8; P. Ex. 3 at 6; CMS Ex. 8 at 9; see P.
Ex. 3 at 2.

A nurse’s note entry, dated 10/29/08 at 12:15 a.m., indicates that R27’s 02 saturation
level was at 94% on room air, and he had no complaints of pain or discomfort. P. Ex. 3
at 7; CMS Ex. 8 at 7; see P. Ex. 3 at 1."

On October 30, 2008, an untimed nurse’s note shows that R27 was resting in bed, his
skin was warm and dry, he had no complaints of pain and discomfort, and his 02
saturation level was at 93% on room air. The note also stated that R27’s respirations
were full and unlabored. P. Ex. 3 at 7; CMS Ex. 8 at 7.

On October 31, 2008, at 1:55 a.m., a nurse’s note states that R27 was resting in bed, his
respirations were full and unlabored, his skin was warm and dry, and he had no
complaints of pain or discomfort. P. Ex. 3 at 7; CMS Ex. 8 at 7.

4 In its post-hearing brief, Petitioner states that, for October 29, 2008, there are “[nJo
observations recorded since no change in condition.” P. Brief at 4. However, the nurse’s
notes contain one entry recorded for this date.
11

Later in the morning of October 31, 2008, Ms. Daniels went to check R27 again and
observed him at 9:50 a.m. in bed in his room. Tr. 27; see CMS Ex. 1 at 21. Ms. Daniels
testified that R27 was again experiencing shortness of breath and told her that he “didn’t
feel good.” Tr. 27. She stated that she again summoned a nurse to the room, who
checked R27’s 02 saturation level, which was in the 70s. Tr. 27. According to Ms.
Daniels, the nurse administered oxygen to R27 and called Dr. Jurak. Tr. 27.

An entry in the nurse’s notes, dated October 31, 2008 at 9:50 a.m., indicates that R27 had
“slight dyspnea” and that he received two liters of oxygen per minute per nasal cannula.
P. Ex. 3 at 6; CMS Ex. 8 at 9; see P. Ex. 3 at 2. The note states that R27’s 02 saturation
level was at 79-85%, and lung sounds were diminished bilaterally. R27 used his inhaler.
His oxygen was increased to a rate of four liters per minute, resulting in an increased 02
saturation level to 90 to 95%. R27’s lung sounds continued to be diminished. The
nurse’s note goes on to state that staff called Dr. Jurak for instructions, and he gave new
orders. The note also indicates that R27 is a chronic smoker and that he refuses to wear
the nasal cannula at times. P. Ex. 3 at 6; CMS Ex. 8 at 9; see CMS Ex. 1 at 21.

The record shows that, on October 31, 2008, Dr. Jurak ordered staff to: discontinue
R27’s Combivent inhaler; start Symbicort inhaler at one puff, twice daily; start nebulizer
treatment with Albuterol every four hours as needed for dyspnea; and continue oxygen
two to four liters titration to keep 02 saturation levels above 90%. Dr. Jurak also ordered
a chest x-ray. P. Ex. 4 at 2; CMS Ex. 12 at 6; see P. Ex. 3 at 2.

A nursing note, dated October 31, 2008 at 10:15 a.m., indicates that R27 was given
nebulizer treatment as ordered, and his 02 saturation level was at 95-96%. The note
states that the resident was resting comfortably, and x-ray was on the way. CMS Ex. 8 at
10.

Petitioner argues that the testimony and documentary evidence demonstrate that its
nursing staff closely monitored R27’s oxygen saturation levels and carried out Dr.
Jurak’s orders to maintain his oxygen levels above 90%. Petitioner claims that CMS’s
allegation concerning the failure to monitor is premised on “the mere failure to
document.” P. Brief at 12. Petitioner argues that even though R27 was not physically
seen by Dr. Jurak, he did receive medical evaluations after his episodes of respiratory
distress. Finally, Petitioner claims that R27 had access to his inhaler at all times after Dr.
Jurak issued an order authorizing it.

There is no dispute that R27 had COPD and asthma and that his respiratory system was
compromised. For this reason, R27 required especially-careful assessment and
monitoring. On September 26, 2008, the day after he was admitted to Petitioner’s
facility, his physician, Dr. Jurak, ordered a Combivent inhaler to be used every four to six
hours, as needed, for shortness of breath. CMS Ex. 12 at 9. Petitioner’s staff put in place
a care plan that specifically addressed R27’s altered respiratory function, listing
interventions that included, inter alia: observing and reporting signs of congestion,
12

labored breathing, and wheezing; administering oxygen as ordered by the physician;
assessing for signs and symptoms of dyspnea; and checking oxygen saturation as ordered
and PRN (as needed). Moreover, staff noted on the care plan that the stated goal was for
R27 to “be free from signs of respiratory distress” through December 28, 2008, the date
of the next review. CMS Ex. 9.

As discussed above, R27 first experienced respiratory distress on October 23, 2008. On
this date, he complained of weakness and not feeling well. R27’s lungs were congested
on expiration, and his 02 saturation level was 66% on room air. After he received oxygen
by mask, his 02 saturation level increased to 98%. That same day, after being paged, Dr.
Jurak gave orders for Albuterol, back-to-back nebulizer treatments, a chest x-ray, a
course of Prednisone over eight days, and ordered that R27’s oxygen be titrated to keep
saturation levels above 90%. P. Ex. 4 at 2; CMS Ex. 12 at 6. According to the nurse’s
notes, dated October 23, 2008, which were timed at 11:30 a.m., 1:30 p.m., 2:15 p.m., and
10:00 p.m., staff monitored R27 and maintained his 02 saturation level at 90% or above
for the rest of the day.

Despite the fact that Dr. Jurak had given an order that R27’s 02 saturation level be
maintained above 90%, R27 again suffered respiratory distress on October 28, 2008, and
October 31, 2008. I note that, on both these occasions, it was Surveyor Daniels who
found R27 to be ina state of distress, experiencing shortness of breath and difficulty
breathing. On both occasions, Surveyor Daniels summoned a nurse for assistance. The
nurse checked R27’s 02 saturation level and administered oxygen to him. With respect to
the October 28, 2008 episode, R2’s 02 saturation level was at 71% room air, and his lung
sounds showed wheezing and a non-productive cough. After he received oxygen, his 02
saturation level increased to 96-99%. P. Ex. 3 at 5; CMS Ex. 8 at 8; see CMS Ex. | at
20-21; see also Tr. 87-88. Similarly, with the October 31, 2008 episode, R27’s 02
saturation level was at 79-85%, and his lung sounds were diminished bilaterally. After
the nurse administered oxygen to R27, R27’s 02 saturation level increased to 90 to 95%.

l agree with CMS that the fact that R27 had three episodes of respiratory distress in an
eight-day period indicates that Petitioner’s staff failed to monitor R27’s respiratory status
and failed to maintain his 02 saturation level above 90% as Dr. Jurak ordered. Although
Petitioner insists that there was monitoring and documentation on October 23, October
28, and October 31, 2008, it is clear that the record does not support this. See P. Brief at
13.

At the hearing, Surveyor Daniels testified that a normal 02 saturation level would be at
90% or above, for “a normal person breathing at room air.” Tr. 25. She stated that if the
02 level drops below that, then a person would experience lack of oxygenation to the
organs, brain, and tissues. Surveyor Daniels testified further that if a person’s 02 level
drops to 70%, the person would be “very compromised” and would need assistance to get
13

the oxygen levels back up. Tr. 25. When asked how one would “titrate 02 levels to 90
percent,” Surveyor Daniels stated:

[Y]ou need to frequently monitor the oxygen saturation levels to determine the
need for oxygen increases or decreases to maintain that 90 percent or higher level.
Once you determine there’s a need to increase or decrease, you need to go back
and recheck that saturation level to see if you’ve obtained that level, so you have
to do periodic levels.

See Tr. 28; Tr. 53.

To measure the 02 saturation level, Surveyor Daniels testified that a device called a pulse
oximeter is used. She stated that it is attached to a person’s finger, and it “records the
oxygen saturation level with a specific number percent.” Tr. 28. According to Surveyor
Daniels, the machine would not show a range of numbers, only a specific number. Tr.
28. Surveyor Daniels stated that, with a compromised resident who has respiratory
distress, the 02 saturation level should be monitored on every shift. Tr. 28.

The record contains no evidence that R27’s 02 saturation level was being closely
monitored by Petitioner’s staff on October 23, 28, and 31, 2008, to ensure that it stayed
above 90%. Nothing in the nurse’s notes indicates that Petitioner’s staff had taken pulse
oximetry readings on these dates prior to R27’s episodes of compromised oxygen intake,
which would have been required to ascertain R27’s 02 saturation level.

Petitioner downplays R27’s shortness of breath on October 28, 2008, questioning
whether “the mere occurrence of an episode of shortness of breath is tantamount to the
lack of monitoring of oxygen saturation levels.” P. Brief at 11. When R27 had difficulty
breathing on October 28, 2008 episode, his 02 saturation level was at 71% room air.
Contrary to Petitioner’s rather glib description that he had a “mere occurrence” of
shortness of breath, R27’s dangerously low 02 saturation level shows that his oxygen
intake was seriously compromised. Even Petitioner’s counsel admitted at the hearing that
when Surveyor Daniels went into R27’s room, “he was in some way respiratorily
compromised.” Tr. 20.°

In fact, I find that the only reason R27’s 02 saturation levels were checked at all on
October 28 and 31, 2008, is because Surveyor Daniels happened personally to observe
him as he was experiencing respiratory distress. I find credible Surveyor Daniels’
testimony, including her observations of R27 on October 28 and October 31. Had
Petitioner’s staff provided the appropriate care and monitored R27’s 02 saturation levels
as ordered, his 02 levels would not have fallen dangerously low into the 60s and 70s.

> T note that Petitioner’s counsel does not indicate in his statement to which of the room
visits by Surveyor Daniels, one or both visits, he is referring.
14

In addition to the failure of care described above, CMS contends that the record also
shows that Petitioner’s staff failed to monitor closely R27’s 02 saturation levels and
respiratory status on October 24, October 25, October 26, October 27, October 29, and
October 30, 2008. CMS points out that, aside from a few out-of-sequence nursing notes,
there is no evidence that staff was taking pulse oximetry readings to ensure that R27’s 02
saturation level was monitored and kept above 90%, as Dr. Jurak ordered.

In its defense, Petitioner maintains that its staff did closely monitor R27’s respiratory
condition and his 02 saturation levels. Petitioner asserts that its staff carried out the
monitoring not only by obtaining pulse oximetry readings, but also through observation
of R27’s physical condition. P. Brief at 14. Moreover, Petitioner argues that “a failure to
document is not tantamount to failing to maintain R27’s oxygen saturation levels at 90
percent.” P. Brief at 11. As further support for its claim that its staff monitored R27 as
Dr. Jurak ordered, Petitioner states that R27 was resistant to care and would refuse to
wear his oxygen.

According to the entries in the nurse’s notes, staff took: one pulse oximeter reading
(90%) on October 24; one pulse oximeter reading (94%) at 12:15 a.m. on October 29;
and one pulse oximeter reading (93%) on October 30. For October 25, there are no
nursing note entries. For October 26 and 27, the nursing notes contain staffs
observations of R27 and indicate that R27 had full and unlabored respirations, and his
lung sounds were clear. I note that some of these notes appear to be out of sequence.

At the hearing, both Surveyor Daniels and Petitioner’s Director of Nursing, Jodi Foster,
testified that the only way to measure 02 saturation levels is through pulse oximetry. Tr.
28, 104.° Ms. Foster testified further that it is not possible to determine 02 saturation
levels through observation. Tr. 104. Like Surveyor Daniels, Ms. Foster testified that the
pulse oximeter does not give a range of saturation levels. Tr. 94-95. When asked why a
range would have been written in the nurse’s notes, Ms. Foster testified that a nurse may
have taken three different pulse oximeter readings, showing three different numbers (e.g.,
“a range of 79 to 85”). Tr. 95.

Based on the testimony of Surveyor Daniels and Ms. Foster, it follows that, for staff to
carry out Dr. Jurak’s order to maintain R27’s 02 saturation level above 90%, they would
need to check his 02 saturation level at various times during the day by pulse oximetry
and, as Surveyor Daniels explained, determine whether R27’s oxygen intake should be
increased or decreased. According to Surveyor Daniels, if a resident has had recent

° T note that, at the hearing, Ms. Foster provided a description of the pulse oximeter
similar to that given by Surveyor Daniels, stating that the device “can be a hand-held
machine . . . [that] has a digital reading on the front with a little device that is placed on
the tip of your finger to monitor the oxygen level in the blood.” Tr. 94. Ms. Foster also
stated that some facilities have pulse oximeters “on rollers.” Tr. 94.
15

episodes of respiratory distress and needs oxygen titration, the resident should be
monitored on every shift.

As stated above, the nurse’s notes covering the period October 24-27, 2008, and October
29-30, 2008, show that staff took R27’s pulse oximetry readings a total of three times.
Staff measured R27’s 02 saturation level once on October 24, once on October 29, and
once on October 30. On the other dates, staff either recorded their observations of R27 or
made no nurse’s note entries at all.

In Petitioner’s view, the three pulse oximetry readings, combined with staff's
observations of R27, show that staff monitored his 02 saturation levels. With respect to
the pulse oximetry readings, Petitioner, citing Ms. Foster’s testimony, argues that “R27’s
physician did not specify how often these readings needed to be done or that they must be
taken on any kind of regular basis.” P. Brief at 12. According to Ms. Foster, taking a
pulse oximetry reading would have been “a nursing judgment . . . because there was no
order for [the nurses] to take a daily pulse ox or a weekly pulse ox.” Tr. 99. Ms. Foster
expressed her opinion that when a physician has written an order to monitor a patient and
as not provided a specific level of monitoring, then it is up to the nursing staffs
judgment as to how to monitor the patient. Tr. 100. When questioned about the nursing
notes, Ms. Foster testified that she wrote one of the October 26, 2008 nursing notes and
noted her observations of R27 but did not take a pulse oximetry reading. Tr. 84-85.
When asked why she did not take a reading, Ms. Foster responded that she did not
believe it was medically necessary or that it was ordered by a physician. Tr. 85.

Further, Petitioner claims that, by noting their observations of R27’s physical condition,
staff were also able to check R27’s 02 saturation levels in this manner. As an example,
Petitioner noted that R27’s skin is “warm and pink in color [which indicates] normal
oxygenation.” P. Brief at 15.

I find Petitioner’s arguments unpersuasive. There was only one way for Petitioner’s staff
to ensure that R27’s 02 saturation level was kept above 90% in accordance with Dr.
Jurak’s order, and that was by taking the necessary pulse oximetry readings. Even
Petitioner’s own witness, Ms. Foster, confirmed that 02 saturation levels cannot be
determined through observation, and the only way to measure the 02 level is by pulse
oximetry. Tr. 104.

Pulse oximetry readings were thus required for R27. They were not unimportant or
medically unnecessary given the fact that Dr. Jurak had specifically ordered that R27’s
oxygen be titrated to keep saturation levels above 90%. The fact that Petitioner’s staff
took R27’s pulse oximetry reading only three times over the period October 24-27, 2008,
and October 29-30, 2008, shows that staff failed to carry out Dr. Jurak’s order. Staff
were required to ensure that R27’s 02 saturation level stayed above 90%, and they could
only carry this out by diligently monitoring his respiratory status and taking pulse
16

oximetry readings on a regular basis. The observations of R27’s physical condition noted
by Petitioner’s staff, while a part of his assessment, are not a substitute for these readings.
The fact that Dr. Jurak did not explicitly order that pulse oximetry readings be taken does
not excuse Petitioner’s staff’s failure to take them, since the only way to ensure that his
order was properly executed was by taking the readings. Contrary to Petitioner’s
misguided claim that CMS is requiring it to go beyond what Dr. Jurak recommended, I
find that a more apt conclusion is that Petitioner’s staff fell far short of complying with
his order.

With respect to Petitioner’s “failure to document” argument, Petitioner has not produced
any evidence that its staff took pulse oximetry readings during the period October 24-27,
2008, and October 29-30, 2008, at other times than the three times noted in the nurse’s
notes. To explain why staff did not write any nursing notes at all on October 25, 2008,
Petitioner states that staff did not write any observations because R27 had “no change in
condition.” P. Brief at 3. I note that, at the hearing, Ms. Foster confirmed that “some of
the time, actual pulse oxes were taken, and other times, there were observation but no
pulse ox taken.” Tr. 98. Ms. Foster stated that nurses could have taken readings, but not
recorded them. Tr. 98-99.

It is generally accepted that the absence of documentation that a service or treatment was
not delivered gives rise to the inference that the service or treatment was not delivered.
The burden is upon Petitioner to show that necessary care and services were delivered
and, absent documentation and/or other credible evidence, Petitioner cannot meet the
burden. If Petitioner’s staff had taken R27’s pulse oximetry readings on a regular basis
on the dates mentioned above, Petitioner had the burden to produce documentation or
other credible evidence of this. Petitioner failed to do so.

To the extent that Petitioner argues that R27 was resistant to care, this does not excuse
Petitioner’s staff’s failure to comply with Dr. Jurak’s order to keep R27’s 02 saturation
level above 90%. R27’s MDS, dated October 6, 2008, indicated that R27 had been
resistant to care one to three times in the previous seven days, but his behavior was easily
altered. CMS Ex. 10 at 4; see Tr. 46. At the hearing, Surveyor Daniels testified that the
nurse’s notes did not indicate that R27 was “noncompliant” or “resistant.” Tr. 46. She
stated further that when she observed R27 when he was receiving oxygen and treatment
from staff, he was not noncompliant. Tr. 46.

According to the nurse’s notes, R27 refused to wear his oxygen on October 28 and
October 31, 2008. These are the only instances of resistance to care recorded by staff.
Interestingly, it is on these dates when Surveyor Daniels found R27 suffering respiratory
distress with dangerously low 02 saturation levels and summoned a nurse, who then
administered oxygen to R27. Petitioner does not claim, and the record does not show,
that R27 refused the oxygen treatment from staff. R27 did, on these dates, later refuse to
wear his oxygen. Focusing on these refusals, Petitioner argues that any drop in oxygen
17

levels was “largely caused by R27’s refusal to follow Dr. Jurak’s orders, not
[Petitioner’s] purported failure to monitor oxygen saturation levels.” P. Reply at 5.

Given that the evidence clearly shows that Petitioner’s staff failed to take pulse oximetry
readings as necessitated by Dr. Jurak’s order, it is a misguided argument by Petitioner to
attempt to minimize its own staff’s failure in care by blaming R27. Further, as CMS
correctly points outs, nothing in the record shows that R27’s resistance to care, or refusal
to wear his oxygen, affected staff’s ability to take a pulse oximetry reading.

With respect to CMS’s argument that R27 did not receive timely medical evaluations
after his episodes of respiratory distress on October 23, October 28, and October 31,
2008, the record shows that staff called Dr. Jurak each time and made him aware of the
situation. Surveyor Daniels testified on cross-examination that, after R27 suffered
respiratory distress on October 28, 2008, the staff should have asked Dr. Jurak to come to
the facility to see R27, or R27 should have been taken to Dr. Jurak or the hospital. Tr.
59. When asked to explain the bases for her opinion, Surveyor Daniels stated that it was
based on “nursing standards . . . professional judgment.” Tr. 60. Surveyor Daniels
testified further that a medical evaluation “could mean x-rays. It could mean labs.
Medical evaluation doesn’t have to necessarily be eye to eye.” Tr. 60. She then
acknowledged that R27 had a chest x-ray taken on October 23, 2008, and again on
October 31, 2008. Tr. 60. Surveyor Daniels also did not appear to dispute that R27
received a medical evaluation on October 28, 2008. Tr. 60.

Based on the record, including Surveyor Daniels’ testimony, I find that R27 did receive
timely medical evaluations on October 23, October 28, and October 31, 2008. For R27 to
be medically evaluated after his episodes of respiratory distress, it was not necessary that
Dr. Jurak actually examine him in person. Staff contacted Dr. Jurak, described R27’s
condition, and Dr. Jurak then acted by giving orders to staff, which included medication,
x-rays, and keeping R27’s 02 saturation levels above 90%.

I next address CMS’s allegation that Petitioner’s staff failed to obtain orders for R27’s
access to his inhaler. According to the SOD, during the October 28, 2008 episode of
respiratory distress, R27 had told Surveyor Daniels that the staff would not allow him to
keep his inhaler with him, and the nurse had informed both R27 and Surveyor Daniels
that R27 did not have a physician’s order to keep the inhaler. CMS Ex. | at 20-21. CMS
claims that Petitioner’s staff ignored R27’s request to have access to his inhaler rather
than obtain an order from Dr. Jurak. CMS asserts that, through Surveyor Daniels’
intervention, R27 received an order from Dr. Jurak authorizing him to keep his inhaler
with him. CMS Reply at 3. The record shows that, later in the day on October 28, 2008,
Dr. Jurak ordered that R27 be able to keep his Combivent inhaler at his bedside for use
every six hours, two puffs. CMS Ex. 12 at 2, 8; P. Ex. 3 at 2, 6; CMS Ex. 8 at 9.
18

Prior to October 28, 2008, R27 did not have any orders that authorized him to have his
inhaler at his bedside. Other than R27’s statement to Surveyor Daniels, there is nothing
in the record as to what he may have told staff regarding his inhaler. Surveyor Daniels
testified that after Dr. Jurak issued the order on October 23, 2008, authorizing R27 to
keep his inhaler with him, R27 had the inhaler available to him at all times. Tr. 45.
While Petitioner’s staff should probably have acted on R27’s request sooner, it appears
that once they received Dr. Jurak’s order, they complied with it.

Based on my review of all of the evidence before me, I find that Petitioner did not
provide R27 the care and services he needed to attain or maintain his highest practicable
physical well-being and was therefore not in substantial compliance with Tag F309, 42
C.F.R. § 483.25. CMS established a prima facie case, and Petitioner did not successfully
rebut it by a preponderance of the evidence.

2. The proposed CMP of $350 per day from November 7, 2008,
through December 11, 2008, is reasonable.

In determining the amount of the CMP, the following factors specified at 42 C.F.R.

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

The lower range of CMP, from $50 per day to $3,000 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
CFR. § 488.438(a)(1)(ii).

CMS seeks to impose a CMP of $350 a day from November 7, 2008, through December
11, 2008, for a total CMP of $12,250.

I note that, with respect to facility history, CMS submitted documentation, which
Petitioner does not challenge, that shows that the facility has a significant history of
substantial noncompliance. CMS Ex. 13. In prior survey cycles, Petitioner has been
cited under various tags, including a citation under Tag F309 at the immediate jeopardy
level twice, and several citations at the “G” scope and severity level. CMS Ex. 13 at 3, 5.
Although Petitioner claimed that the CMP was “excessive” in its hearing request, I note
that Petitioner has not provided any evidence to show that its financial condition
precludes it from paying the proposed CMP. See CMS Ex. 14.

As previously noted, Petitioner did not appeal 17 deficiencies identified during the
November 7, 2008 survey. These unappealed deficiencies comprised five deficiencies at
the “D” scope and severity level, 10 deficiencies at the “E” scope and severity level, and
19

two deficiencies at the “F” scope and severity level. These deficiencies are now final and
binding against Petitioner. 42 C.F.R. § 498.20(b). As such, CMS has established a
finding of noncompliance that provides a basis for its imposition of a CMP at the lower
range of $50 to $3,000 per day for deficiencies that do not constitute immediate jeopardy,
but either cause actual harm or caused no actual harm, but have the potential for more
than minimal harm. See 42 C.F.R. § 488.438(a)(1)(ii).

Furthermore, with respect to the deficiency that Petitioner appealed, I found that
Petitioner was not in substantial compliance with Tag F309, 42 C.F.R. § 483.25, at the
“G” scope and severity level. The evidence shows that the deficiency under Tag F309
was serious and further justifies CMS’s imposition of a CMP against Petitioner at the
lower range of $50 to $3,000 per day. Petitioner’s staff failed to monitor closely R27’s
respiratory status and take necessary pulse oximetry readings to monitor his 02 saturation
levels, in accordance with his physician’s orders. The record shows that R27’s 02
saturation levels fell to dangerously low levels, causing him respiratory distress. Based
on the evidence, I find that Petitioner was culpable.

In contesting the CMP remedy, Petitioner disputes CMS’s position that the 17
unappealed deficiencies in themselves are sufficient to support a CMP of $350 per day.
P. Reply at 6. Petitioner asserts that the unappealed tags are non-immediate jeopardy
level deficiencies and were cited at scope and severity levels of “D”, “E,” and “F.”
Petitioner claims that it made a strategic decision to only contest Tag F309 and that its
“failure to appeal these tags was not an admission of liability or an inference that these
tags were not worthy of attention.” P. Reply at 6. Petitioner acknowledges that “some
sort of CMP is warranted,” based on the uncontested deficiencies, but takes the position
that they are not the type of deficiencies associated with $350 per day CMPs. Petitioner
requests that I not impose any CMP for the unappealed deficiencies, but if this is not
possible, then Petitioner seeks a reduction in the CMP amount from $350 per day to $50
per day. P. Reply at 7.

Petitioner’s arguments must fail. The 17 unappealed deficiencies are now final and
binding determinations that Petitioner was out of compliance with program requirements
that were serious enough to pose the potential for more than minimal harm. Although
Petitioner seeks a reduction in the CMP from $350 to $50 per day, no reduction is
warranted. At $350 per day, the imposed penalty is at the low end of the range.
Moreover, while, by itself, the gross number of deficiencies does not dictate the
reasonableness of a CMP, neither is it irrelevant (see Pacific Regency Arvin, DAB No.
1823 at 17-18 (2002)), and the presence of 17 deficiencies is significant enough to justify
a CMP of $350 per day. Accordingly, on the basis of the unappealed deficiencies, I find
that CMS is authorized to impose a CMP of $350 per day and that this figure is
reasonable.
20

Further, while the 17 now-final deficiencies, in themselves, support a $350 per day CMP,
Lalso find that, in light of the relevant factors, the deficiency cited under Tag F309 gives
CMS a separate basis to impose a $350 per day CMP and that this amount is reasonable.

V. Conclusion

For the foregoing reasons, I conclude that there is a basis for the imposition of a CMP. I
further find that a CMP of $350 per day from November 7 through December 11, 2008,
for a total of $12,250, is reasonable.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Universal Respiratory Care, LLC
(Supplier No: 4879950001)
Petitioner,

Vv.

Centers for Medicare & Medicaid Services.
Docket No. C-10-78
Decision No. CR2106

Date: April 6, 2010

DECISION

The Centers for Medicare & Medicaid Services (CMS) revoked Petitioner’s Medicare
supplier number, after the supplier’s employee created and sent to the Medicare
contractor a phony letter, purportedly from the Maryland state licensing agency, falsely
claiming that the supplier’s license was current.

Petitioner, Universal Respiratory Care, LLC., appeals the revocation, and CMS moves for
summary judgment. As discussed below, the uncontroverted facts compel revocation of
Petitioner’s supplier number. I therefore grant CMS’s motion for summary judgment.

I. Background

Until its Medicare supplier number was revoked on May 28, 2009, Petitioner participated
in the Medicare program as a supplier of durable medical equipment, prosthetics,
orthotics, and supplies (DMEPOS). See 42 C.F.R. § 424.57. Ina letter, dated April 28,
2009, the Medicare contractor, Palmetto GBA National Supplier Clearinghouse, notified
Petitioner that its supplier number would be revoked, and that, pursuant to 42 C.F.R.
§ 424.535(c), the supplier would be barred from re-enrolling in the Medicare program for
one year. The letter gave two reasons for the revocation: 1) the supplier did not have a
current Residential Service Agency (RSA) license; and 2) the supplier’s administrator
submitted to the contractor false documentation regarding renewal of the license. CMS
Ex. 7.

Petitioner sought reconsideration. In a reconsideration decision, dated August 25, 2009, a
Medicare hearing officer found that the supplier had submitted false documentation,
which justified revoking Petitioner’s supplier number. CMS Ex. 11. Petitioner now
appeals that determination.

CMS moves for summary judgment. With its motion and brief, CMS submits 12 exhibits
(CMS Exs. 1-12). Petitioner submits a response, with no additional exhibits.

II. Discussion

CMS is entitled to summary judgment, because the
undisputed evidence establishes that the supplier, Universal
Respiratory Care, LLC, did not satisfy Medicare enrollment
requirements.!

Summary judgment. The Departmental Appeals Board has, on multiple occasions,
discussed the well-settled principles governing summary judgment. See, e.g.,
1866ICPayday.com, L.L.C., DAB No. 2289 at 2-3 (2009). Summary judgment is
appropriate if a case presents no genuine issue of material fact, and the moving party is
entitled to judgment as a matter of law. 1866/CPayday, DAB No. 2289 at 2; Illinois
Knights Templar Home, DAB No. 2274 at 3-4 (2009), and cases cited therein.

The moving party may show the absence of a genuine factual dispute by presenting
evidence so one-sided that it must prevail as a matter of law, or by showing that the non-
moving party has presented no evidence “sufficient to establish the existence of an
element essential to [that party’s] case, and on which [that party] will bear the burden of
proof at trial.” Livingston Care Ctr. v. Dep’t of Health & Human Servs., 388 F.3d 168,
173 (6th Cir. 2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). To
avoid summary judgment, the non-moving party must then act affirmatively by tendering
evidence of specific facts showing that a dispute exists. Matsushita Elec. Indus. Co.,
Ltd., v. Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986); see also Vandalia Park, DAB
No. 1939 (2004); Lebanon Nursing and Rehab. Ctr., DAB No. 1918 (2004).

To defeat an adequately supported summary judgment
motion, the non-moving party may not rely on the denials in

' [make this one finding of fact/conclusion of law.
its pleadings or briefs, but must furnish evidence of a
dispute concerning a material fact... .

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

In examining the evidence for purposes of determining the appropriateness of summary
judgment, I must draw all reasonable inferences in the light most favorable to the non-
moving party. 1866/CPayday, L.L.C, DAB No. 2289 at 3; Brightview Care Ctr., DAB
No. 2132 at 2, 9 (2007); Livingston Care Ctr., 388 F.3d at 172; Guardian Health Care
Ctr., DAB No. 1943 at 8 (2004); but see Brightview, DAB No. 2132 at 10 (entry of
summary judgment upheld where inferences and views of non-moving party are not
reasonable). Moreover, drawing factual inferences in the light most favorable to the non-
moving party does not require that I accept the non-moving party’s legal conclusions. Cf
Guardian Health Care Ctr., DAB No. 1943 at 11 (2004) (‘A dispute over the conclusion
to be drawn from applying relevant legal criteria to undisputed facts does not preclude
summary judgment if the record is sufficiently developed and there is only one
reasonable conclusion that can be drawn from those facts.”).

Requirements fora DMEPOS supplier’s Medicare participation. To receive Medicare
payments for items furnished to a Medicare-eligible beneficiary, a supplier of medical
equipment and supplies must have a supplier number issued by the Secretary of the
Department of Health and Human Services. Social Security Act § 1834(j)(1)(A).

To obtain and retain its supplier number, a Medicare supplier must meet the standards set
forth in 42 C.F.R. § 424.57(c), and CMS may revoke its billing privileges if it fails to do
so. 42 C.F.R. §§ 424.57(c)(1) and (d); 42 C.F.R. § 424.535(a)(1). Among other
requirements, the supplier must truthfully certify that it “[h]as not made, or caused to be
made, any false statement or misrepresentation of a material fact on its application for
billing privileges.” The supplier must also provide “complete and accurate information
in response to questions on its application for billing privileges.” 42 C.F.R.

§ 424.57(c)(2).

Undisputed facts and application of law to those facts. Here, the critical facts are not in
dispute. On December 1, 2008, Petitioner relocated its business to 110 West Road,
Towson, Maryland. CMS Ex. | at 16; P. Br. at 2. On December 31, 2008, a supplier
employee hand delivered to the appropriate state agency the supplier’s check for renewal
of its RSA license. CMS Ex. | at 3; P. Response at 2.

Thereafter, on February 6, 2009, the supplier submitted to the Medicare contractor a new
Medicare enrollment application form (CMS Form 855S) reflecting the location change.
CMS Ex. | at 4-37. The form specifies that “[a] change to the business location address
requires submission of professional and business licenses for the new address. . . “? CMS
Ex. 1 at 16. However, the state licensing agency had not yet issued the necessary RSA
license. Fearful that the state licensing procedure would not be completed for months
and knowing that, without a Medicare number, the supplier would be out of business, the
supplier’s employee, Nicole J.B. Parker, forged a letter, using state agency letterhead.
The phony letter was addressed to the attention of Ms. Parker at Universal Respiratory
Care, LLC. It said that the supplier’s RSA license “is considered current” and that the
supplier was authorized to operate under state law. CMS Ex. 3.

Petitioner does not dispute any of this but argues that Ms. Parker acted without the
owner’s knowledge or consent. Petitioner claims that Ms. Parker was not an “authorized
official” or a “delegated official,” but merely a “contact person.” While the supplier’s
owner/president, Steven T. Baker, delegated to Ms. Parker “the process of licensing
around the move,” he remained the supplier’s sole “authorized official.” CMS Ex. 1 at
26, 31. In Petitioner’s view, because Mr. Baker did “not permit or direct her to falsify
information,” the supplier should not be accountable for her actions. P. Br. at 2-3. I
disagree.

It is well-settled that an employer is legally responsible for an employee’s actions that are
committed within the scope of her employment. See, e.g., U.S. v. Park, 421 U.S. 658
(1975); U.S. v. Cabrera-Diaz, 106 F. Supp. 2d 234 (D.P.R. 2000) (employees’
knowledge of the submission of a false claim is imputed to the employer, even absent
actual knowledge); see also Brightview Care Ctr., DAB No. 2132 at 13 (2007);
Cherrywood Nursing & Living Ctr., DAB No. 1845 at 10 (2002); Emerald Oaks, DAB
No. 1800 at 7 n.3 (2001); Florence Park Care Ctr., DAB No. 1931 at 18-19 (provider is
responsible for the acts of its employees). Here, Petitioner concedes that Ms. Parker was
authorized to communicate with the Medicare contractor on issues relating to the
supplier’s license. Its enrollment application, which was signed by Mr. Baker, explicitly
directs the Medicare contractor to contact her if questions arise during the processing of
the application. She was therefore acting within the scope of her authority, and the
supplier is accountable for her actions.

Based on these facts, I find that Petitioner was not in compliance with all of the standards
set forth in section 424.57(c). The employee charged with responding to the Medicare
contractor’s questions regarding its application for billing privileges made false
statements and misrepresentations of material facts, violating 42 C.F.R. § 424.57(c)(2).
CMS therefore properly revoked its billing privileges. 42 C.F.R. § 424.57(d).

II. Conclusion

Because the undisputed facts establish that the supplier violated 42 C.F.R. § 424.57(c)(2),
I grant CMS’s motion for summary judgment and sustain the revocation of Petitioner’s
supplier number.

/s/
Carolyn Cozad Hughes
Administrative Law Judge