Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

Avon Nursing Home,
(CCN: 33-5216),

Petitioner,
v.
Centers for Medicare & Medicaid Services.

Docket No. C-14-549

Decision No. CR4670

Date: August 2, 2016

DECISION

The survey completed at Petitioner, Avon Nursing Home, on September 6, 2013, violated
section 1819(g)(2)(E)(i) of the Social Security Act (Act) (42 U.S.C. § 1395i-
3(g)(2)(E)(i)) and 42 C.F.R. § 488.314(a)(1).' Accordingly, the findings and conclusions
of the survey team, which was constituted in violation of the Act and regulations, are
invalid and cannot be the bases for the imposition of any enforcement remedy. No
enforcement remedy is reasonable absent a lawful basis to impose such a remedy.
I. Background
Petitioner is located in New York, New York, and participates in Medicare as a skilled
nursing facility (SNF). Revised Joint Stipulation of Facts (Jt. Stip.) § 1. On September 6,

2013, the New York Department of Health, Office of Long Term Care (state agency),
completed a survey of Petitioner’s facility.

' References are to the 2012 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise indicated.
The Centers for Medicare & Medicaid Services (CMS) notified Petitioner by letter dated
November 15, 2013, that it was imposing enforcement remedies against Petitioner based
on deficiencies cited by the September 6, 2013 survey. The CMS notice cited Petitioner
with violations of 42 C.F.R. §§ 483.13(c) (Tag F225), at a scope and severity of D; and
483 .25(h) (Tag F323) at a scope and severity of L. The notice advised Petitioner that a
revisit survey conducted on October 17, 2013, determined that Petitioner had returned to
substantial compliance with Medicare program participation requirements. CMS advised
Petitioner that CMS was imposing a per instance civil money penalty (PICMP) of
$9,500.00, based on the noncompliance cited under Tags F225 and F323. The CMS
notice also informed Petitioner that Petitioner was prohibited from conducting a nurse
aide training and competency evaluation program (NATCEP) from September 6, 2013
through September 5, 2013, based on the amount of the civil money penalty (CMP).
CMS Exhibits (Exs.) 1 and 2.

> This is a “Tag” designation as used in CMS Pub.100-07, State Operations Manual
(SOM), Appendix PP — Guidance to Surveyors for Long Term Care Facilities
(http://www.cms.hhs.gov/Manuals/IOM/list.asp). The “Tag” refers to the specific
regulatory provision allegedly violated and CMS policy guidance to surveyors. Although
the SOM does not have the force and effect of law, the provisions of the Act and
regulations as interpreted in the SOM clearly do have such force and effect. Ind. Dep't of
Pub. Welfare v. Sullivan, 934 F.2d 853 (7th Cir. 1991); Northwest Tissue Ctr. v. Shalala,
1 F.3d 522 (7th Cir. 1993). Thus, while the Secretary of Health and Human Services
(Secretary) may not seek to enforce the provisions of the SOM, she may seek to enforce
the provisions of the Act or regulations as interpreted by the SOM.

> Scope and severity levels are used by CMS and a state when selecting remedies. The
scope and severity level is designated by an alpha character, A through L, selected by
CMS or the state agency from the scope and severity matrix published in the SOM, Chap.
7, § 7A00E. A scope and severity level of A, B, or C indicates a deficiency that presents
no actual harm but has the potential for minimal harm, which is an insufficient basis for
imposing an enforcement remedy. Facilities with deficiencies of a level no greater than
C remain in substantial compliance. 42 C.F.R. § 488.301. 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. Scope and severity levels J, K, and L indicate
deficiencies that constitute 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.
CMS notified Petitioner by letter dated December 5, 2014, that it had reduced the scope
and severity of the deficiency cited under Tag F323 to K, and, because Petitioner did not
have a NATCEP, the prohibition on conducting a NATCEP cited in the November 15,
2013 notice was not applicable to Petitioner. CMS advised Petitioner that there was no
change to the $9,500.00 PICMP. CMS Ex. 64.

Petitioner requested a hearing before an administrative law judge (ALJ) by letter dated
January 6, 2014, specifically challenging the noncompliance cited under Tag F323 by the
September 6, 2013 survey.* On January 16, 2014, the case was assigned to me for
hearing and decision and an Acknowledgement and Prehearing Order (Prehearing Order)
was issued.

A hearing was convened by video teleconference on January 6,7, and 8, 2015. A
transcript of the proceedings was prepared.” CMS offered CMS Exs. | through 35, 35A,
and 36 through 68, all of which were admitted as evidence. Tr. Vol. | at 31-32.
Petitioner offered Petitioner exhibits (P. Exs.) 1 through 31 that were admitted as
evidence. Tr. Vol. | at 32-34. Petitioner offered P. Exs. 42 and 43 that were admitted
over CMS objection.° Tr. Vol. 2 at 20, 28, 63-67. CMS called the following witnesses:
Surveyor Linda Werth, R.D.,C.D.N. and Surveyor Mary Langworthy, R.D., C.D.N.
Petitioner called the following witnesses: Robert M. Rubens, former Administrator of
Petitioner; Josette Dobiesz, former Director of Nursing (DON) for Petitioner; Wanda
Cobb, Petitioner’s Food Service Director; Lisa Jansen, a cook at Petitioner’s facility; and
Wendy Leakey, a Certified Nursing Assistant (CNA) at Petitioner’s facility.

* On January 7, 2015, Petitioner amended its request for review to include both the
deficiency citations under Tags F225 and F323. The amendment and the CMS objection
to the amendment are discussed hereafter.

oA separate volume of the transcript was prepared for each day the hearing was in
session. Rather than number all pages consecutively across all three volumes of the
transcript — the usual practice — the court reporting firm began the numbering of the pages
of each volume of the transcript with the number 1. Therefore, to avoid potential
confusion, references to the transcript must be by volume and page. The transcript for
January 6 is referred to as “Tr. Vol. 1” followed by the page number. The transcripts for
January 7 and 8 are referred to as “Tr. Vol. 2” and “Tr. Vol. 3,” respectively.

® Petitioner did not offer P. Exs. 32 through 41. Petitioner Avon Nursing Home’s List of
Exhibits Offered dated April 2, 2015.
Subsequent to the hearing, on February 25, 2015, CMS filed an amended exhibit list and
offered extracts from the SOM app. PP, marked as CMS Exs. 69 through 72. On March
24, 2015, CMS filed an amended exhibit list and offered CMS Ex. 73, which included a
memorandum titled “Incident Reporting System,” dated October 4, 2011, and addressed
to “Nursing Home Administrators” (CMS Ex. 73 at 1) and a copy of the New York State
Department of Health Division of Residential Services’, “Nursing Home Incident
Reporting Manual,” rev. June 14, 2012 (CMS Ex. 73 at 2-39). Petitioner did not object to
my consideration of CMS Exs. 69 through 73 and the exhibits are admitted.

The parties filed post-hearing briefs (CMS Br. and P. Br.) and related pleadings on April
2, 2015, and reply briefs (CMS Reply and P. Reply) on May 4, 2015.

II. Discussion
A. Issues

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

Whether the remedy imposed is reasonable.
B. Applicable Law

The statutory and regulatory requirements for participation of a SNF in Medicare are
found at section 1819 of the Act and at 42 C.F.R. pt. 483. Section 1819(h)(2) of the Act
authorizes the Secretary to impose enforcement remedies against a SNF for failure to
comply substantially with the federal participation requirements established by sections
1819(b), (c), and (d) of the Act.’ The Act requires that the Secretary terminate the
Medicare participation of any SNF that does not return to substantial compliance with
participation requirements within six months of being found not to be in substantial
compliance. Act § 1819(h)(2)(C). The Act also requires that the Secretary deny payment
of Medicare benefits for any beneficiary admitted to a SNF, if the SNF fails to return to
substantial compliance with program participation requirements within three months of
being found not to be in substantial compliance — commonly referred to as the mandatory
or statutory denial of payment for new admissions (DPNA). Act § 1819(h)(2)(D). The

7 Participation of a nursing facility (NF) in Medicaid is governed by section 1919 of the
Act (42 U.S.C. § 1396r). Section 1919(h)(2) of the Act gives enforcement authority to
the states to ensure that NFs comply with the participation requirements established by
sections 1919(b), (c), and (d) of the Act. The provisions of sections 1819 and 1919 of the
Act are substantially similar.
Act grants the Secretary discretionary authority to terminate a noncompliant SNF’s
participation in Medicare, even if there has been less than 180 days of noncompliance.
The Act also grants the Secretary authority to impose other enforcement remedies,
including a discretionary DPNA, CMPs, appointment of temporary management, and
other remedies such as a directed plan of correction, when a facility is found not to be in
substantial compliance with program participation requirements. Act § 1819(h)(2)(B).

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 sections 1819(b), (c), and (d) of the Act or the Secretary’s
regulations at 42 C.F.R. pt. 483, subpt. B. Noncompliance refers to any deficiency that
causes a facility not to be in substantial compliance, that is, a deficiency that poses a risk
for more than minimal harm. 42 C.F.R. § 488.301. State survey agencies survey
facilities that participate in Medicare on behalf of CMS to determine whether the
facilities are complying with federal participation requirements. 42 C.F.R. §§ 488.10-.28,
.300-.335. The regulations specify the enforcement remedies that CMS may impose if a
facility is not in substantial compliance with Medicare requirements. 42 C.F.R.

§ 488.406.

The Act and regulations make a hearing before an ALJ available to a long-term care
facility such as Petitioner against which CMS has determined to impose an enforcement
remedy. Act §§ 1128A(c)(2), 1866(h); 42 C.F.R. §§ 488.408(g), 498.3(b)(13). A facility
has a right to request ALJ review of a “certification of noncompliance leading to an
enforcement remedy.” 42 C.F.R. §§ 488.408(g)(1), 488.330(e), 498.3. However, the
choice of remedies, 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 determined by CMS if a successful challenge would
affect the range of the CMP that may be imposed or impact the facility’s authority to
conduct a NATCEP. 42 C.F.R. § 498.3(b)(14), (d)(10)(i). The CMS determination as to
the level of noncompliance, including the finding of immediate jeopardy, “must be
upheld unless it is clearly erroneous.” 42 C.F.R. § 498.60(c)(2); Woodstock Care Ctr.,
DAB No. 1726 at 9, 38 (2000), aff'd, 363 F.3d 583 (6th 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).

The hearing before an ALJ is a de novo proceeding, i-e., “a fresh look by a neutral
decision-maker at the legal and factual basis for the deficiency findings underlying the
remedies.” Life Care Ctr. of Bardstown, DAB No. 2479 at 32 (2012) (citation omitted);
The Residence at Salem Woods, DAB No. 2052 (2006); Cal Turner Extended Care
Pavilion, DAB No. 2030 (2006); Beechwood Sanitarium, DAB No. 1906 (2004);
Emerald Oaks, DAB No. 1800 at 11 (2001); Anesthesiologists Affiliated, DAB CR65
(1990), aff'd, 941 F.2d 678 (8th Cir. 1991). The Secretary’s regulations do not address
the allocation of the burden of proof or the standard of proof. However, the Board has
addressed the allocation of the burden of proof in many decisions. The standard of proof
is a preponderance of the evidence. CMS has the burden of coming forward with the
evidence and making a prima facie showing of a basis for imposing an enforcement
remedy. “Prima facie” means generally that the evidence is “[s]ufficient to establish a
fact or raise a presumption unless disproved or rebutted.” Black’s Law Dictionary 1228
(8th ed. 2004). To make a prima facie case that its decision to impose an enforcement
remedy was legally sufficient, CMS must: (1) identify the statute, regulation or other
legal criteria to which it seeks to hold the petitioner; (2) come forward with evidence
upon which it relies for its factual conclusions that are disputed by the petitioner; and (3)
show how the deficiencies it found amounted to noncompliance that warrants an
enforcement remedy, that is, that there was a risk for more than minimal harm due to the
regulatory violation. Evergreene Nursing Care Ctr., DAB No. 2069 at 7 (2007).
Petitioner bears the burden of persuasion to show by a preponderance of the evidence that
it was in substantial compliance with participation requirements or any affirmative
defense. Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004); Batavia Nursing
& Convalescent Ctr., DAB No. 1904 (2004), aff'd, 129 F. App’x 181 (6th Cir. 2005);
Emerald Oaks, DAB No. 1800; Cross Creek Health Care Ctr., DAB No. 1665 (1998);
Hillman Rehab. Ctr., DAB No. 1611 (1997), DAB CR500 (1997) (on remand), rev'd,
DAB No. 1663 (1998), aff’d, Hillman Rehab. Ctr. v. United States, No. 98-3789 (GEB),
1999 WL 34813783 (D.N.J. May 13, 1999).

C. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold text followed by my findings of fact and
analysis. I have carefully considered all the evidence and the arguments of both parties,
although not all may be specifically discussed in this decision. I discuss the credible
evidence given the greatest weight in my decision-making.* Talso discuss any evidence
that I find is not credible or worthy of weight. The fact that evidence is not specifically
discussed should not be considered sufficient to rebut the presumption that I considered

® “Credible evidence” is evidence that is worthy of belief. Black’s Law Dictionary 596
(18th ed. 2004). The “weight of evidence” is the persuasiveness of some evidence
compared to other evidence. Id. at 1625.

all the evidence and assigned such weight or probative value to the credible evidence that
I determined appropriate within my discretion as an ALJ. There is no requirement for me
to discuss the weight given every piece of evidence considered in this case, nor would it
be consistent with notions of judicial economy to do so. Charles H. Koch, Jr., Admin. L.
& Prac. § 5:64 (3d ed. 2013).

1. Petitioner did not waive its right to review of the factual bases for
either of the deficiencies cited by the survey of Petitioner’s facility
completed on September 6, 2013.

2. The filing of an amended request for hearing was unnecessary as the
parties stipulated that the factual bases for both deficiencies cited by
the survey of Petitioner’s facility completed on September 6, 2013,
were at issue before me.

3. The factual bases for both deficiencies cited in this case are properly
before me for review and fact finding based upon Petitioner’s timely
request for hearing.

4. Whether or not the facts proved are a basis for concluding that
there was a violation of 42 C.F.R. § 483.13(c)(3) is a legal question
properly before me for decision.

At the outset it is necessary to determine which deficiency citations are properly before
me for review.

CMS notified Petitioner on November 15, 2013, that it was imposing enforcement
remedies against Petitioner based on deficiencies cited in the September 6, 2013 survey,
specifically, for violations of 42 C.F.R. § 483.13(c) (Tag F225), at a scope and severity of
D, and 42 C.F.R. § 483.25(h) (Tag F323) at a scope and severity of L. The notice clearly
stated that a $9,500.00 PICMP was proposed based on the findings of deficiencies and
listed both deficiencies. CMS Ex. 2 at 1.

Petitioner’s January 6, 2014 request for hearing refers specifically to the noncompliance
cited under Tag F323 by the September 6, 2013 survey. The noncompliance cited under
Tag F225 is not mentioned in the request for hearing. Jt. Stip. § 22. The request for
hearing was signed by Petitioner’s Administrator, Robert Rubens. In its prehearing brief,
Petitioner specifically states that it is not requesting review of the deficiency cited under
Tag F225, except that Petitioner stated that it disputes any facts alleged under Tag F225
that CMS relies upon to show noncompliance under Tag F323. Petitioner’s Prehearing
Brief at 7-8. At the hearing on January 6, 2015, counsel for Petitioner argued that the
PICMP proposed by CMS was based only upon Tag F323 and, therefore, Petitioner had
not specifically requested review of the deficiency cited under Tag F225. Petitioner also
argues that it never conceded the facts underlying the Tag F225 deficiency citation to the
extent that those facts are also cited in support of the deficiency cited under Tag F323.
Tr. Vol. 1 at 59, 61-63. CMS stated at the hearing, consistent with the November 15,
2013 CMS notice of initial determination, that the proposed PICMP is based on both
Tags F225 and F323. Tr. Vol. 1 at 61. CMS argued at hearing that Petitioner is barred
from requesting my review of Tag F225 because Petitioner failed to specifically request a
hearing as to that deficiency and because Petitioner had stipulated it did not seek review
of that deficiency. Tr. Vol. 1 at 67-68. At hearing CMS directed questions to its
surveyor about Tag F225. Vol. 1 at 96-98, 141; Vol. 2 at 68-75, 110-22, 137-38. At the
beginning of the second day of hearing, Petitioner announced that it intended to amend its
request for hearing to include Tag F225, citing 42 C.F.R. §§ 498.40(c)(2) and

498 .56(a)(1) and (3), as well as_the fact that CMS had issued a revised initial
determination on December 5, 2014. Tr. Vol. 2 at 5-16.

On January 7, 2015, Petitioner filed a written amendment of its request for hearing in
which it challenges both the deficiency citations under Tags F225 and F323. CMS filed
an objection to the amendment on January 27, 2015.

Petitioner argues in post-hearing briefing that there is good cause for me to review the
noncompliance alleged under Tag F225. Petitioner argues that: CMS elected in its
prehearing brief to rely on F225 as a basis for imposing the PICMP; there is no prejudice
to CMS; CMS cannot claim surprise; and justice requires my review of Tag F225. P. Br.
at 12-14; P. Reply at 8-9.

In its January 27, 2015 objection to the amendment of the request for hearing, CMS
argues that the filing of the amended hearing request was untimely and no good cause
exists to permit the amendment. CMS argues that it was surprised by the amendment and
prejudiced in its ability to prepare and present argument and evidence. CMS argues that
the amendment cannot be treated as raising a new issue for hearing under 42 C.F R.

§ 498.56 because CMS did not have notice ten days prior to hearing. Finally, CMS
argues that the CMS notice of December 5, 2014, did not constitute notice of a reopened
or revised determination that would have triggered a new 60-day period for requesting a
hearing because CMS only changed the scope and severity of the alleged violation of 42
C.F.R. § 483.25(h) (Tag F323). Objection to Petitioner’s Amended Hearing Request.

In the Statement of Deficiencies (SOD) for the survey completed on September 6, 2013,
it is alleged under Tag F225 that Petitioner violated 42 C.F.R. § 483.13(c)(1)(ii)-(iii) and
(c)(2)-(4)? CMS Ex. | at 1. The allegations under Tag F225 are that Petitioner failed to

° The regulatory citation is in error because there are no factual allegations by the

surveyors that would support a conclusion that Petitioner violated 42 C.F.R.
(Footnote continued next page.)
thoroughly investigate incidents involving Residents | and 2 and burns with hot food and,
in the case of Resident 2, it is alleged that Petitioner failed to conduct a timely
investigation. CMS Ex. | at 2. The regulatory provision implicated by the allegations is
42 CER. § 483.13(c)(3), which requires that a “facility must have evidence that all
alleged violations are thoroughly investigated ....” The SOD alleges under Tag F323
that Petitioner violated 42 C.F.R. § 483.25(h), which requires a facility to keep the
resident environment as free of accident hazards as possible and to ensure that each
resident receives adequate supervision and assistance devices to prevent accidents. The
alleged noncompliance under Tag F323 is that Petitioner failed to ensure the resident
environment was as free of accident hazards as possible because it failed to ensure hot
foods and beverages were served at “safe temperatures to limit the potential for burns.”
CMS Ex. | at 5. The incidents involving Residents | and 2 cited as examples under Tag
F323 are the same as those cited under Tag F225. CMS Ex. | at 2-4, 6-11. The
surveyors also included under Tag F323 statements of their own observations during the
survey not directly related to the incidents involving Residents 1 and 2. CMS Ex. | at 6-
Il.

Petitioner’s request for hearing dated January 6, 2014, was signed by Petitioner’s
Administrator at the time. Jt. Stip.§ 2. There is no reference in the request for hearing to
the alleged noncompliance under Tag F225. The request for hearing clearly states that
Petitioner was requesting ALJ review only of the alleged noncompliance under Tag
F323. Petitioner agreed in the Revised Joint Stipulation of Facts dated December 18,
2014, that in its request for hearing Petitioner requested review of only the deficiency
cited under Tag F323. Jt. Stip. § 22. In a combined Joint Statement of Facts and Issues
executed by the parties on June 12 and 13, 2014, the parties agreed under the section
titled Joint Statement of Issues:

Petitioner is not appealing the deficiency at 42 C.F.R.

§ 483.13(c)(1)(ii)-(iii), (c)(2)-(4) [F225], which was cited at a
scope and severity of “D” in the Statement of Deficiencies for
the September 6 Survey. However, to the extent that CMS is

relying on findings related to the deficiency at 42 C.F.R.

(Footnote continued.)

§ 483.13(c)(1)(ii)-(iii). There is no allegation that the facility failed to immediately
report an allegation of mistreatment, neglect, abuse, or misappropriation of resident
property, which would be a violation of 42 C.F.R. § 483.13(c)(2). There is also no
allegation that Petitioner failed to timely report the results of an investigation as required
by 42 C.F R. § 483.13(c)(4). The facts alleged in the SOD under Tag F225 are consistent
with an alleged violation of 42 C.F.R. § 483.13(c)(3) only. The incorrect citations to the
regulations create no prejudice to either party and are considered to be scrivener’s errors.
10

§ 483.13(c)(1)(ii)-(iii), (c)(2)-(4) [F225] to support its
determination of noncompliance with respect to 42 C.F.R.

§ 483.25(h) [F323], Petitioner reserves the right to contest the
findings related to the F225 deficiency as part of this appeal.

My reading of the stipulated issue is that Petitioner agreed that it is not requesting review
of the deficiency alleged under Tag F225, but it reserved the right to dispute the facts
alleged in the SOD under Tag F225 if CMS sought to rely upon those facts as part of its
case under Tag F323. CMS agreed to this stipulated issue as indicated by the signature of
CMS counsel on June 12, 2014, with no reservation by CMS. The factual bases cited
under both Tags F323 and F225 are mostly related to the incidents involving Residents 1
and 2 save for a few observations of the surveyors in the SOD under Tag F323. The
stipulated issue clearly shows that CMS was on notice at least as early as June 12, 2014,
that while Petitioner was not seeking review of Tag F225, Petitioner reserved the right to
dispute the facts under Tag F225 and did so with the agreement of CMS. The stipulation
of fact that Petitioner requested review only as to Tag F323 is correct as Tag F225 is not
mentioned in the request for hearing. However, that fact is not inconsistent with the
parties’ agreement that Petitioner reserved the right to challenge any facts that were
alleged by CMS in support of Tag F323 that were also cited in the SOD in support of Tag
F225. Because the factual bases for both Tags F323 and Tag F225 are identical in
substantial part, were I to conclude that Petitioner requested a hearing but waived its
challenge to the facts underlying Tag F225, would effectively result in a conclusion that
Petitioner had also waived a hearing as to the facts underlying Tag F323, which clearly
was not the apparent intent of Petitioner’s Administrator when he filed the request for
hearing. Petitioner also stated in its prehearing brief filed June 16, 2014, that it reserved
the right to contest the facts underlying Tag F225 to the extent that CMS relied upon the
same facts to prove the deficiency alleged under Tag F323. Petitioner’s Prehearing Brief
at 7-8. In its prehearing brief, CMS stated:

In the summary of the proposed testimony of its witnesses,
CMS provided notice that, although Petitioner was not
appealing the F225 deficiency, it would be relying on the
findings associated with the F225 deficiency to support the
F323 deficiency. In particular, the facility’s failure to
investigate root causes of the injuries of Resident #1 and
Resident #2 contributed to its failure to ensure that the
resident environment remained as free of accident hazards as
is possible, and that each resident received supervision and
assistance devices to prevent accidents, as required by F323.
11

CMS Prehearing Brief at 7. In footnote 14 of its prehearing brief, CMS argued that even
if I do not find noncompliance under Tag F323, Petitioner has not appealed the
noncompliance under Tag F225, and that undisputed deficiency was sufficient alone as a
basis for the $9,500.00 PICMP. CMS Prehearing Brief at 32 n.14.

Given the foregoing facts, CMS cannot credibly argue that it was surprised that Petitioner
did not concede the facts common to both Tags F225 and F323. It is clear from the CMS
prehearing brief that CMS intended to present at hearing and rely upon the facts common
to both Tags F225 and F323, as evidenced by the CMS argument that the deficiencies
cited under both Tags F225 and F323 are bases for imposing a $9,500.00 PICMP.
Therefore, CMS cannot credibly argue that it was not prepared or that it was prejudiced
by Petitioner’s attempt to amend its request for hearing to request review of Tag F225.
Furthermore, if I concluded that Petitioner’s Administrator waived review of the facts
alleged under Tag F225, that waiver would extend to the same facts alleged under Tag
F323, because the factual allegations under the two deficiency citations are essentially the
same, and there would be no need to proceed further with fact finding. It would only be
necessary to determine whether the conceded facts amounted to noncompliance under
Tags F225 and F323. There is no evidence that the Administrator was an attorney, and to
strictly apply the doctrine of waiver against Petitioner based upon the Administrator’s
drafting skills and legal knowledge would be unjust, particularly absent any significant
prejudice to CMS. Furthermore, CMS points to no regulation or statute that prevents an
aggrieved party from amending its request for hearing at any time after filing and before I
make a decision.

A request for hearing need only:

(1) Identify the specific issues, and the findings of fact and
conclusions of law with which the affected party disagrees;
and

(2) Specify the basis for contending that the findings and
conclusions are incorrect.

42 CFR. § 498.40(b). I have no basis to assume that Petitioner’s Administrator, who
signed the January 6, 2014 hearing request, had the ability to distinguish between a
“finding of fact” and “conclusion of law,” legal terms of art that challenge many
attorneys. However, the Administrator did a fair job of setting out what he disagreed
with. He clearly disagreed with the surveyors’ conclusion of law that the facts they found
amounted to a violation of 42 C.F.R. § 483.25(h) as cited under Tag F323 of the SOD,
and he so stated. The Administrator also clearly stated in the request for hearing that
Petitioner disagreed with many factual findings made by the surveyors related to the
following: the incidents involving Residents | and 2; facility actions and policies; and
state requirements. The Administrator did not make specific reference to the surveyors’
12

conclusion of law that Petitioner violated 42 C.F.R. § 483.13(c)(3) as cited in the SOD
under Tag F225. However, the request for hearing clearly disputed most, if not all the
facts, cited by the surveyors related to the incidents involving Residents | and 2. There is
no specific statement in the request for hearing that Petitioner conceded a violation of
Tag F225. At most, Petitioner’s failure to specifically challenge the conclusion of law
that Petitioner violated 42 C.F.R. § 483.13(c)(3) as cited under Tag F225 could be
construed as a waiver of review of whether or not the facts, if established, constitute a
violation of Tag F225. CMS has cited no statutory or regulatory provision that would
prevent the withdrawal of such an implicit waiver or require a showing of good cause for
such a withdrawal. In promulgating 42 C.F.R. pt. 498, the procedural regulations
applicable to this case, CMS did impose a requirement for a party to show good cause in
the event the party sought to withdraw a waiver of an oral hearing. The good cause
requirement under such circumstances makes sense as the parties’ trial preparation would
be suspended in a case where the parties thought the case would be decided on written
pleadings and documentary evidence. The circumstances are significantly different in
this case because the parties were aware from the early stages of trial preparation that
Petitioner did not concede or waive hearing as to the facts alleged as the basis for the
surveyors’ conclusion of law that Petitioner violated 42 C.F.R. § 483.13(c)(3). In this
case, the requested amendment of the request for hearing is really very narrow. Petitioner
has never not disputed the facts underlying the alleged violation of 42 C.F.R.

§ 483.13(c)(3). The amendment simply clarifies that Petitioner also does not concede the
legal issue of whether or not, if proven, the facts alleged under Tag F225 support a legal
conclusion that Petitioner violated 42 C.F.R. § 483.13(c). There is no dispute that
Petitioner’s request for hearing was timely and that I have jurisdiction to decide all legal
issues, including whether or not the facts constitute the regulatory violations that CMS
cites as a basis for the imposition of the PICMP. On the facts of this case, I will not
conclude that Petitioner’s non-attorney Administrator waived the legal issue particularly
where he specifically challenged the underlying facts.

Amending the request for hearing is unnecessary in this case. The attempted amendment
is really a clarification by Petitioner of the conclusions of law it seeks to challenge. CMS
is not prejudiced as there was no change in the factual bases that CMS had to present to
meet its very low evidentiary burden to establish a prima facie case. CMS was also on
notice well in advance of the proposed amendment, as early as the filing of the original
request for hearing in fact, that Petitioner did not concede the findings of fact that the
surveyors allege amounted to a violation of 42 C.F.R. § 483.13(c). At most, CMS was
obliged as part of post-hearing briefing to address the legal issue of whether or not the
facts established amounted to a violation of 42 C.F.R. § 483.13(c) as well as a violation
13

of 42 C.F.R. § 483.25(h), which I conclude does not amount to unreasonable prejudice.
The burden to CMS of challenging the amendment of the request for hearing was a
burden of its own choosing that could have been simply waived with no real prejudice to
cMs."”

5. The state agency violated section 1819(g)(2)(C) of the Act and

42 CFR. § 488.314(a)(1) by permitting a survey team with no
registered nurse participating to conduct the survey of Petitioner that
was completed on September 6, 2013.

6. Because the survey team that completed the survey of Petitioner on
September 6, 2013, was constituted in violation of section 1819(g)(2)(C)
of the Act and 42 C.F.R. § 488.314(a)(1), the findings and conclusions
of the survey team were reached in violation of the Act and regulations,
and are therefore, void and may not be the bases for the imposition of
enforcement remedies.

7. No enforcement remedy is reasonable in the absence of a basis for
imposing such a remedy.

Petitioner argues that the survey in this case was unlawfully constituted because the
survey team did not include a registered nurse. P. Br. at 5-8; P. Reply at 15-16.
Petitioner is correct that the Act and regulations require that survey teams include a
registered nurse. It is undisputed by CMS that the team that conducted the survey of
Petitioner’s facility that was completed on September 6, 2013, did not include a
registered nurse. For the following reasons, I conclude that the unlawfully constituted
survey team could not lawfully conduct a survey in violation of the Act and regulations.
Furthermore, an unlawfully conducted survey may not be the basis for the imposition of
any enforcement remedy.

The Act imposes upon the Secretary and CMS certain requirements for the survey and
certification of long-term care facilities, SNFs and NFs. Act §§ 1819(g) (SNFs), 1919(g)
(NFs) (42 U.S.C. §§ 1395i-3(g), 1396r(g)). The Act requires that state agencies establish
a reporting procedure and a procedure for conducting investigations of allegations of
neglect and abuse and misappropriation of resident property. Act § 1819(g)(1)(C). The

© On January 29, 2015, Petitioner submitted a letter requesting that I sanction CMS for
filing its objection by reducing the pages permitted CMS for its post-hearing brief from
30 to 16. CMS responded by letters dated February 3, 2015 and February 11,2015.
Petitioner’s request was not considered as it was not submitted as a motion as required by
the Prehearing Order § II.D.6.
14

Act also requires each state to maintain procedures and staff to investigate complaints of
violations of Medicare participation requirements and for monitoring SNF compliance.
Act § 1819(g)(4). The parties stipulated that a complaint investigation was conducted on
September 5, 2013, which triggered a survey on September 6, 2013. Jt. Stip. JJ 9, 10.
The procedures and requirements mandated by Congress for surveying long-term care
facilities are established in Act §§ 1819(g)(2) and 1919(g)(2). The Act establishes three
types of surveys:!! the standard survey, the extended survey or partial extended survey,
and special surveys such as an abbreviated standard survey.! Act § 1819(g)(2)(A), (B).
The Act provides that surveys are to be conducted by a survey team that meets the
“minimum qualifications” established by the Secretary. Act § 1819(g)(2)(C). However,
section 1819(g)(2)(E) of the Act specifically imposes a requirement for survey team
composition:

"| The Secretary’s regulations are consistent with the Act. Definitions of extended
survey, partial extended survey, standard survey, and abbreviated survey are found in

42 CFR. § 488.301. According to 42 C.F.R. § 488.30, a complaint survey is a survey
conducted on the basis of a substantial allegation of noncompliance. “Complaint survey”
is only used in 42 C.F R. pt. 488, the survey, certification and enforcement regulations, in
the context of establishing revisit user fees. The procedures for survey and certification
of SNFs and NFs are in 42 C.F.R. pt. 488. State agencies conduct standard or
abbreviated standard surveys to investigate complaints of noncompliance against SNFs
and NFs, if preliminary review results in a conclusion that a deficiency may have
occurred, and only a survey can determine whether or not a deficiency exists. 42 C.F.R.
§§ 488 .308(e)(2), 488.335. Extended and partial extended surveys are triggered by a
finding of substandard quality of care, specifically for the purpose of examining the
facility policies and procedures that may have caused the substandard quality of care.

42 CFR. §§ 488.301, 488.310.

The Act also provides in sections 1819(g)(3) and 1919(g)(3) for “validation surveys.”
Validation surveys, under the Act, are surveys conducted by the Secretary or CMS of a
representative sample of facilities surveyed by the state to determine the adequacy of
state agency compliance with survey requirements in surveying nursing facilities. In
conducting a validation survey, the Secretary or CMS must apply the same protocols
required of the state survey agency when conducting a survey under section 1919(g)(3) of
the Act, which includes the requirement for a registered nurse to be a member of the
survey team. Validation surveys of state performance are referenced in 42 C.F.R.

§§ 488.301, 488.330(a), (g). Validation surveys and accreditation surveys are also used
by CMS to assess the performance of accreditation organizations. 42 C.F.R. §§ 488.5(c)-
7.
15

(E) Survey teams.—

(i) In general—Surveys under this subsection shall be
conducted by a multidisciplinary team of professionals
(including a registered professional nurse).

(Emphasis added.) Therefore, irrespective of the professional qualifications of other
survey team members, Congress has required that every survey team include a registered
professional nurse. The requirement applies to all types of surveys established by section
1819(g)(2) of the Act, including the standard survey, the extended survey or partial
extended survey, and special surveys such as an abbreviated standard survey. Act

§ 1819(g)(2)(A), (B). There are no surveys authorized by the Act under section 1819(g)
of the Act that are exempt from the requirement of section 1819(g)(2)(E) of the Act to
include a registered nurse.

The Secretary has by regulation required that all survey teams include a registered nurse.
Specifically, 42 C.F.R. § 488.314(a)(1) requires that surveys “be conducted by an
interdisciplinary team of professionals, which must include a registered nurse.” 59 Fed.
Reg. 56,116, 56,119 (Nov. 10, 1994). In proposed rulemaking in 1992, the proponent of
the regulations establishing the SNF and NF survey process, which implemented the
Omnibus Budget Reconciliation Act of 1987, stated that sections 1819(g)(2)(E)
(pertaining to SNFs) and 1919(g)(2)(E) (pertaining to NFs) required that a survey team
include a registered nurse, and the drafters included that requirement in the draft
regulation. 57 Fed. Reg. 39,278 at 39,286, 39,307 (Aug. 28, 1992). When the final rule
was issued in 1994, the drafters of 42 C.F.R. § 488.314 explained that the registered
nurse is necessary because SNFs and NFs that are being surveyed are “primarily engaged
in providing skilled nursing care and/or related services.” 59 Fed. Reg. at 56,142. The
drafters failed to mention that a registered nurse is also required to participate by
Congress. Act §§ 1819(g)(2)(E), 1919(a)(2)(E).

In Omni Manor Nursing Home, DAB No. 1920 at 5 (2004), an appellate panel of the
Board stated:

Surveys of long term care facilities “must be conducted by a
multidisciplinary team of professionals, which must include a
registered nurse.” 42 C.F.R. § 488.314(a)(1). Professionals
who may be on such a survey team include physicians, nurse
practitioners, dieticians, engineers, or social workers. 42
CFR. § 488.314(a)(2). The state (with CMS approval)
determines what constitutes a survey team professional. 42
C.F.R. § 488.314(a)(3). “Surveyors are professionals who
use their judgment, in concert with Federal forms and
procedures, to determine compliance.” 42 C.F.R.
16

§ 488.26(c)(3). The state survey agency must use “methods,
procedures, and forms that are prescribed by [CMS].” 42
C.F.R. § 488.26(d). The use of federal procedures “ensure[s]
uniform and consistent application and interpretation of
Federal requirements.” 42 C.F.R. § 488.26(c)(4). The use of
federal forms “ensure[s] proper recording of findings and
[documentation of] the basis for the findings.” 42 C.F.R.

§ 488.26(c)(5).

There is no dispute that a complaint investigation was conducted at Petitioner’s facility
on September 5, 2013, by Linda Werth, R.D., C.D.N, followed by a partial extended
survey or an abbreviated standard survey'® on September 6, 2013, that was conducted by
Ms. Werth and Mary Langworthy, R.D.,C.D.N. Jt. Stip. §§ 9-10; CMS Exs. 2-4. Ms.
Werth is not a registered nurse. Tr. Vol. 1 at 100-01. Ms. Langworthy is also not a
registered nurse. CMS has not disputed that no registered nurse participated in the
complaint investigation or the partial extended or abbreviated standard survey on
September 6, 2013. Tr. Vol. 2 at 85-87.

I conclude, based on the undisputed facts, that the state agency violated section
1819(g)(2)(C) of the Act and 42 C.F.R. § 488.314(a)(1) by permitting a survey team with
no registered nurse participating to conduct the survey of Petitioner completed on
September 6, 2013. I further conclude that the findings and conclusions of the survey
team, which was constituted in violation of the Act and regulations, are invalid and
cannot be the bases for the imposition of any enforcement remedy. The Secretary is
authorized by Congress to impose enforcement remedies against a SNF or NF when it is
found “on the basis of a standard, extended, or partial extended survey [under section
1819(g)(2) or 1919(g)(2) of the Act] or otherwise,” that a SNF or NF no longer meets
conditions for participation in Medicare or Medicaid. Act §§ 1819(h), 1919(h). The
Secretary delegated the authority to impose enforcement remedies to CMS. The

'S The inconsistent and incorrect use of terms by state survey agencies and CMS is a
recurring annoyance. The October 4, 2013 letter from the state agency to Petitioner’s
Administrator plainly states in the first line of the body of the letter that “[o]n September
6, 2013, a partial extended survey was completed at [Petitioner].” CMS Ex. 4. In the
SOD, the surveyors referred to the survey completed on September 6, 2013, as an
“abbreviated survey.” CMS Ex. | at 2,5. In the revised SOD issued by CMS on
December 5, 2014, the survey completed on September 6, 2013, is also referred to as an
“abbreviated survey.” CMS Ex. 64 at 4, 7. Whether or not the September 6, 2013 survey
was an abbreviated standard or a partial extended survey need not be resolved in this case
because the requirement to have a registered nurse on the survey team applies equally to
both.

17

Secretary provided that “[w]hen CMS or the State chooses to apply one or more remedies
specified in [42 C.F.R. § 488.406], the remedies are applied on the basis of
noncompliance found during surveys conducted by CMS or by the survey agency.” 42
C.F.R. § 488.402(b). In this case, the surveyors’ findings and conclusions were invalid
because the survey team was constituted in violation of the Act and regulations and thus,
may not be the bases for imposing an enforcement remedy. There should be no question
that:

An agency has no power to act in conflict with the authority
granted to it by the legislature or outside of its own
regulations. In addition, an agency may not exceed its
statutory authority or constitutional limitations, and
administrative actions exceeding authority delegated by law
are void.

2 Am. Jur. 2d Administrative Law § 51 (2016) (footnotes omitted). “The power of an
administrative agency must be exercised in accordance with and in the mode prescribed
by the statute or other law bestowing such power.” Id. § 52.

CMS argues that: there is no requirement to send a registered nurse on a complaint
survey;"" whether or not a registered nurse participated in a survey is not an initial
determination subject to my review; and inadequate survey performance does not relieve
a facility of noncompliance with participation requirements. CMS Br. at 29. The CMS
arguments are without merit.

In its post-hearing briefing, CMS misquotes section 1819(g)(2)(E)(i) of the Act in a way
to suggest that Congress left to the Secretary, CMS, or the state agency the discretion to
determine whether or not a registered nurse was required to participate as a member of a
survey team.'> CMS Br. at 30; CMS Reply at 3-5. However, the language of section

'* The reference to a “complaint survey” is an inaccurate use of the term. The Act
provides for complaint investigations (Act § 1819(g)(1)(C) and (g)(4)) and various types
of surveys (Act § 1819(g)(2)), including the standard survey, the extended survey or
partial extended survey, and special surveys such as an abbreviated standard survey. See
footnotes 11 and 12. A complaint may trigger one of the types of surveys established by
the Act, as it did in this case. CMS subsequently acknowledges in its post-hearing brief
that the survey completed on September 6, 2013, was an abbreviated standard survey,
though the state agency also characterized as a partial extended survey. CMS Br. at 30.

'S CMS states in its brief: “The Act states that ‘/i/n general .. .’ surveys shall be

conducted by a survey team that includes a registered nurse, thus providing the Secretary
(Footnote continued next page.)
18

1819(g)(2)(E)(i) clearly mandates that surveys conducted under the authority of
subsection 1819(g)(2) “shall be conducted by a multidisciplinary team of professionals
(including a registered professional nurse).” Congress left no room for the exercise of
discretion by the Secretary, CMS, or the state agency, and the failure to include a
registered nurse on a survey team conducting a partial extended or an abbreviated
standard survey clearly violates section 1819(g)(2)(E)(i) of the Act. Contrary to what
CMS suggests, the words “In general” at the beginning of section 1819(g)(2)(E)(i) did
not open the door for the Secretary to find exceptions to the requirement that a survey
team be a multidisciplinary team of professionals that includes a registered nurse. “In
general” is the title or topic of the subsection used to show that the subsection applies to
all surveys “in general” and not just a particular type of survey. “In general” is separated
from the substantive law set forth in section 1819(g)(2)(E)(i) by both a period and a dash
and clearly does not modify the requirement established by Congress in that section. The
other sections and subsections of section 1819(g) all have similar titles or topics and the
use of those titles or topics is consistent with and supports my interpretation.

(Footnote continued.)

with leeway as to the survey team composition. Act §1819(g)(2)(E)(i).” Section
1819(g)(2)(E)(i) as published at www.ssa.gov/OP_Home/ssact/title 18/1819.htm actually
states:

(E) SURVEY TEAMS.—
(i) INGENERAL.—Surveys under this subsection shall
be conducted by a multidisciplinary team of
professionals (including a registered professional
nurse).

The codification of section 1819 (g)(2)(E)(i) at 42 U.S.C. § 1395i-3(g)(2)(E)(i), available
at www.gpo.gov/fdsys/pkg/USCODE-2010-title42-chap7-subchapX VIII-partA htm,
states:

(E) Survey teams
(i) In general
Surveys under this subsection shall be conducted
by a multidisciplinary team of professionals (including
a registered professional nurse).

(Emphasis in original.)
19

CMS also asserts that the SOM “‘permissibly interprets the statute and regulation as not
requiring that a registered nurse be sent on a complaint survey that is an abbreviated
standard survey.” CMS Br. at 30; CMS Reply at 6-7. The Board has been very clear that
the SOM is not a substantive rule that may be applied contrary to the Act or regulations:

The SOM, in general, is a compilation of interpretive
guidelines, standards of practice, and internal policies
directed to the state survey agencies that conduct long-term
care facility surveys and that certify facility compliance. See,
e.g., Columbus Nursing & Rehabilitation Center, DAB No.
2247, at 23 (2009); Claiborne-Hughes Health Center, DAB
No. 2223, at 8 (2008); Aase Haugen Homes, Inc., DAB No.
2013, at 15 (2006). While the SOM may reflect CMS’s
interpretations of the applicable statutes and regulations, the
SOM provisions are not substantive rules themselves.
Beverly Health & Rehabilitation Services v. Thompson, 223
F.Supp.2d 73, at 99-106 (D.D.C.), aff’g Beverly Health &
Rehabilitation-Spring Hill, DAB No. 1696 (1999).

[W]e have previously upheld an ALJ’s conclusion that
“unpublished internal guidance to surveyors in the SOM ...
was not a reliable basis to alter the plain meaning of [a]
published regulation.” Beverly Health and Rehabilitation
Center - Williamsburg, DAB No. 1748, at 8 (2000).

Foxwood Springs Living Ctr., DAB No. 2294 at 8-9 (2009) (concluding that the SOM
provision was not binding on either the ALJ or the Board).

The interpretation of the SOM urged by CMS in this case is simply in error. CMS policy
related to survey team composition is consistent with the Act and the Secretary’s
regulations in requiring that all survey teams include a registered nurse. SOM, chap. 7,

§ 7201.2 (rev. 63, eff: Sep. 10, 2010) provides:

The State (or, for Federal teams, the regional office)
decides what the composition of the survey team will be,
as long as certain statutory and regulatory requirements
are met. Sections 1819(g)(2)(E) and 1919(g)(2)(E) of the
Act and 42 CFR 488.314 require that:

¢ Skilled nursing facility and nursing facility standard
surveys be conducted by a multidisciplinary team of
20

professionals, at least one of whom must be a registered
nurse;

+ Surveyors be free of conflicts of interest (see §7202); and

+ Surveyors successfully complete a training and testing
program in survey and certification techniques that has been
approved by the Secretary. In other words, surveyors must
successfully complete the CMS-approved training and pass
the Surveyor Minimum Qualifications Test. (See §4009.1 of
this manual for additional information concerning Surveyor
Minimum Qualifications Test requirements.)

Within these parameters, the States (or, for Federal teams, the
regional offices) are free to choose the composition of each
team, and it is the State that determines what constitutes a
professional.

CMS Ex. 69 at 2 (emphasis added).

CMS argues, citing 42 C.F.R. § 488.318(b), that inadequate survey performance does not
relieve a facility of its obligation to remain in substantial compliance with Medicare
participation requirements or invalidate adequately documented deficiencies. CMS Br. at
30; CMS Reply at 8-9. I agree with CMS on this point. However, the regulation cited
does not authorize CMS to impose an enforcement remedy based on an unlawful survey,
which is a different issue than whether or not Petitioner must remain in substantial
compliance.

CMS objects in a footnote that I raised this issue sua sponte during the hearing. CMS
complains that Petitioner did not raise the issue and asserts prejudice. CMS Br. at 30
n.13. CMS does not articulate what prejudice it suffered and I find none. I am bound to
follow the Act and regulations. “An ALJ is bound by applicable laws and regulations and
may not invalidate either a law or regulation on any ground, even a constitutional one.
But an ALJ may, consistent with the applicable regulations and statutes, take steps to
ensure procedural fairness.” 1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009).
The fact that Petitioner did not identify the issue initially, and the fact that CMS
apparently failed to identify the statutory and regulatory violation by the state agency
and/or chose not to reveal the violation of the Act, does not relieve me of my
responsibility to ensure that the law and regulations are properly executed. Indeed, I have
an affirmative responsibility to ensure that the law and regulations are applied correctly.
Ihave a duty to raise issues sua sponte for the parties to address, particularly where, as
here, there is a clear statutory and regulatory violation. The administrative hearing
process is not a game that CMS wins simply because Petitioner failed to raise an issue. I
21

also find no prejudice to CMS in the way the issue was raised or the opportunity provided
to CMS to address the issue. The issue was raised early in the proceedings, there is no
dispute as to the facts that could have been addressed by additional evidence, and CMS
had a significantly long briefing schedule and two pleadings totaling 60 pages in which to
address the fatal defect in the survey process.

CMS asserts that I have no jurisdiction to address whether or not the survey was properly
constituted because the issue is not an initial determination. CMS Br. at 30. The CMS
initial determination to impose a $9,500.00 PICMP is clearly an initial determination
within the meaning of 42 C.F.R. § 498.3(b)(13). The certification of noncompliance on
which CMS based the enforcement remedy triggered Petitioner’s right to a hearing.

42 CFR. § 488.408(g). Therefore, whether or not the certification of noncompliance
was correct and provides a basis or bases for the imposition of an enforcement remedy is
the general issue that must be resolved. An unlawfully constituted survey team may be
found, as I have in this case, to render the findings and conclusions of the survey team
invalid, thereby eliminating the basis for the imposition of the enforcement remedy. I
agree with CMS that the legal issue is not an “initial determination,” but the review of the
lawfulness of the “initial determination,” which is properly before me, turns on the legal
issue.'° Cf. Foxwood, DAB No. 2294 at 13-14.

'® CMS cites Perry Cnty. Nursing Ctr. v. U.S. Dep't of Health & Human Servs., 603
Fed.Appx. 265 at 272 (Sth Cir. 2015). CMS Br. at 29. The unpublished decision of the
U.S. Court of Appeals for the Fifth Circuit is not inconsistent with my understanding of
Petitioner’s right to request review, the general issue I must address, or the scope of my
jurisdiction. If the purpose of the citation is to subtly suggest that I should defer to
CMS’s interpretation of the scope of my jurisdiction and CMS’s interpretation and
applications of its regulations and the Act, Perry is entitled to no weight as it is not on
point. The court in Perry discusses in the cited pages the concept of the judiciary
deferring to an executive branch administrative agency. Nothing in Perry suggests that
the Secretary must defer to CMS, which acts with authority delegated by the Secretary.
Nor does Perry suggest that an ALJ or the Board, who act with delegated authority for
the Secretary, are required to defer to CMS and its interpretations and application of the
Act and the Secretary’s regulations, and such a requirement would render meaningless
the right to ALJ and Board review granted to the regulated entities by Congress. Nor
does Perry suggest that the Secretary may avoid responsibility for execution of the Act
by the simple expedient of delegating her authority to a component agency and then
deferring to the acts of the agent to which she delegated that authority.
22

III. Conclusion

For the foregoing reasons, I conclude that there is no basis for the imposition of an
enforcement remedy and no enforcement remedy is reasonable in this case.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Angel Kidney Care of Inglewood, Inc.
(CCN: 55-2656),
Petitioner,
v.
Centers for Medicare & Medicaid Services.

Docket No. C-15-2799

Decision No. CR4669

Date: August 1, 2016

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
terminate the participation in Medicare of Petitioner, Angel Kidney Care of Inglewood,
Inc. The evidence in this case overwhelmingly supports a finding that Petitioner failed to
comply with two Medicare conditions of participation.
I. Background
Petitioner, an end stage renal disease (ESRD) dialysis facility, requested a hearing in
order to challenge CMS’s determination to terminate its Medicare participation. I held a
hearing on May 24, 2016. At that hearing I received into evidence exhibits from CMS
that are identified as CMS Ex. | - CMS Ex. 24 and from Petitioner that are identified as

P. Ex. 1 — P. Ex. 5. I afforded the parties the opportunity to cross examine witnesses
whose written direct testimony is part of the record as exhibits.
II. Issues, Findings of Fact and Conclusions of Law
A. Issue

The issue is whether Petitioner failed to comply with one or more conditions of
participation governing ESRD facilities, thereby giving CMS authority to terminate its
participation in Medicare.

B. Findings of Fact and Conclusions of Law

Medicare participation of ESRD facilities is governed by regulations at 42 C.F.R. Part
494. As a general rule a failure by an ESRD facility to comply with even one of the
conditions governing its Medicare participation will result in termination of its Medicare
participation. 42 C.F.R. § 488.604(a).

Here, CMS asserts that Petitioner failed to comply substantially with two conditions that
governed its participation and with standards that are subsumed in those conditions.
Specifically, CMS argues that Petitioner failed to comply substantially with the condition
set forth at 42 C.F.R. § 494.80 (patient assessment) and with subsumed standards at 42
CFR. § 494.80(a)(1) and (a)(2); and with the condition set forth at 42 C.F.R. § 494.90
(patient plan of care) and with the standard at 42 C.F.R. § 494.90(a).

The evidence supporting CMS’s allegations of noncompliance is overwhelming and in
the main not refuted by Petitioner. Petitioner’s arguments in opposition to CMS’s
allegations are without merit.

End stage renal disease is marked by complete failure of one’s kidneys to cleanse the
lood of potentially lethal toxins. CMS Ex. 21 at 4. This condition causes the afflicted
individual to suffer from grave problems including fatigue, anemia, bone disease, joint
problems, itchy skin and sleep disorders. Id. at 11-14. Left untreated the illness ends in
death. CMS Ex. 23 at 2.

Kidney dialysis is one of the means of treating the disease. CMS Ex. 23 at 2. Itisa
process by which a patient’s blood is extracted, mechanically cleansed of wastes and
toxins, and then reinserted into the patient. CMS Ex. 21 at 4-5. In order to do this access
must be established to the patient’s circulatory system. That can be accomplished by
several means. All of them require surgical intervention and all of them have
accompanying risks to the patient. CMS Ex. 22 at 1-4. Risks include the development of
lood clots and scarring. Id. Patients who receive dialysis are at heightened risk for
developing cardiovascular disease, heart attacks and stroke. CMS Ex. 23 at 2. Patients
often have weakened immune systems as a result of their disease, and they are at an

enhanced risk for developing infections. Dialysis Safety, Centers for Disease Control and
Prevention, www.cdc.gov/dialysis, last accessed on August 1, 2016. The potential
problems associated with kidney dialysis make it imperative that caregivers carefully
monitor and assess their patients.

The regulations governing ESRD facilities incorporate the requirements for close
monitoring and careful assessment of patients receiving kidney dialysis. A participating
ESRD facility must establish an interdisciplinary team that provides each patient with an
individualized and comprehensive assessment of his or her needs. 42 C.F.R. § 494.80.
That assessment must be used in developing the patient’s plan of care. The assessment
must contain an evaluation of each patient’s current health status and medical condition.
42 CFR. § 494.80(a)(1). It must also contain an evaluation of the appropriateness of the
patient’s dialysis prescription, his or her blood pressure, and fluid management needs. 42
C.F.R. § 494.80(a)(2). The plan of care that the ESRD facility’s interdisciplinary team
develops, based on the patient’s comprehensive assessment, must specify the services
necessary to identify that patient’s needs. It must include measurable and expected
outcomes and estimated timetables to achieve those outcomes. 42 C.F.R. §§ 494.90;
494.90(a)(1).

CMS’s allegations of noncompliance consist of the following:

. Petitioner failed to comply with the requirements of 42 C.F.R. § 494.80(a)(1) in
that it failed to complete health status and medical condition assessments for patients
identified as Patients 5, 11, 18, 19, 20, and 21. As respects Patient 5, CMS contends that
Petitioner failed to document the placement of a catheter in the patient’s chest and failed
to document the removal and reinsertion of that catheter. CMS Ex. 6; CMS Ex. 18 at 4-5.
Moreover, Petitioner failed to assess the resident’s pre-dialysis catheter condition. CMS
Ex. 6 at 3-13. CMS asserts that Petitioner failed to document the date of catheter
insertion in Patient 11. CMS Ex. 7 at 2-3; CMS Ex. 18 at 5. It charges that Petitioner
failed to assess the health status of Patients 18, 19, and 20. Specifically, Petitioner’s staff
failed to document the presence of sounds associated with blood flow (“thrill” and
“bruit”) at the sites of these residents’ surgical interventions for dialysis. CMS Ex. 11 at
5,7, 13, 14; CMS Ex. 12 at 5,7,9, 31,33, 40,42, 44; CMS Ex. 13 at 8, 10, 12, 14.
Moreover, according to CMS, in the case of Patient 20, Petitioner’s staff failed to assess
her for patency of her catheter, for lung sounds, and for location of edema. CMS Ex. 13
at 10, 12, 14. Finally, in the case of Patient 21,CMS contends that Petitioner failed to
record whether the patient had received catheter care, had manifested thrill or bruit, and
whether the catheter was patent. CMS Ex. 8 at 4.

. Petitioner failed to comply with the requirements of 42 C.F.R. § 494.80(a)(2)
because it failed to evaluate the appropriateness of dialysis prescription for Patients 18
and 19. CMS asserts specifically that Petitioner’s staff failed to evaluate adequately and
manage these patients’ dialysis prescriptions. In the case of Patient 18, the medical
records show that the patient received a substantially larger dose of the medication
Heparin, an anticoagulant, than had been prescribed by the patient’s physician. However,
Petitioner’s staff provided no explanation for the increased dosage of this medication.
CMS Ex. 11 at 17-19. CMS asserts also that there was an episode of bleeding involving
this patient that Petitioner’s staff failed to assess. CMS Ex. 11 at 3. As respects Patient
19, CMS contends that on one occasion Petitioner’s staff failed to administer Heparin to
the patient despite a physician’s order that it be administered and failed to explain why
the staff did not do so. CMS Ex. 12 at 13,22. CMS argues also that on multiple
occasions the patient manifested a blood flow rate that deviated from that which the
patient’s physician had ordered and again, the staff failed to explain or assess the
discrepancy. CMS Ex. 12 at 13, 14, 16, 18, 20, 22.

. Petitioner failed also to comply with the requirements of 42 C.F.R. § 494.80(a)(2)
in that it failed to monitor the appropriateness of dialysis treatment for three patients,
Patients 18, 20, and 22. CMS contends, specifically, that Petitioner’s staff failed to
monitor and assess the patients’ blood pressures and fluid management needs. CMS Ex.
1 at 25-30. CMS contends that on several occasions all three of these exhibited very high
blood pressures. For example, Patient 18 had a blood pressure on one occasion of
191/97. CMS Ex. 11 at 24. Yet, there was no documentation that a registered nurse was
informed of this development, that the patient was assessed, or that anti-hypertensive
medication was administered to the patient, as the patient’s physician ordered. Id. at 23,
24-25. CMS asserts additionally that in Patient 20’s case, Petitioner’s staff failed on
several occasions to assess the patient despite very high blood pressure readings
(205/102, 186/88, 186/89, and 186/66), to notify a registered nurse of the findings of
hypertension, or to administer anti-hypertensive medication to the patient. CMS Ex. 13
at 19, 20-25. As respects Patient 22,CMS contends that Patient 22 registered a blood
pressure reading of 191/103, yet there is no documentation that a registered nurse was
notified so that she could assess Patient 22’s condition and, if necessary, notify the
patient’s physician. CMS Ex. 9 at 3, 4. CMS asserts that Petitioner not only failed to
comply with regulatory requirements in its care of Patients 18, 20, and 22, but also that it
failed to comply with its own internal policy governing hypertension. That policy
requires that a patient’s blood pressure be monitored after dialysis and that findings of
hypertension, including any systolic reading greater than 185 or diastolic reading greater
than 100, must be reported to a registered nurse. CMS Ex. 16 at 11.

. Petitioner failed to comply with the requirements of 42 C.F.R. §§ 494.90 and

494 .90(a)(1) in that it failed to develop plans of care to address medical issues confronted
by Patients 5 and 19. In the case of Patient 5, CMS asserts that Petitioner’s staff failed to
document whatever interventions it may have decided upon to address problems with the
patient’s catheter. CMS Ex. 6 at 2, 17,22; CMS Ex. 10 at 11. With respect to Patient 19,
CMS contends that the resident wore a pacemaker after having experienced an episode of
cardiac arrest, but that Petitioner’s staff did not develop a care plan to address any
problems that might be associated with the patient’s use of a pacemaker. CMS Ex. 12 at

39, 57-59. Moreover, according to CMS, the staff did not develop a care plan to deal
with blood clots that Patient 19 developed in association with a graft utilized in dialysis.
CMS Ex. 12 at 28-30.

The exhibits of record amply support CMS’s allegations. Furthermore, I find nothing in
Petitioner’s arguments or in its exhibits that undercut or contradict these allegations. Put
simply, the record conclusively establishes that Petitioner failed to perform the
assessments and care planning that is mandated by the regulations.

Petitioner argues that even if it failed in various respects to assess its patients or failed to
plan their care consistent with regulatory requirements, there was no documented harm
experienced by any of them and consequently, its deficiencies are not substantial. I find
this argument to be without merit.

The regulations governing ESRD facilities do not specifically define what is meant by
substantial compliance with conditions of participation. However, it is evident that these
regulations do not require proof of actual harm in order for a facility to be out of
compliance. Regulations governing providers and suppliers in general state that a
provider or a supplier (such as an ESRD facility) will be found to be out of compliance
with Medicare conditions of participation if it has deficiencies that:

are of such character as to substantially limit the provider’s or supplier’s
capacity to furnish adequate care or which adversely affect the health and
safety of patients ....

42 C.F.R. § 488.24(b). Finding noncompliance that “adversely affects the health and
safety of patients” (emphasis added) does not require a finding of actual harm. A
potential for harm certainly affects safety. Thus, a potential for harm is all that is
necessary to establish noncompliance.’ CMS must terminate an ESRD facility where it
fails to meet a condition of participation, and there is no exception to that requirement
even though the facility’s failure “did not result in actual harm to a patient or patients.”
Dialysis Center at Moreno Valley, Inc., DAB No. 2193 at 23 (2008).

With ESRD facilities there is great potential for harm where a facility fails to comply
with regulatory requirements. As I discuss above, kidney dialysis is a treatment that is
fraught with peril for patients who receive it. There are issues concerning potential blood
clots and infections. Patients receiving dialysis are at risk for strokes, heart attacks, and

' Moreover, the regulations governing ESRD facility compliance should be read
consistently with regulations governing other providers and suppliers. Regulations
governing compliance by skilled nursing facilities define failure to comply substantially
with participation requirements as constituting a situation where a potential for more than
minimal harm exists. 42 C.F.R. § 488.301.
potentially lethal infections. As a consequence, those who provide dialysis must be
especially scrupulous in assuring that the care that they give and the patients’ responses
to that care are monitored and assessed.

In this case the record is manifest with omissions and errors by Petitioner’s staff that had
the potential for causing great harm to patients and that adversely affect their patients’
safety. For example, failure to monitor patients’ catheter care, including when catheters
were placed and removed, meant that Petitioner’s staff could not establish a baseline of
the patients’ conditions and could not, as a consequence, acquire individualized
information in order to provide specific treatment to address patients’ unique needs.
CMS Ex. 16 at 4. Cases of serious hypertension pose a potential for possibly lethal
consequences to patients. Petitioner’s own internal policy identified that risk. And, yet,
Petitioner’s staff failed to monitor patients — including those who manifested extreme
hypertension — consistent with Petitioner’s internal policy. Petitioner’s demonstrated
noncompliance in this case, both with its own policies and with two conditions of
participation, suggests that the threat it poses to the safety of patients in its care is greater
than the sum of the specific incidents of noncompliance for which CMS cited it.

Indeed, what emerges from the totality of the evidence is a picture of a facility that was,
to say the least, slipshod in assuring that its patients received the monitoring and care
planning that they needed in order to protect them against possibly dangerous adverse
complications. Petitioner’s many failures establish systemic noncompliance with
participation requirements.

Petitioner argues also that the surveys conducted of its facility were unfair in the sense
that surveyors pressured Petitioner’s staff and acted unprofessionally. How the surveys
were conducted is irrelevant. What matters here is the evidence of compliance and
noncompliance that the parties adduce, not the conduct of the surveyors. Beechwood
Sanitarium, DAB No. 1906 at 44 (2004). Furthermore, Petitioner has adduced no
evidence to show that an ostensibly more professionally done survey would have
produced results that were more favorable to Petitioner. I make my findings in this case
based on the evidence of Petitioner’s noncompliance and, as I have said, that evidence is
overwhelming.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Rockmart Health & Rehab, LLC,

(CCN: 11-5330),

Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-16-470
ALJ Ruling No. 2016-16

Date: August 1, 2016

RULING

For the reasons set forth below, I dismiss as untimely the hearing request filed by
Petitioner, Rockmart Health & Rehab, LLC.

Background

Petitioner is a skilled nursing facility located in Rockmart, Georgia, that participated in
the Medicare program until January 2016. The Georgia Department of Community
Health (state agency) completed a complaint investigation and recertification survey on
December 16, 2015. Based on the survey findings, the Centers for Medicare & Medicaid
Services (CMS) determined that the facility was not in substantial compliance with
Medicare requirements and that its deficiencies posed immediate jeopardy to resident
health and safety. CMS Ex. 1. In a notice letter dated January 5, 2016, CMS advised
Petitioner that the facility was not in substantial compliance and that CMS was therefore
imposing remedies, including involuntary termination. CMS Ex. 2.

A section of the notice letter — prominently captioned, “Appeal Rights for December
16, 2015 Survey” — advises the facility of its right to request a hearing before an

administrative law judge (ALJ) “[i]f you disagree with the survey findings.” The letter
sets forth the procedures for filing an appeal and cites the regulations that govern such
appeals — 42 C.F.R. § 498.40 et seq. It explains that the appeal should identify the
specific issues, findings of fact, and conclusions of law with which the facility disagrees
and should specify the basis for contending that CMS’s findings and conclusions are
incorrect. CMS Ex. 2 at 3-4.

The letter advises the facility of the filing deadlines: “You must file a written request for
a hearing no later than sixty (60) days after receiving this letter.” CMS Ex. 2 at 3. CMS
sent the letter via federal express, regular mail, and e-mail. The letter also advises the
facility that “Receipt of this Notice is Presumed to be January 5, 2016, Date Notice E-
mailed.” CMS Ex. 2 at 1.

In a letter dated April 8, 2016, Petitioner filed “formal notice of our intent to appeal” the
December 16 survey findings. CMS now moves to dismiss Petitioner’s “appeal” as

untimely, which Petitioner opposes.
Discussion

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

Section 1866(h) of the Social Security Act (Act) authorizes administrative review of
determinations that a provider fails to comply substantially with Medicare program
requirements “to the same extent as is provided in section 205(b) of the [Act].” Under
section 205(b), the Secretary of Health and Human Services must provide reasonable
notice and opportunity for a hearing “upon request by [the affected party] who makes a
showing in writing that his or her rights may be prejudiced” by the Secretary’s decision.
The hearing request “‘must be filed within sixty days” after receipt of the notice of CMS’s
determination. Act § 205(b) (emphasis added). The sixty-day time limit is thus a
statutory requirement. See Cary Health and Rehab. Ctr., DAB No. 1771 at 8-9 (2001).

Similarly, the regulations mandate that the affected party “file the request in writing
within 60 days from receipt of the notice . . . unless that period is extended ....” 42
C.F.R. § 498.40(a). On motion of a party, or his/her own motion, the ALJ may dismiss a
hearing request where that request was not timely filed and the time for filing was not
extended. 42 C.F.R. § 498.70(c).

' T make this one finding of fact/conclusion of law.
No one disputes that the facility received its notice on January 5, which means that its
hearing request was due no later than March 5, 2016. Petitioner’s April 8 hearing request
was therefore untimely and, absent a showing of good cause for my extending the time in
which to file, should be dismissed pursuant to 42 C.F.R. § 498.70(c).

No good cause. I treat Petitioner’s April 8 letter as a hearing request, even though it does
not satisfy regulatory requirements. 42 C.F.R. § 498.40(b); see Carlton at the Lake, DAB
No. 1829 (2002); Alden Nursing Ctr.— Morrow, DAB No. 1825 (2002) (affording the
ALJ “discretion” to accept as adequate to preserve a right to hearing requests that fail to
identify the specific issues and findings of fact and conclusions of law with which the
affected party disagrees and fail to specify the bases for contending the findings and
conclusions are incorrect.). In responding to CMS’s motion to dismiss, Petitioner refers
to its April 8 letter as its appeal. P. Response at 2.

Petitioner’s April 8 letter does not directly acknowledge that it missed the filing deadline
but explains that the facility is “in the process of compiling pertinent facts and
documentation” and suggests that its efforts are hampered by competing demands: from
December through March, the state agency surveyed and terminated four facilities
(including Petitioner) that were managed by Petitioner’s management company.
Petitioner also complains that it was “not given due process to refute or correct the
deficiencies.” Hearing Request; P. Response at 4.

I do not agree.

The regulations do not define “good cause” but leave that determination to the discretion
of the ALJ. Looking to regulations governing certain Social Security benefit appeals
(which also derive from section 205(b) of the Act), many ALJs have long ruled that
“good cause” means circumstances beyond a party’s ability to control. See, e.g., Oak
Park Healthcare Ctr., DAB CR1917 (2009) ; Hillcrest Healthcare, LLC, DAB CR976
(2002), aff'd DAB No. 1879 (2003); Hammonds Lane Ctr., et al., DAB CR913 (2002),
aff'd DAB No. 1853 (2002); Glen Rose Medical Ctr., DAB CR918 (2002), aff'd DAB
No. 1852 (2002); Parkview Care Ctr., DAB CR785 (2001); Hospicio San Martin, DAB
CR387 (1995), aff'd DAB No. 1554 (1996); 20 CER. § 404.933(c).’

> The Social Security regulations instruct the ALJ to consider: 1) the circumstances that
kept the respondent from making the request on time; 2) whether any agency action
misled him; 3) whether the respondent understood the requirements for filing; and 4)
whether the respondent had any physical, mental, educational, or linguistic limitation that
prevented him from filing a timely request or from understanding or knowing about the
need to file a timely request for review. 20 C.F.R. § 404.911.
For its part, the Departmental Appeals Board has avoided articulating a “good cause”
standard. Rutland Nursing Home, DAB No. 2582 at 5 (2014); Hammonds Lane Ctr., et
al., DAB No. 1853 n.3; Wellington Oaks Care Ctr., DAB No. 1626 (1997)? In any
event, the Board has consistently agreed that where a party, by inadvertence or tactical
choice, makes no effort to preserve its hearing rights, it must accept the consequences of
its inaction — loss of its right to an in-person hearing. Rutland at 5; Hammonds Lane Ctr.
at 1; Hillcrest Healthcare, LLC, DAB No. 1978 (2003). Thus, the Board has sustained
dismissals where the facility missed a filing deadline because it opted to pursue other
avenues (Rutland, Hillcrest); waited for the results of a waiver (Kids Med (Delta Medical
Branch), DAB No. 2471 (2012)); relied on a defunct policy that might have allowed it to
correct without incurring a penalty (Hammonds); and opted to focus on its plan of
correction and resurvey rather than to pursue an appeal (Nursing Inn of Menlo Park,
DAB No. 1812 (2002).

Here, Petitioner delayed requesting a hearing because its management company had
problems with other facilities. That a management company has spread itself so thin that
it is unable to address all of its facilities’ problems does not constitute good cause.
Indeed, preserving hearing rights requires little time or effort, as evidenced by the quality
of the request Petitioner filed here, and to do so should have been well within Petitioner’s
ability.

Finally, with respect to Petitioner’s due process complaints, Petitioner had ample
opportunity to refute the survey findings, but, by its own inaction, it failed to do so in the
manner provided by statute and regulation.

> As noted above, the regulation gives the ALJ discretion to extend the time for filing. 42
CFR. § 498.40(c). (“For good cause shown, the ALJ may extend the time for filing the
request for hearing.”). While the SSA standard is likely the most-widely used for section
205(b) hearings — and its application thus least likely to be considered an abuse of
discretion — it is not the only standard an ALJ might reasonably apply, particularly given
the absence of controlling regulations or other guidance. In reviewing an ALJ’s
dismissal, the Board does not decide de novo its own view of good cause; rather it
determines whether the ALJ abused his/her discretion. “Abuse of discretion” is thus the
appropriate standard for reviewing an ALJ’s finding of good cause.
Conclusion

Because Petitioner did not file its hearing request within sixty days of receiving the
January 5, 2016 notice letter, and no good cause justifies my extending the time for filing,
I dismiss its request pursuant to 42 C.F.R. § 498.70(c).

/s/
Carolyn Cozad Hughes
Administrative Law Judge