Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Hillsdale County Medical Care Facility
(CCN: 23-5197),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-289
Decision No. CR4034

Date: July 13, 2015

DECISION

Following a September 19, 2013 complaint investigation survey, the Michigan
Department of Licensing and Regulatory Affairs (state agency) found that Hillsdale

County Medicare Care Facility (Petitioner) was not in substantial compliance with the
requirements for Medicare-participating long-term care facilities. The state agency
determined that Petitioner’s care of a resident did not comply substantially with the
notification requirement (42 C.F.R. § 483.10(b)(11)) or the general quality of care
requirement (42 C.F.R. § 483.25). A subsequent revisit survey determined that Petitioner
returned to substantial compliance on October 17, 2013. The Centers for Medicare
& Medicaid Services (CMS) accepted the state agency’s findings and imposed a $450

per-day civil money penalty (CMP) against Petitioner from September 19, 2013 through
October 16, 2013 (28 days), for a total CMP of $12,600. Petitioner appealed.

For the reasons set forth below, I find that Petitioner was not in substantial compliance
with the requirements of a long-term care facility during the cited period and that the
enforcement remedy imposed is reasonable in amount and duration. | therefore affirm
the noncompliance determination as well as the $450 per-day CMP for 28 days.

I. Background and Procedural History

Petitioner is a long-term care facility located in Michigan that participates in the
Medicare and Medicaid programs. After receiving a complaint from a former resident’s
family member, the state agency conducted a complaint investigation survey of Petitioner
between September 18 and September 19, 2013, and determined Petitioner was not in
substantial compliance with Medicare participation requirements. The state agency’s
findings that led to its noncompliance determination focused on a resident referred to as
“Resident 101” who was admitted to Petitioner’s facility on April 1, 2013, and died in the
facility on April 17, 2013. Based on its survey findings, the state agency alleged that
Petitioner’s staff did not timely or adequately notify Resident 101’s legal representative
of several significant changes to the resident’s medical status, nor did Petitioner’s staff
provide Resident 101 with the necessary care and services to address his declining
respiratory condition the day before and the day of his death. Specifically, the state
agency found that Petitioner did not comply with two regulatory requirements:

e 42 C.F.R. § 483.10(b)(11) (Tag F-157) — facility must inform resident, consult
with physician, and notify resident’s legal representative or family member of
significant changes to resident’s physical, mental, or psychosocial status or a
need to alter treatment significantly; and

e 42 C.F.R. § 483.25 (Tag F-309) — facility must provide the necessary care and
services for a resident to attain or maintain his or her highest practical physical,
mental, and psychosocial well-being.

The state agency determined Petitioner’s noncompliance was at a scope and severity level
“G,” an isolated instance of actual harm not rising to the level of immediate jeopardy.

By letter dated October 30, 2013, CMS notified Petitioner that it had accepted the state
agency’s findings and was imposing a mandatory denial of payment for new admissions
(DPNA) effective December 19, 2013, if Petitioner remained out of substantial
compliance, and a CMP of $450 per day, effective September 19, 2013. By letter dated
December 4, 2013, CMS notified Petitioner that a revisit survey found that Petitioner
returned to substantial compliance on October 17, 2013. CMS rescinded the DPNA but
continued the $450 per-day CMP through October 16, 2013, for a total of 28 days.

On November 14, 2013, Petitioner, through its administrator, filed its request for a
earing before an administrative law judge to challenge the two cited deficiencies in the
September 2013 survey. Petitioner then retained counsel, who continued to represent
Petitioner throughout these proceedings. CMS subsequently filed a motion for summary
judgment along with 34 proposed exhibits (CMS Exs. 1-34). Petitioner opposed
summary judgment, and submitted two exhibits (P. Exs. 1-2), which actually contain four
separate affidavits, two of which are from Petitioner’s medical director, who also served

as Resident 101’s primary care physician. See P. Ex. | at 8-9; P. Ex. 2 at 1-2. Ina ruling
dated July 29, 2014, I denied CMS’s motion for summary judgment because, although
the parties relied on the same documentary evidence in their prehearing arguments, each
party presented reasonable factual inferences of the documentary evidence that created a
genuine dispute of material facts. I convened a prehearing conference by telephone on
August 5, 2014, during which the parties agreed that the case could be resolved without
holding an in-person hearing. Accordingly, each party waived its opportunity to cross-
examine the opposing party’s witnesses. Neither party objected to the admission of the
proposed exhibits, so I admitted the exhibits that the parties submitted with their
prehearing arguments (CMS Exs. 1-34; P. Exs. 1-2). The parties each submitted a
closing brief (CMS Br.; P. Br.) and did not submit any additional evidence. On March 2,
2015, I ordered the parties to file supplemental briefs to address the legal issue of whether
it was permissible for CMS to rely on events that occurred sometime between April 1 and
April 17, 2013, to support Petitioner’s noncompliance between September 13 and
October 17, 2013. I also directed CMS to file a copy of Petitioner’s plan of correction.
Each party filed a supplemental brief (CMS Supp. Br.; P. Supp. Br.) as directed. CMS
also filed Petitioner’s plan of correction, labeled as “ALJ Ex. 1,” which is admitted into
the record.

IL. Issues
This case presents the following issues:

1. Whether Petitioner was in substantial compliance with the Medicare participation
requirement in 42 C.F.R. § 483.10(b)(11) (proper notification of changes) between
September 19 and October 17, 2013;

2. Whether Petitioner was in substantial compliance with the Medicare participation
requirement in 42 C.F.R. § 483.25 (necessary care and services for the highest
practicable well-being) between September 19 and October 17, 2013; and

3. If Petitioner was not in substantial compliance, whether the penalty imposed is
reasonable in duration and amount.

The scope and severity of Petitioner’s noncompliance is not at issue. A facility may only
challenge the scope and severity level of noncompliance if: (1) CMS has made a finding
of “substandard quality of care” that impacts the facility’s authority to conduct a nurse
aid training and competency evaluation program; or (2) a successful challenge to the
scope and severity of noncompliance would affect the range of the CMP that may be
imposed. 42 C.F.R. § 498.3(b)(14). Here, CMS did not make a finding of “substandard
quality of care,” which requires either immediate jeopardy, a pattern of actual harm, or
widespread potential for more than minimal harm. 42 C.F.R. § 488.301. The state
agency found that the two deficiencies cited were isolated instances of actual harm that
were not immediate jeopardy. CMS Ex. 1. Moreover, a successful challenge would not
impact the range of CMP that CMS may impose. The only range for a possible CMP
based on noncompliance that does not pose immediate jeopardy, such as in this case, is
between $50 and $3,000 per day. 42 C.F.R. § 488.438(a)(1)(ii). Thus, the scope and
severity of Petitioner’s noncompliance is not at issue.

Ill. Statutory and Regulatory Framework

The Social Security Act (Act) establishes the minimum standards of resident care that a
long-term care facility must meet in order to participate in the Medicare and Medicaid
programs and authorizes the Secretary of Health and Human Services (Secretary) to
promulgate regulations implementing those statutory requirements. 42 U.S.C. §§ 1395i-
3, 1396r. Specific Medicare participation requirements for long-term care facilities are in
42 C.F.R. Part 483. A long-term care facility must remain in substantial compliance with
program requirements to participate in Medicare. 42 C.F.R. § 483.1(b). “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 minimal harm. /d. § 488.301. “Noncompliance” means “any deficiency that
causes a facility not to be in substantial compliance.” Jd.

The Act authorizes the Secretary to impose enforcement remedies against a long-term
care facility for failure to comply substantially with the federal participation
requirements. The Secretary has delegated to CMS and the states the authority to impose
remedies against a long-term care facility not in substantial compliance with participation
requirements. State agencies survey facilities on behalf of CMS to determine whether the
facilities comply with federal participation requirements. 42 C.F.R. §§ 488.10-.28,
488.300-.335. Standard surveys must occur at least every 15 months, and complaints of
abuse or neglect of residents in a long-term care facility may trigger a survey sooner than
a standard survey. See 42 U.S.C. § 1395i-3(g)(1)(C), (g)(2)(A)(iii).. 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. These remedies include:
termination of a facility’s participation in the Medicare program, closure of the facility,
temporary management, denial of certain Medicare payments, transfer of residents, state
monitoring, directed plans of correction, and various CMPs. Jd. § 488.408.

CMS may impose a per-day CMP for the number of days a facility is not in substantial
compliance or a per-instance CMP for each instance of the facility’s noncompliance. Id.
§ 488.430(a). A per-day CMP, which CMS imposed in this case, may range from either
$50 to $3,000 per day for less serious noncompliance or $3,050 to $10,000 per day for
more serious noncompliance that poses immediate jeopardy to the health and safety of
residents. Jd. § 488.438(a)(2). “Immediate jeopardy” exists when “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.” Jd. § 488.301.
If CMS imposes an enforcement remedy against a long-term care facility based ona
noncompliance determination, the facility may request a hearing before an administrative
law judge to challenge the noncompliance finding and enforcement remedies. 42 U.S.C.
§§ 1320a-7a(c)(2), 1395cc(h); 42 C.F.R. §§ 488.408(g), 498.3(b)(13).

IV. Findings of Fact and Conclusions of Law

A. Petitioner was not in substantial compliance with the notification
requirement in 42 C.F.R. § 483.10(b)(11) because Petitioner’s staff did not
immediately notify Resident 101’s legal representative of significant changes
to his status or of the need to alter his treatment significantly.

To maintain compliance with the Medicare participation standards, a long-term care
facility “must immediately . . . notify the resident’s legal representative or an interested
family member” if any of four specific circumstances occur, two of which are relevant in
this case:

(B) A significant change in the resident’s physical, mental, or psychosocial
status (i.e., a deterioration in health, mental, or psychosocial status in either
life-threatening conditions or clinical complications);

(C) A need to alter treatment significantly (i.e., a need to discontinue an
existing form of treatment due to adverse consequences, or to commence a
new form of treatment)|[.]

42 C.F.R. § 483.10(b)(11)(i)(B)-(C). The Board has explained that the word
“immediately” as it is used in section 483.10(b)(11) means “without any intervening
interval of time.” Magnolia Estates Skilled Care, DAB No. 2228, at 8-9 (2009). In
addition, the Board has often pointed out that the drafters of the regulation changed the
notification requirement from 24 hours, as initially proposed, to “immediately,” as stated
in the final rule, in response to public comment:

CMS stated that the February 1989 draft of the rule gave the facility
“up to 24 hours in which to notify the resident’s physician and the
legal representative or family.” [56 Fed. Reg. 48,826, at 48,832-33
(1991).] Several commenters, however, objected to the 24-hour
period because “a resident could be dead or beyond recovery in that
time ....” In response, CMS stated: “We agree and have amended
the regulation to require that the physician and legal representative
or family be notified immediately.”

Laurels at Forest Glen, DAB No. 2182 at 12-13 (2008) (second citation omitted), accord,
River City Care Ctr., DAB No. 2627 (2015); NHC Healthcare Athens, DAB No. 2258
(2009); Magnolia Estates, DAB No. 2228.

The regulation requires that there be a “significant change” or a “need to alter treatment
significantly” before a facility is required to notify a resident’s legal representative.

42 C.F.R. § 483.10(b)(11)(i). While the regulation provides examples of what constitute
circumstances significant enough to require notification (“life-threatening conditions or
clinical complications” and “a need to discontinue an existing form of treatment due to
adverse consequences, or to commence a new form of treatment”), Appendix PP of the
State Operations Manual (SOM) also explains:

For purposes of § 483.10(b)(11)(i)(B), life-threatening conditions are
such things as a heart attack or stroke. Clinical complications are such
things as development of a stage II pressure sore, onset or recurrent
periods of delirium, recurrent urinary tract infection, or onset of
depression. A need to alter treatment “significantly” means a need to
stop a form of treatment because of adverse consequences (e.g., an
adverse drug reaction), or commence a new form of treatment to deal
with a problem (e.g., the use of any medical procedure, or therapy that
has not been used on that resident before).

SOM, App. PP, Interpretive Guidelines §483(b)(1 1) (Rev. 70, 2011) (as cited in Laurels
at Forest Glen, DAB No. 2182 at 12-13). The notification requirement is not limited
only to life-threatening circumstances but includes situations when “there is a chance that
physician intervention is needed.” Claiborne-Hughes Heath Ctr. v. Sebelius, 609 F.3d
839, 843 (6th Cir. 2010)' (citing Laurels at Forest Glen, DAB No. 2182 at 12-13).

Petitioner has also developed a written policy addressing the notification of a resident’s
legal representative, and it is consistent with the regulatory requirements. CMS Ex. 32.
That policy, titled “Change of Condition Notification,” states:

' Claiborne-Hughes did not discuss when a facility must notify a legal representative but
rather discussed when it was necessary for a facility to consult with a physician. See 609
F.3d at 843. However, consultation with a physician for a “significant change” in a
resident’s condition necessarily triggers the requirement that the resident’s legal
representative be notified as well. The regulation uses the conjunctive “and,” meaning
consultation with a physician and notification of a legal representative must occur if there
is a significant change. See 42 C.F.R. § 483.10(b)(11). Therefore, the chance that
physician intervention is needed triggers both the physician consultation and the legal
representative requirements.
The facility (i.e. Neighborhood Nurse, Supervisor, and Unit Manager) is
to notify the elder, physician and appropriate representative when any of
the following occur:

a. Accident or Incident involving the elder which results in an
injury and has a potential for requesting physician intervention
and per policy.

b. A significant change in the elder’s physical, mental or
psychosocial status, for example:

New Infection.

Depression.

Change of status.

Acute episode.

Medication change for mood or behavior or significant
physical change.

6. Life threatening conditions.

7. Clinical complications.

8. Treatment changes; i.e. therapy, oxygen, etc.

WBWNE

CMS Ex. 32. Thus, Petitioner’s own policy recognizes the wide range of circumstances
when notification of a resident’s legal representative is required. Moreover, I accept
Petitioner’s notification policy as its interpretation of how the requirements in 42 C.F.R.
§ 483.10(b)(11) should be carried out by its staff.

Resident 101, an 80-year-old male, was admitted to Petitioner’s facility on April 1, 2013,
with a history of dementia, urinary tract infection (UTD, sepsis, anxiety, insomnia,
chronic obstructive pulmonary disease (COPD), hypertension, dysphagia, depression, and
muscle weakness. CMS Ex. 18 at 1-3. Resident 101 had appointed his daughter to serve
as his legal representative. CMS Ex. 18 at 27. It is undisputed that Resident 101’s legal
representative visited him frequently and was “intimately involved in his care.” P. Ex. 1
at 11; see P. Br. at 3.

CMS cites four separate incidents, between April 5 and April 14, 2013, when Petitioner’s
staff allegedly did not provide the requisite notification to Resident 101’s legal
representative of a significant change to his status or of a need to alter his treatment
significantly. Petitioner does not dispute that these incidents occurred but instead argues
that none of them were of such a significant nature to trigger the notification requirement
to Resident 101’s legal representative.
1. Petitioner’s intramuscular administration of Ativan® to Resident 101 on
April 5, 2013 did not require immediate notification of his legal
representative because it did not constitute a significant change in the
resident’s status nor a significant alteration of his treatment.

On April 5, 2013, Petitioner’s staff administered Ativan, an anti-anxiety medication, to
Resident 101 intramuscularly rather than by mouth. CMS Ex. 25 at 2. Just prior to the
staff’s administering Ativan, Resident 101 set off an alarm several times while trying to
get out of bed. He told staff that he was “going to die.” He shouted for help and grabbed
a certified nursing assistant (CNA). Staff attempted to give Ativan to Resident 101 by
mouth, but he refused it. Staff then administered the medication intramuscularly “with
[positive] results.” CMS Ex. 25 at 2. Petitioner points out that an April 2, 2013
physician’s order directed that Ativan be administered to Resident 101 either orally or
intramuscularly, every four hours as needed.” CMS Ex. 20 at 7. That order stated
“Ativan 1 mg PO or IM q 4° PRN #60 5 refills.” Staff did not notify Resident 101’s
legal representative that it had to administer Ativan intramuscularly rather than by mouth.
See CMS Ex. 25 at 2.

There is little doubt that staff had to resort to intramuscular administration of Ativan
rather than by mouth because Resident 101 was combative and refusing to take it. CMS
Ex. 25 at 2. However, it is not a significant alteration in treatment when staff follows an
existing physician’s order, even if the order is “as needed.” Also, while Resident 101
was agitated on April 5, 2013, his agitation did not represent a significant change or acute
episode in his mental status. The order in this instance was for Ativan, which treats
anxiety. Resident 101’s anxiety at the time staff administered the Ativan intramuscularly
was consistent with his prior behavior, which is why his physician had prescribed an

> Upon Resident 101’s admission, on April 1, 2013, the physician had ordered Ativan
only by mouth every four hours as needed. CMS Ex. 20 at 2. The physician changed
that order the following day to include the option of administering Ativan intramuscularly
every four hours as needed. CMS Ex. 20 at 7. A care note on April 2, 2013 states that
Resident 101 was “combative with transfers and care,” climbing out of his bed, and
“swinging at CNAs,” which may have precipitated the change in how the anti-anxiety
medication was administered. CMS Ex. 25 at 33. Resident 101’s physician wrote in his
written direct testimony that he ordered the intramuscular administration of Ativan on
April 5, 2013, only after Resident 101 refused to take it by mouth. P. Ex. 1 at 9. The
order for intramuscular Ativan, however, appears to have been in place for three days
prior. See CMS Ex. 20 at 7.

> Expanding the medical abbreviations used, this order would apparently read “Ativan 1
milligram by mouth or intramuscularly every four hours as needed. . .” See Neil M.
Davis, Medical Abbreviations (13th ed. 2007).

Ativan regimen already.’ P. Br. at 12-13. Staff administered Ativan to Resident 101 ina
prescribed manner to address the very reason for prescribing Ativan in the first place.
Ultimately, I conclude that the notification requirement in section 483.10(b)(11) was not
triggered, and the fact that staff did not notify Resident 101’s legal representative of the
administration of Ativan intramuscularly or Resident 101’s anxiety-driven behavior that
evening did not violate the regulatory standard.

2. Petitioner’s decision to change Resident 101’s medication from
Cipro® to Bactrim® required immediate notification of his legal
representative because it constituted a significant change in the
resident’s status and a significant alteration of his treatment.

On April 8, 2013,° Resident 101’s physician changed a prescribed antibiotic from Cipro
to Bactrim to address lab results that showed the “resistance” of Resident 101’s UTI to
Cipro. CMS Ex. 25 at 5; CMS Ex. 20 at 9. Resident 101 had been on Cipro to treat his
UTI, but results from a urine sample showed the presence of proteus mirabilis, which,
according to Resident 101’s physician, required the use of Bactrim instead of Cipro in
order to provide “a different spectrum of coverage for the usual pathogens.” P. Ex. | at
8. Bactrim is an antibiotic that treats a wider range of bacteria than Cipro. P. Ex. | at 2.
Staff did not document any notification of Resident 101’s legal representative at the time
of the change. See CMS Ex. 25 at 5. However, a licensed practical nurse (LPN) at
Petitioner’s facility wrote in her direct testimony that she “advised [Resident 1’s legal
representative] regarding the results of [Resident 101’s] culture and advised her that

* Petitioner argues that CMS improperly changed its basis for claiming the events of
April 5, 2013 required notification of Resident 101’s legal representative. P. Br. at 12.

In its prehearing brief, CMS argued that the failure to notify the legal representative of
the intramuscular administration of Ativan was deficient, while in its closing brief, CMS
for the first time argued that the failure to notify the legal representative of Resident
101’s behavior that evening was deficient. CMS Br. at 3-4. I disagree with Petitioner
that CMS improperly or untimely raised this argument. CMS did not add any additional
facts or evidence to make its argument but rather provided a different interpretation of the
evidence already in the record. Moreover, Petitioner had an opportunity to, and did,
adequately defend against this argument. P. Br. at 12-14.

> A nurse transcribed the order which the physician made over the phone. The date on
the transcribed order is April 7, 2013. CMS Ex. 20 at 7. The contemporaneous nursing
notes, however, date the medication change as April 8, 2013. CMS Ex. 25 at 5. The
parties seem to agree that the change occurred sometime on April 8, 2013. CMS Br. at 5;
CMS Ex. | at 4; P. Ex. 1 at 2. I accept that the change occurred on April 8, 2013, and the
transcribed order was erroneously dated April 7. The lab’s culture results precipitating
the change, however, were undisputedly reported on April 7, 2013 at 2:01 p.m. See CMS
Ex. 25 at 64.
10

instead of treating his urinary tract infection with Cipro, we would instead be treating it
with Bactrim.” P. Ex. 1 at 11. The LPN notified Resident 101’s legal representative only
after the legal representative asked the LPN to “go over with her the medications
[Resident 101] was taking.” P. Ex. | at 11.

CMS argues that there is no documentary evidence to support the LPN’s statement that
she notified the legal representative. CMS Br. at 4n.1. That is certainly true. However,
the LPN also testified that she remembered notifying Resident 101’s legal representative
about the change from Cipro to Bactrim because she was surprised that the legal
representative, a medical professional herself, was reportedly not familiar with Cipro, a
very common antibiotic. P. Ex. 1 at 11. Therefore, there was a unique circumstance that
caused the LPN to remember this specific interaction with Resident 101’s legal
representative. However, with no documentation, I find that the LPN told Resident 101’s
legal representative about the change from Cipro to Bactrim more likely when the LPN
and the legal representative were discussing Resident 101’s medications, not at the time
that the change occurred. Thus, there is no compelling evidence that the notification was
“immediate,” and I find that it was not. The LPN’s own statement suggests, and I infer
from it, that Resident 101’s legal representative first asked about his current medications,
which then prompted the LPN to tell her about the change in medication.° P. Ex. | at 11.
Specifically, the LPN who notified the legal representative testified that “[Resident 101’s
legal representative] asked me to go over with her the medications [Resident 101] was
taking. As we were reviewing the medications, | advised her that instead of treating his
urinary tract infection with Cipro, we would instead be treating it with Bactrim.” P. Ex. 1
at 11 (emphasis added). In addition, where prompted on the physician’s order form dated
April 7, 2013, staff left blank a check box asking whether the family “has been notified of
the above treatment change.” CMS Ex. 20 at 9. There is no evidence that Petitioner’s
staff intended to or otherwise would have notified Resident 101’s legal representative
about the culture results and change in antibiotics. Instead, I find it more likely that the
persistence and involvement of Resident 101’s legal representative in his care resulted in

° The LPN also stated that Resident 101’s legal representative was “at the Facility
following our receipt of [Resident 101’s] culture, which demonstrated the bacterial
infection . . . was resistant to Cipro....” P. Ex. 1 at 11. The LPN’s statement, however,
does not explain how or when staff notified the legal representative of the culture results
and medication change. I do not infer from the LPN’s statement that simply because the
legal representative was present in the facility at the time the culture results came back to
facility staff, the legal representative also had notice of those results. I read the LPN’s
statement as explaining that Resident 101’s legal representative was in the facility and
asked to review Resident 101’s medications soon after the change to Bactrim had been
ordered, but not that any notification about the change to Bactrim precipitated her inquiry
about Resident 101’s medications.
11

staff eventually advising the legal representative of the culture results and change in
medication.

The diagnosis of an antibiotic-resistant condition represents a significant change in status
and a clinical complication that triggered the requirement to notify Resident 101’s legal
representative. See 42 C.F.R. § 483.10(b)(11)(i)(B). As the SOM notes, a “clinical
complication” includes such things as “onset or recurrent periods of delirium, recurrent
urinary tract infection, or onset of depression.” SOM, App. PP, Interpretive Guidelines
§483(b)(11). While not recurrent, Resident 101’s UTI showed resistance to the treatment
in place at the time, which I find is consistent with the type of clinical complications
listed in the SOM. Had the same course of treatment (Cipro) continued, the UTI would
have never been properly treated. Any clinical finding that prompts a necessary change
in treatment represents a clinical complication and significant change in status, which in
turn, requires the facility to notify the resident’s legal representative. Also, the laboratory
results prompted Petitioner to stop one form of treatment (Cipro) and commence a new
form (Bactrim), which triggered the notification requirement. 42 C.F.R.

§ 483.10(b)(11)()(C). Even under Petitioner’s own notification policy, the results of
Resident 101’s urine sample, which showed resistance to Cipro, was a clinical
complication that prompted a change in medication and should have triggered immediate
notification of Resident 101’s legal representative. See CMS Ex. 32.

Despite Petitioner’s claim that the change was merely the use of a common alternative to
treat a UTI and that Resident 101 did not experience any actual change in condition, the
evidence suggests that the complication was serious enough to warrant physician
intervention in order to ensure Resident 101’s condition was properly addressed. CMS
Ex. 20 at 9; see Claiborne-Hughes, 609 F.3d at 843. Moreover, it is disingenuous to
claim that Resident 101’s condition did not change. It is certainly true that from April 7
to April 8, there is no evidence that Resident 101’s physical condition was significantly
different as a result of his UTI, for example, that symptoms of his UTI were in some way
worsening in that time. However, when staff learned that his UTI was Cipro-resistant, it
represented a significant change in his clinical status, enough to warrant physician
intervention to ensure proper treatment of the UTI. Simply pointing out that it was a
switch from one antibiotic to another, as Petitioner does here (P. Br. at 14-15), does not
persuasively minimize the significance of the culture results and medication change. A
necessary change in medication to address a persistent, Cipro-resistant infection
represents a “need to alter treatment significantly,” even if it is a change from one
antibiotic to another. Thus, I conclude that Petitioner did not comply with the regulatory
requirement because it did not immediately notify Resident 101’s legal representative of
the culture results or the change in medication from Cipro to Bactrim.
12

3. Petitioner’s intravenous administration of fluid (dextrose 5%) to
Resident 101 required immediate notification of his legal representative
because it constituted a significant change in the resident’s status and a
significant alteration of his treatment.

Just after midnight on April 13, 2013, Resident 101’s physician ordered staff to
administer “D5W["] 60 mL/hr IV or clysis[*] x 48 [hours]” to Resident 101. CMS Ex. 20
at 13. At 12:30 a.m., a nursing note states that staff initiated the IV in Resident 101’s
right hand, it “flushed [with] ease,” and was “infusing well” at 60 milliliters per hour.
CMS Ex. 25 at 7, 59. The nursing notes from that time, however, do not indicate any
specific reason for the order, but Petitioner’s administrator wrote in her direct testimony
that Resident 101 was “not eating food as he normally did and he was struggling.” P. Ex.
1 at 4. The nutrition intake and output record confirms that on April 12, 2013, Resident
101 refused breakfast, and he only ate a small portion of his lunch and dinner. See CMS
Ex. 25 at 14. His blood pressure also appeared to be dropping slightly, from 116/66
uring the day on April 12, to 96/66 during the morning of April 13, 2013. See CMS Ex.
25 at 30. There is no indication that staff notified Resident 101’s legal representative of
the need for the administration of fluids or the start of the IV line. See CMS Ex. 20 at 13
(unchecked box when asked whether the family “has been notified of the above treatment
change”); CMS Ex. 25 at 7.

The need to provide fluid to Resident 101 intravenously or by clysis because he was not
eating normally and was “struggling” represents both a significant change in his physical
status as well as a need to alter treatment significantly. Petitioner argues that starting an
IV line and fluid replacement was simply maintaining hydration for Resident 101 at an
“unremarkable” level. P. Br. at 16-17. But Petitioner’s claim misses that staff started an
IV in Resident 101’s hand just after midnight and in response to a physician’s order at
that time because staff observed that he was “struggling.” P. Ex. 1 at 4. Ido not accept
that the newly started IV line and fluid infusion for Resident 101 in the middle of the
night was simply a routine event to maintain hydration. Instead, by noting that he was
“not eating food as he normally did and he was struggling” at the time the doctor ordered
additional fluids, Petitioner’s staff acknowledged that Resident 101’s condition had
deteriorated to a point where he needed this new form of treatment immediately. Prior to
the start of the IV line and infusion of fluid, Resident 101 did not have the need for fluid
replacement nor was he receiving any. See CMS Ex. 25 at 35, 59 (“I.V. Schedule” for
Resident 101 showing initial IV started on April 13, 2013). Thus, when staff initiated the

7 “D5W?” is an abbreviation for dextrose 5% in water. See Davis, supra, note 4.

® “Clysis” is the “introduction of large amounts of fluid into the body usually by
parenteral injection to replace that lost (as from hemorrhage or in dysentery or burns), to
provide nutrients, or to maintain blood pressure.” Merriam-Webster Medical Dictionary,
available at http://www.merriam-webster.com/medical/clysis.

13

new form of treatment based on the observed clinical complication that he was not eating
and “struggling,” staff was required to notify Resident 101’s legal representative
immediately.

4. The physician’s order for Norco® required immediate notification of
Resident 101’s legal representative because it constituted a significant
change in the resident’s status and a significant alteration of his
treatment.

A nursing note from April 13, 2013, reported that Resident 101 was “holding his [right]
side” during the 7:00 a.m. to 3:00 p.m. shift, although the evening shift noted “no
complaints of pain or discomfort.” CMS Ex. 25 at 8. On April 14, 2013, nursing staff
again noted “no complaints of pain or discomfort.” CMS Ex. 25 at 9. However, by 1:30
p.m. on April 15, 2013, Resident 101 was “grimacing, guarding ribs [with] cough;
complaining of] pain when asked if hurting.” CMS Ex. 25 at 9. Staff consulted with
Resident 101’s physician, who ordered the narcotic Norco, by mouth, twice daily for pain
as needed. CMS Ex. 20 at 13. However, by the 3:00 p.m. to 11:00 p.m. shift, Resident
01 had no signs or symptoms of pain or discomfort. CMS Ex. 25 at 9. There is no
evidence that staff ever actually administered Norco to Resident 101 before his death two
days later. See CMS Ex. 25 at 9-12, 41. Instead, staff twice provided Roxanol®, a
narcotic ordered on April 16, 2013, to address Resident 101’s pain and anxiety.” CMS
Ex. 25 at 41-42. Petitioner’s staff did not notify Resident 101’s legal representative of
the need for, or physician’s order for Norco. CMS Ex. 25 at 9; CMS Ex. 20 at 13. The
legal representative also noted in an interview with surveyors that staff did not inform her
about the Roxanol order or administration until she called the facility to inquire about
Resident 101. CMS Ex. | at 5. In its briefing, however, CMS relies on the April 15,
2013 Norco order and facility staff not notifying the legal representative about that
specific order as demonstrating noncompliance with the regulatory requirements. CMS
Br. at 5.

The rib pain noted on the afternoon of April 15 was a change in Resident 101’s physical
status. See 42 C.F.R. § 483.10(b)(11)(i)(B).. Prior to that afternoon, his rib pain had only
been noted once, two days earlier, but at that earlier time the pain was not at a level that
warranted physician consultation or an order for a narcotic pain reliever. Staff gave
Resident 101 Motrin, a nonsteroidal anti-inflammatory drug (NSAID) pain reliever, on
April 13, 2015, because he was “moaning” and “holding his [right] side.” CMS Ex. 25 at

° T reject Petitioner’s suggestion that the “likelihood is the pain was negligible” because
Resident 101 did not later complain of pain. P. Br. at 17. Staff administered Roxanol at
least three times the following two days for “pain/anxiety.” CMS Ex. 25 at 42. The
record therefore shows that Resident 101’s pain was more persistent that Petitioner now
recognizes, and its staff treated the pain with a separate narcotic.
14

8. Resident 101’s pain on April 15 was therefore a significant change in his physical
status because staff determined for the first time that it was serious enough for a stronger
pain reliever.'° The Motrin was apparently no longer adequate to address the pain he
exhibited. Compare CMS Ex. 25 at 8 (providing Motrin after signs of rib pain) with
CMS Ex. 25 at 9 (receiving order for Norco after signs of rib pain). In addition, the April
15 order for Norco represented a new course of treatment to address Resident 101’s rib
pain. Prior to that time, Resident 101 received a general NSAID, not a narcotic. See
CMS Ex. 20 at 1 (April 1, 2015 order for Motrin 600 mg by mouth as needed). Thus, the
order for a narcotic pain reliever was a new course of treatment and a significant change
in Resident 101’s medical treatment. In addition, pursuant to Petitioner’s policy, the
order for Norco represented a “medication change for. . . a significant physical change,”
which should have prompted appropriate notifications. CMS Ex. 32. Overall, Resident
101’s rib pain and the April 15 order for Norco both triggered the regulatory requirement
that staff immediately notify Resident 101’s legal representative.'! Petitioner’s staff did
not make that immediate notification.

In three out of the four instances outlined above, Petitioner did not provide the requisite
notice to Resident 101’s legal representative of significant changes to his status or the
need to alter his treatment significantly. Petitioner, therefore, did not comply with the
regulatory requirements in 42 C.F.R. § 483.10(b)(11). Moreover, Petitioner’s
deficiencies posed the potential for more than minimal harm. By not immediately
notifying Resident 101’s legal representative of his clinical complications and medication
changes, Petitioner effectively cut off the individual that Resident 101 intended to speak
on his behalf and make important medical decisions for him. See Magnolia Estates

'° The April 15, 2013 rib pain, which was a significant change in Resident 101’s physical
status, is distinguishable from the anxiety that Resident 101 exhibited on April 5, 2013,
which was not a significant change in his status. Prior to April 15, Resident 101 had not
experienced rib pain to a level that required physician consultation or intervention. The
prior order for Motrin was simply as needed, but it does not appear to be directed at rib
pain. See CMS Ex. 20 at 1. April 15, therefore, was a new onset of serious rib pain. In
contrast, Resident 101’s April 5 anxiety was exactly the type of behavior that staff had
experienced and consulted with Resident 101’s physician about previously. The standing
order for Ativan intramuscularly demonstrated that staff anticipated such behavior. CMS
Ex. 20 at 7. Thus, Resident 101’s April 5 anxiety requiring intramuscular Ativan was
expected behavior and therefore not a significant change in status.

"| Staff immediately consulted with Resident 101’s physician about rib pain, which
demonstrates that staff believed it to be a significant change in status. CMS Ex. 20 at 13;
CMS Ex. 25 at 8. I recognize, however, that physician consultation alone does not
trigger the regulatory requirement that a resident’s legal representative be notified, but it
may reasonably indicate that facility staff understood that there was a significant change
in the resident’s status.
15

Skilled Care, DAB CR1804, at 15 n.12 (2008) (“[The resident] was unable to
communicate or, presumably, to participate in medical decision-making with her
physician or the physician’s extender. Thus, the importance of immediate notification
should not be minimized.”), aff’d, DAB No. 2228 at 18 (“We also note and agree with the
ALJ about the importance of family notification in this case because [the resident] was
unable to communicate or participate in decision-making about her care.”).

Petitioner’s claim that the failure to notify the legal representative could not have caused
Resident 101 any actual harm is inconsistent with the regulatory language requiring
notification of a resident’s legal representative. See P. Br. at 7-8. Petitioner argues that if
“all long term care facilities had to notify a resident’s [legal representative] or guardian
when a minimal IV dose, for example, is administered for hydration . . . operations would
effectively be brought to a halt. Imposing such a requirement on long term care facilities
is unreasonable, impractical, and is not contemplated by the law.” P. Br. at 11. Ihave
already rejected the underlying premise of Petitioner’s argument that the changes to
Resident 101 were not significant. More importantly, and contrary to Petitioner’s
argument about the unreasonableness of notifying a resident’s legal representative, the
Secretary has recognized the important role a resident’s legal representative plays in that
resident’s overall medical care. The Secretary mandated that all Medicare-participating
long-term care facilities immediately notify a resident’s legal representative of significant
changes in a resident’s status or a need to alter the resident’s treatment significantly. 42
C.F.R. § 483.10(b)(11). This requirement is in addition to, not simply secondary to, the
physician consultation requirement. The Secretary thus included notification of the
resident’s legal representative at the same level of importance as consultation with the
resident’s physician. Indeed, the legal representative can provide consent for treatment,
recommend treatment based on past experiences that the facility staff may not know and,
critically, express the interests of the resident receiving care. In this case, not
immediately notifying Resident 101’s legal representative was especially likely to cause
more than minimal harm because the legal representative was a medical professional who
had ample experience in directing the care of her father. See P. Ex. | at 11. The lack of
immediate notification may have prevented her from making informed decisions about
his health care and likely clouded her overall picture of Resident 101’s condition. An
uniformed, or even under-informed legal representative cannot carry out the functions
with which the resident entrusted him or her. By creating such a situation, Petitioner’s
failure to notify Resident 101’s legal representative on three separate occasions of a
significant change in Resident 101’s condition and the need to alter his treatment
significantly did not comply substantially with the requirements of 42 C.F.R.

§ 483.10(b)(11).

16

B. Petitioner was not in substantial compliance with 42 C.F.R. § 485.25 because
it did not provide Resident 101 with necessary care when its staff did not
transfer Resident 101 to a hospital in accordance with standing physician’s
orders or the resident’s desire to be hospitalized in any situation.

The lead-in language of 42 C.F.R. § 483.25 states:

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 comprehensive
assessment and plan of care.

The Board has explained that this regulation “imposes on facilities an affirmative duty
designed to achieve favorable outcomes to the highest practicable degree.” Windsor
Health Care Ctr., DAB No. 1902, at 16-17 (2003), aff'd, 127 F. App’x. 843 (6th Cir.
2005). “The facility must take ‘reasonable steps’ and ‘practicable measures to achieve
that regulatory end.’” Golden Living Ctr. - Foley, DAB No. 2510, at 23 (2013) (quoting
Clermont Nursing & Convalescent Ctr., DAB No. 1923, at 21 (2004)). The regulation
implicitly imposes on a facility the duty to provide care and services that, “at a minimum,
meet accepted professional standards of quality ‘since the regulations elsewhere require
that the services provided or arranged by the facility must meet such standards.’” Id.
(quoting Spring Meadows Health Care Ctr., DAB No. 1966, at 17 (2005)). In Crestview
Parke Care Center v. Thompson, 373 F.3d 743 (6th Cir. 2004), the court concluded that
the general quality of care regulation is not a “strict liability” regulation. 373 F.3d at
753-54. The court explained that the word “practicable” suggests that a
“reasonableness” standard inheres in the regulation” and that it would be possible for a
facility to show “a justifiable reason for the violation of [section] 483.25.” Id. at 754.

Resident 101 had a history of COPD, and during his time as a resident of Petitioner’s
facility his blood oxygen saturation levels were typically around 90% with supplemental
oxygen in place. See, e.g., CMS Ex. 19; CMS Ex. 25 at 1-8; see also CMS Ex. 25 at 4
(reading of 71% on room air after Resident 101 removed supplemental oxygen, and
returning to 91% when oxygen was reapplied). He received continuous oxygen through a
nasal cannula at a rate of 3 to 4 liters of oxygen per minute. CMS Ex. 25 at 1-8. Staff

ad standing orders to treat Resident 101, like any resident suffering from a known
respiratory ailment, with a nebulized mist treatment if his oxygen saturation levels were
below 88%. CMS Ex. 22. The standing order stated:

EMERGENCY CARE:

1. Respiratory Distress: Check SaO2[.] Place on oxygen at 2 liters, pulse
oximetry should be 88% or higher, check for abnormal lung sounds and use
of accessory muscles-then give Proventil NMT’S [nebulized mist
17

treatments] every 20 minutes times 3 treatments if resident has known
diagnosis of COPD/Emphysema. If not known pulmonary diagnosis, but
symptoms mentioned, give 1 NMT treatment of Proventil. If no
improvement or condition worsens, contact the Physician and transfer to
the hospital.

CMS Ex. 22 at | (bold and underlines in original).

On April 14, 2013, Resident 101 had an oxygen saturation level of 84% with absent lung
sounds in his left lower lobe and crackles in his right lobe. CMS Ex. 25 at 8. Consistent
with the physician’s standing order, staff administered a nebulizer treatment, which
brought Resident 101’s oxygen level to 91% and cleared his lung sounds on both sides.
CMS Ex. 25 at 8.

The overnight shift of April 15 into April 16 documented Resident 101 as trying to climb
out of his bed and repeatedly setting off alarms at the beginning of the shift (11:00 p.m.).
He was combative with staff, “swinging [at] aides” and “slapping aides.” CMS Ex. 25 at
10. His oxygen saturation around 11:30 p.m. on April 15 was 98% on 2 liters per minute
of supplemental oxygen via nasal cannula. CMS Ex. 25 at 10. Resident 101 awoke at
4:00 a.m. on April 16, 2013, and was “confused, combative, [and] very anxious.” CMS
Ex. 25 at 10. His oxygen saturation levels had dropped to 69% despite receiving 4 liters
per minute of oxygen via nasal cannula. Staff notified the nursing supervisor. They
administered three rounds of nebulized treatment, consistent with the physician’s
standing order, first at 4:15 a.m., then 4:30 a.m., and then at 4:45 a.m. CMS Ex. 25 at 10;
see CMS Ex. 22 at 1. After the treatment, Resident 101’s oxygen saturation ranged
between 78-92% on 5 liters of oxygen by nasal cannula. CMS Ex. 25 at 9-10. However,
it then dropped to 78-80%. Staff placed Resident 101 on a non-rebreather mask and
provided 15 liters per minute of supplemental oxygen, which brought his oxygen
saturation level to 90%. Lung sounds were noted as “moist” at that time. CMS Ex. 25 at
9. Staff notified Resident 101’s physician, who ordered Lasix, a diuretic, 40 milligrams
by IV push, which staff administered. CMS Ex. 20 at 14; CMS Ex. 25 at 35. Staff noted
that they notified Resident 101’s legal representative of his condition and of the care they
were providing. CMS Ex. 25 at 10.

A short time later, at 6:00 a.m. on April 16, staff had Resident 101 on a non-rebreather
oxygen mask, providing 15 liters per minute of supplemental oxygen. CMS Ex. 25 at 10.
Despite the additional oxygen, Resident 101’s oxygen saturation was between 85-88%.
CMS Ex. 25 at 10. Staff again notified the physician, who ordered Rocephin®, an
antibiotic, 1 gram intramuscularly every 24 hours for 3 days, which staff administered.
CMS Ex. 25 at 10.

A subsequent nurse note on April 16 documented Resident 101 as restless and anxious.
His respiration rate had increased, but staff was unable to obtain vital signs because it
18

made Resident 101 too “agitated.” CMS Ex. 25 at 11. At 4:00 p.m. on April 16, staff
notified the nursing supervisor that Resident 101’s right hand and arm were swollen. His
oxygen saturation at that time was 86% despite receiving supplemental oxygen at a rate
of 15 liters per minute by non-rebreather mask. CMS Ex. 25 at 11. Resident 101 began
“abdom[inal] breathing” and was “unresponsive to verball[ ] stimuli.” CMS Ex. 25 at 11.
Staff removed the IV from his right hand. At 6:45 p.m., Resident 101 was “alert” and
complaining of pain. Staff administered Roxanol 0.25 milliliters sublingually along with
his scheduled dose of Ativan, but with little relief. CMS Ex. 25 at 11. At 8:45 p.m., staff
again administered Roxanol, but at Resident 101’s family’s request, staff contacted the
physician to address Resident 101’s ongoing pain. Resident 101’s physician doubled the
pain medication and ordered 0.5 milliliters of Roxanol every hour as needed, which staff
administered at 9:45 p.m. and again at 10:30 p.m. CMS Ex. 25 at 11.

During the overnight shift of April 16 into April 17, 2013, staff noted that “several family
members” were at Resident 101’s bedside, although his legal representative was not one
of those family members. Staff notified the legal representative of Resident 101’s
condition during that shift, although the exact time was not documented. CMS Ex. 25 at
12. Staff kept Resident 101 on 15 liters of oxygen per minute via non-rebreather mask.
CMS Ex. 25 at 12. Staff moved Resident 101 into his wheelchair at his family’s request
and began repositioning him every two hours “to keep comfortable.” CMS Ex. 25 at 12.
Resident 101 died on April 17, 2013 at 10:50 a.m. CMS Ex. 25 at 12.

CMS argues that staff should have immediately transferred Resident 101 to the hospital
on the morning of April 16, 2013 to address his respiratory distress at that time. CMS Br.
at 8-10. The physician’s standing order required as much. See CMS Ex. 22. Petitioner,
however, reads the physician’s standing order differently and argues that the directive for
staff to transfer a resident to a hospital is only when the resident is suffering from
respiratory distress for unknown reasons. P. Br. at 20-21; see also P. Ex. | at 2-3.
According to Petitioner, because Resident 101 had a known respiratory ailment, COPD,
staff only needed to treat him with a nebulizer treatment three times to satisfy the
physician’s order. P. Br. at 20.

Under Petitioner’s reading of the physician’s standing order, those residents in respiratory
distress because of a known respiratory ailment would not be transported to the hospital
even if the ordered treatment was unsuccessful. Instead, those residents would wait,
while suffering a potentially life-threatening medical emergency, until further instruction
came from the physician. Petitioner’s interpretation of the physician’s standing order is
unreasonable. The more reasonable reading of the standing order is that transport to a
hospital is required for any resident experiencing respiratory distress, regardless of its
cause, if the ordered treatment resulted in “no improvement or [the] condition worsens
....” CMS Ex. 22. There is nothing in the plain language of the order’s last sentence
that limits its directive to transport the resident to a hospital only if there is respiratory
distress of unknown origins. Instead, the ordered treatment differs based on whether a
19

known versus unknown ailment has caused the respiratory distress. CMS Ex. 22. Here,
Resident 101 had a known ailment, so staff was required to treat him with three rounds of
nebulized Proventil. CMS Ex. 22. Staff did so on the morning of April 16, 2013. CMS
Ex. 25 at 10. Following that treatment, however, Resident 101’s oxygen saturation level
remained below 88%, indicating that the treatment had not improved the respiratory
distress to a non-critical level. CMS Ex. 25 at 10. Resident 101 was still in “respiratory
distress” based on the standing order’s explanation of that condition to include oxygen
saturation below 88%. CMS Ex. 22. At that point, staff was required to follow the
standing physician’s order and transport Resident 101 to the hospital.

It is now evident that Resident 101 was dying on April 16, 2013, and staff’s action to
increase his Roxanol and maintain his comfort demonstrates that staff likely recognized
what was happening as well. Petitioner’s suggestion, however, that keeping Resident 101
at the facility rather than transporting him to the hospital because of his near-death
condition and status with a do-not-resuscitate order, is improper. See P. Br. at 21-23.
There is no indication that Resident 101’s physician directed staff not to transport
Resident 101 to the hospital. There is no indication that Resident 101’s legal
representative directed staff not to transport Resident 101 to the hospital. In fact, the only
relevant documents addressing whether Resident 101 should have been transported to the
ospital to address his respiratory distress on April 16, 2013, all indicate that staff should
ave transported him to the hospital. In addition to the physician’s standing order,
discussed above, Resident 101 indicated in his advanced directive that he wanted to be
ospitalized “in any situation.”'? CMS Ex. 21. There was an option in the advanced
directive to describe situations where hospitalization was not desired, but Resident 101
and his legal representative did not limit his desire to be hospitalized “in any situation.”
See CMS Ex. 21. Resident 101 also indicated in his directive establishing his legal
representative that he wanted his life “to be prolonged by life-sustaining treatment unless
he was] in a coma or vegetative state... .” CMS Ex. 26 at 4. There is no dispute that
Resident 101 was not in a coma or vegetative state on April 16, 2013. See CMS Ex. 25
at 10.

Had staff followed any of these stated wishes or orders, Resident 101 should have been
transported to the hospital after the ordered nebulizer treatments did not alleviate his
respiratory distress. By not transporting Resident 101 to the hospital as required and as

. Petitioner’s argument that Resident 101’s advanced directive did not apply in this case
because his respiratory condition on April 16 was not a true “emergency response” does
not adequately consider the physician’s standing order and its explanation of “respiratory
distress” requiring hospitalization. Resident 101’s physician directed hospitalization for
continued “respiratory distress,” to include oxygen saturation below 88%, which Resident
101 undoubtedly exhibited following treatment that morning. His condition, therefore,
was “respiratory distress” that required hospitalization and was an “emergency response”
according to the physician’s order.
20

he had indicated was his desire, staff did not provide him with the care necessary to
maintain his highest practicable physical, mental, and psychosocial well-being, and put
Resident 101 at risk for worsening respiratory distress. The standing order was the
authoritative medical directive on how to provide Resident 101 with the necessary care to
maintain his physical well-being with regard to his declining respiratory status. Resident
101’s advanced directive stating his intent to be hospitalized offered the only express
indication on how to carry out Resident 101’s wishes and thus provide him with what he
intended to be the necessary care to maintain his well-being. Petitioner, therefore, was
not in substantial compliance with the regulatory requirement.

Petitioner has not offered any valid justification for not hospitalizing Resident 101 on
April 16, 2013. I recognize that Resident 101 was near death and suffered from a
widerange of ailments. Resident 101’s physician wrote in his direct testimony that
Resident 101 did not have to be transported to the hospital because he did not want to be
resuscitated or placed on a ventilator, meaning the overall treatment options were
“somewhat limited.” P. Ex. 2 at 2; see also P. Ex. | at 3 (testimony of Petitioner’s
administrator, stating that “[s]ending a resident [with COPD] to a hospital would serve no
purpose as the hospital is no more equipped to address such a situation than the Facility
is”). He also testified that transporting Resident 101 to the hospital would have resulted
in his becoming more anxious and combative. P. Ex. 2 at 2. While the physician’s
retrospective opinion may be accurate, it is untenable that staff can ignore a resident’s
stated desire to be hospitalized because he ultimately would not want resuscitation or to
be placed on a ventilator, or may become more agitated during the transport to the
hospital. Moreover, the decision to overlook a resident’s stated desire and not transport
him to the hospital cannot, under any circumstances, be a unilateral one. Resident 101’s
physician implies that because he knew there were no better options at the hospital,
transporting Resident 101 to the hospital was unnecessary. If staff understood that to be
true, then the contemporaneous medical record must include some indication that staff
considered Resident 101’s condition and treatment options, consulted with the physician
about them, and consulted with Resident 101’s legal representative — who had already
expressed in writing the desire that Resident 101 be hospitalized — prior to diverting from
the standing order and not transporting Resident 101 to the hospital. Also, there is
nothing in the medical record indicating that the physician actually made a decision not to
transport Resident 101 to the hospital, despite his testimony now about why it was not
necessary at the time. The current justification that Petitioner offers for not transporting
Resident 101 to the hospital was not documented or otherwise supported by evidence
during the time surrounding Resident 101’s passing.
21

C. The enforcement remedy CMS imposed is reasonable.
I. The amount of the CMP is reasonable.

CMS must consider several factors when determining the amount of a CMP, which an
administrative law judge considers de novo when evaluating the reasonableness of the
CMP that CMS imposed: (1) the facility’s history of noncompliance; (2) the facility’s
financial condition, i.e., its ability to pay the CMP; (3) the severity and scope of the
noncompliance, the “relationship of the one deficiency to other deficiencies resulting in
noncompliance,” and the facility’s prior history of noncompliance; and (4) the facility’s
degree of culpability, which includes neglect, indifference, or disregard for resident care,
comfort or safety. 42 C.F.R. §§ 488.438(f), 488.404(b), (c).

A CMP that is imposed against a facility on a per day basis will fall into one of two
ranges of penalties. 42 C.F.R. §§ 488.408. 488.438. The upper range of a CMP, $3,050
per day to $10,000 per day, is reserved for deficiencies that pose immediate jeopardy to
the health and safety of a facility’s residents and, in some circumstances, for repeated
deficiencies. Id. § 488.438(a)(1)(i), 488.438(d)(2). The lower range of CMP, $50 to
$3,000 per day, is reserved for deficiencies that do not pose immediate jeopardy, but
either cause actual harm to residents, or cause no actual harm but have the potential for
causing more than minimal harm. Jd. § 488.438(a)(1)(ii). In assessing the
reasonableness of a CMP amount, an administrative law judge looks at the per-day
amount, rather than the total accrual. Kenton Healthcare, LLC, DAB No. 2186, at 28
(2008). The regulations leave the decision regarding the choice of remedy to CMS and
the amount of the remedy to CMS and the administrative law judge, requiring only that
the regulatory factors at 42 C.F.R. §§ 488.438(f) and 488.404 be considered when
determining the amount of a CMP within a particular range. 42 C.F.R. §§ 488.408,
488.408(g)(2), 498.3(d)(11); see also 42 C.F.R. § 488.438(e)(2); Alexandria Place,
DAB No. 2245, at 27 (2009); Kenton Healthcare, LLC, DAB No. 2186, at 28-29.

Unless a facility contends that a particular regulatory factor does not support the CMP
amount that CMS imposed, the administrative law judge must sustain it. Coquina Ctr.,
DAB No. 1860, at 32 (2002). CMS determined to impose a per-day CMP in this case.
Thus, the minimum CMP I am required to sustain is $50 per day, and the maximum
permissible is $3,000 per day. The $450 per-day CMP that CMS imposed is in the very
low range of CMPs authorized for noncompliance that is not immediate jeopardy.

Here, the $450 per-day CMP that CMS imposed against Petitioner is well-supported.
CMS has presented evidence of Petitioner’s history of noncompliance (CMS Ex. 3),
which shows several previous noncompliance citations. Petitioner was also culpable for
its noncompliance. Petitioner’s staff repeatedly did not notify Resident 101’s legal
representative, who was also a medical professional, of significant changes to her father’s
status or the need to alter his treatment significantly. As a result, staff provided the legal
22

representative with less than complete information and effectively excluded her from the
decision-making process regarding her father’s care. Moreover, staff did not transport
Resident 101 to the hospital despite his express intent for that to happen and despite the
physician’s standing order that staff transfer Resident 101 to the hospital when his
respiratory distress did not respond adequately to treatment.

Petitioner offered no direct challenge to the amount of the CMP imposed. There is no
evidence, therefore, to suggest that Petitioner is unable to pay the total CMP imposed.
In light of all of the factors discussed, the low $450 per-day CMP from September 19,
2013 through October 17, 2013 (28 days) is reasonable.

2. The duration of the CMP is reasonable.

CMS may impose an enforcement remedy against a facility for as long as the facility is
not in substantial compliance with participation requirements. 42 C.F.R. § 488.430(a).
The burden of persuasion regarding the duration of noncompliance is Petitioner’s. In

Owensboro Place and Rehabilitation Center, DAB No. 2397 (2011), the Board stated:

The burden of persuasion is on the facility. The Board has made it clear
that the facility bears the burden of showing that it returned to substantial
compliance on a date earlier than that determined by CMS and has rejected
the idea that CMS must establish a lack of substantial compliance during
each day in which a remedy remains in effect... .

DAB No. 2397, at 12-13 (citations omitted). Based on the survey dates, CMS determined
Petitioner was not in substantial compliance with participation requirements beginning on
September 19, 2013, when the state agency concluded its complaint investigation survey,
and ending October 17, 2013, when the facility implemented an acceptable approach to
address the deficiencies cited.

On March 2, 2015, I directed the parties to file supplemental briefs addressing whether it
was appropriate for CMS to find noncompliance from September 19, 2013 to October 17,
2013, when the only underlying facts supporting that noncompliance occurred in April
2013. [have read and considered both parties’ arguments on the issue and conclude that
the determination to cite a facility’s noncompliance several months after an incident is
appropriate and has been affirmed by the Board in previous cases. For example, in Lake
City Extended Care Center, DAB No. 1658 (1998), the Board discussed at some length
the regulatory history and concluded that the regulatory scheme:

assumes that any deficiency that has a potential for more than minimal
harm is necessarily indicative of problems in the facility which need to be
corrected .... Since the [administrative law judge] found that the incident
in question had a potential for more than minimal harm, he was required to
23

find that Lake City was out of substantial compliance from the date of
completion of the survey in which this incident was cited until the date of
the resurvey in which substantial compliance was established .... No
findings that Lake City violated the standard of care between these dates
were required in order to find Lake City out of substantial compliance ....

DAB No. 1658 at 14 (emphasis added), accord, Park Manor Nursing Home, DAB No.
1926 (2004). Consistent with Lake City, I find that the dates of noncompliance that CMS
cited are acceptable even though the incidents cited occurred several months before the
survey and noncompliance dates.'* Petitioner has not offered any evidence or argument
that the period of noncompliance was shorter than cited. See ALJ Ex. 1. Accordingly,

I find the duration of the CMP is reasonable.

V. Conclusion

I conclude that Petitioner was not in substantial compliance with Medicare participation
requirements for long-term care facilities during the period cited, and the penalty CMS
imposed is reasonable.

/s/
Joseph Grow
Administrative Law Judge

8 Ty their supplemental briefs, the parties cited Chapter 7 of the SOM, which says that in
cases where a per-day CMP is imposed, noncompliance may begin on “the date of the
survey because it may be difficult to document precisely when noncompliance begins if
before the date of survey.” SOM, Ch. 7, § 7518; CMS Supp. Br. at 2; P. Supp. Br. at 3. I
find it unlikely that CMS could not determine the dates of noncompliance in April 2013
because Resident 101 was only in the facility for 17 days. However, based on the
Board’s decision in Lake City, Petitioner may be properly deemed out of substantial
compliance for any time between April 8, 2013 (the date of the first failure to notify the
legal representative) and October 18, 2013. See Lake City, DAB No. 1658 at 14. Thus, it
appears that the 28-day period cited is only a fraction of the possible noncompliance
period and CMP that CMS may have imposed.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Rakesh B. Patel Physician PC,
(PTAN: A100111630)
(NPI: 1114345055),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-1165
Decision No. CR4026

Date: July 8, 2015

DECISION

Petitioner Rakesh B. Patel Physician PC, a solo practice owned by Dr. Rakesh B. Patel,
filed a hearing request to challenge the effective dates assigned to Petitioner and Dr. Patel
for Medicare enrollment and billing privileges. For the reasons discussed below, I affirm
the determination that Petitioner’s and Dr. Patel’s effective dates are July 17, 2014, and
leave unchanged the determination that Petitioner and Dr. Patel may retrospectively bill
Medicare for services provided from June 16, 2014.

I. Background

The following facts are undisputed unless otherwise noted. Dr. Patel is a physician who
practices in New York and has been enrolled as a supplier in the Medicare program for
several years. Dr. Patel began operating Petitioner on March 1, 2014. P. Ex. 5 at § 1;
CMS Ex. | at 13, 15.
Relevant here, Dr. Patel and Petitioner filed four different enrollment applications
between March 13 and July 17, 2014. Those applications were handled as follows:

e March 13, 2014 application: National Government Services (NGS), a
contractor for the Centers for Medicare & Medicaid Services (CMS), received
an application from Dr. Patel on March 13, 2014. P. Ex. | at 1-4. It is unclear
whether Dr. Patel submitted the application to reassign his billing privileges
from his former employer (a group practice) to himself individually or to
Petitioner. By email dated July 9, 2014, NGS notified Dr. Patel that there was
a withdrawal of the application while in progress. P. Ex. 4.

e April 7, 2014 application: NGS received an enrollment application from
Petitioner on April 7, 2014. P. Ex. 2. By letter dated June 6, 2014, NGS
requested additional information and supporting documentation for the
application. CMS Ex. | at 26-29. NGS further explained that the application
might be rejected or denied if Petitioner failed to furnish the requested
information within 30 calendar days from the date of the letter. Jd. at 26. By
letter dated July 14, 2014, NGS informed Petitioner that the application was
rejected for failing to furnish complete information, including all supporting
documentation, within 30 days of NGS’s request. Jd. at 22.

e July 17, 2014 applications: NGS received two applications on July 17, 2014:
one seeking to enroll Petitioner in Medicare; the other seeking to reassign Dr.
Patel’s billing privileges to Petitioner. CMS Ex. | at 11-21. NGS approved
the applications and set June 16, 2014 as the “effective date” for Petitioner’s
billing privileges and the reassignment of Dr. Patel’s billing privileges to
Petitioner.' See id. at 4-7.

Dr. Patel requested reconsideration of the effective dates assigned to him and Petitioner,
arguing that he had initially applied in March 2014 but his application was mistakenly
terminated. CMS Ex. | at 9. NGS issued an unfavorable reconsideration determination
denying the request.” Id. at 1-2.

"NGS erroneously characterized the beginning date of the retrospective billing period
granted to Petitioner and Dr. Patel as their “effective date.” I treat NGS’s action as if it
intended to set June 16, 2014 as the earliest date for which Petitioner and Dr. Patel may
submit retrospective claims, with the effective date of Petitioner’s enrollment and
reassignment of Dr. Patel’s billing privileges as July 17, 2014.

* In its reconsideration determination, NGS erroneously stated that Petitioner and Dr.
Patel had been assigned “effective dates” of June 1, 2014. CMS Ex. | at 1. The parties
agree that NGS set June 16, 2014 as the earliest date for which Petitioner and Dr. Patel
may submit retrospective claims. See CMS Br. at 2, 7; P. Br. at 1,3, 5.
Petitioner subsequently filed a request for hearing (RFH) on behalf of itself and Dr. Patel,
and I was assigned this case. Following the issuance of my Acknowledgment and Pre-
Hearing Order (Order), CMS filed a pre-hearing brief (CMS Br.) that incorporated a
motion for summary judgment and included one proposed exhibit (CMS Ex. 1). CMS
did not propose any witnesses. Petitioner submitted a pre-hearing brief and opposition to
CMS’s motion for summary judgment (P. Br.) with six proposed exhibits (P. Exs. 1-6).
Petitioner proposed Dr. Patel and his office manager as proposed witnesses and provided
their written direct testimony as P. Exs. 5 and 6, respectively. CMS then proffered a
reply brief (CMS R. Br.) and moved for leave to submit it.

In the absence of any objection, I admit CMS Ex. | and P. Exs. 1-6 into the record. I also
grant CMS’s motion for leave to submit a reply brief, finding that there is good cause for
submitting the reply. See Civ. Remedies Division Proc. 8(b). CMS did not request the
opportunity to cross-examine Petitioner’s proposed witnesses. Therefore, in accordance
with my Order, a hearing in this matter is not necessary. Order at § 10. I issue this
decision on the full merits of the written record.

IL. Discussion
A. Issue

Whether CMS or its contractor correctly established the effective dates for Petitioner’s
and Dr. Patel’s Medicare enrollment and billing privileges.

B. Findings of Fact and Conclusions of Law

1. July 17, 2014 is Petitioner’s and Dr. Patel’s effective date because that is
the date NGS received Medicare enrollment applications from Petitioner
and Dr. Patel that NGS subsequently approved.

The effective date for enrollment and billing privileges for physicians and physician
practitioner organizations is “‘the later of the date of filing a Medicare enrollment
application that was subsequently approved by a Medicare contractor or the date an
enrolled physician or nonphysician practitioner first began furnishing services at a new
practice location.” 42 C.F.R. § 424.520(d). The “date of filing” is the date that the
Medicare contractor “receives” a signed enrollment application that the contractor is
“able to process to approval.” 73 Fed. Reg. 69,726, 69,769 (Nov. 19, 2008).

In this case, the record reflects that Dr. Patel began furnishing services at Petitioner’s
location on March 1, 2014. P. Ex. 5 at § 1; CMS Ex. | at 13, 15. The record further
reflects that on July 17, 2014 NGS first received enrollment applications from Petitioner
and Dr. Patel that NGS subsequently approved. Although NGS received other enrollment
applications from Dr. Patel and Petitioner on March 13 and April 7, 2014, respectively,

NGS did not approve either application. Thus, in accordance with section 424.520(d),
NGS correctly established July 17, 2014 as Petitioner’s and Dr. Patel’s effective date.

A CMS contractor may permit retrospective billing for up to 30 days prior to the effective
date of enrollment. 42 C.F.R. § 424.521(a)(1). (The regulations also provide for a longer
retrospective billing period in certain disaster situations not applicable to this case. Jd.

§ 424.521(a)(2).) Here, based on the effective date of July 17, 2014, NGS established
that the retrospective billing period for Petitioner and Dr. Patel commenced on June 16,
2014. In fact, 30 days prior to July 17, 2014 is June 17, 2014. If CMS wants to correct
this error, it has the means to do so. See 42 C.F.R. § 498.30-32.

2. Ido not have authority to consider the enrollment applications submitted
by Petitioner and Dr. Patel prior to July 17, 2014 or to grant Petitioner’s
request for equitable relief.

Petitioner argues that it and Dr. Patel should receive earlier effective dates because Dr.
Patel first submitted an enrollment application on March 13, 2014 and Petitioner first
submitted an enrollment application on April 7, 2014. Petitioner asserts that neither Dr.
Patel nor any member of his staff withdrew his March 13 application and that NGS
improperly rejected Petitioner’s April 7 application because Petitioner submitted all of
the requested information to NGS prior to the 30-day deadline. P. Br. at 6-7.

I do not have the authority to consider the applications submitted by Petitioner and Dr.
Patel prior to July 17, 2014 that NGS did not process to completion. Under 42 C.F.R.
§ 424.525(d), enrollment applications that are rejected are not afforded appeal rights.

Petitioner also contends that it and Dr. Patel are entitled to earlier effective dates under
the doctrine of estoppel because NGS erroneously withdrew Dr. Patel’s March 13
application when no request to withdraw had been made and then instructed Dr. Patel to
submit a new application rather than correcting its error. P. Br. at 8. Iam unable to grant
the relief that Petitioner seeks.

It is well-established that: (1) estoppel cannot be the basis to require payment of funds
from the federal fisc; (2) estoppel cannot lie against the government, if at all, absent a
showing of affirmative misconduct; and (3) I am not authorized to order payment
contrary to law based on equitable grounds. See, e.g., Office of Personnel Mgmt. v.
Richmond, 496 U.S. 414 (1990); Heckler v. Cmty. Health Servs. of Crawford County,
Inc., 467 U.S. 51 (1984); Oklahoma Heart Hosp., DAB No. 2183, at 16 (2008); Wade
Pediatrics, DAB No. 2153, at 22 n.9 (2008), aff’d, 567 F.3d 1202 (10th Cir. 2009). Here,
Petitioner contends that NGS’s actions constitute affirmative misconduct, but I find
otherwise. Although the courts have never provided a conclusive definition of
“affirmative misconduct,” a showing of affirmative misconduct appears to require more
than an innocent mistake and something closer to deliberate misrepresentation, which
Petitioner has not established here. See Kan. Dep’t of Soc. & Rehab. Servs., DAB No.

QC61 (1994) (citing INS v. Hibi, 441 U.S. 5 (1973) (per curiam); Schweiker v. Hansen,
450 U.S. 785 (1981); INS v. Miranda, 459 U.S. 12 (1982)). Thus, I am unable to grant
the earlier effective dates Petitioner requests.

III. Conclusion

For the reasons above, I affirm the determination that July 17, 2014 is the effective date
for Petitioner’s and Dr. Patel’s Medicare enrollment and billing privileges.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Diane N. Burke, D.C.,
(PTAN: M011004726),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-1195
Decision No. CR4010
Date: July 2, 2015
DECISION

I. Background
I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
establish an effective participation date of July 18, 2014 for Petitioner Diane N. Burke,
D.C., at her new practice location.'
CMS established an effective date of participation for Petitioner of July 18, 2014 based
on an application for participation that she filed on that date. Petitioner challenged this
determination. CMS subsequently moved for summary judgment. Petitioner filed a

statement in which she acknowledged that she did not oppose the facts or arguments
asserted by CMS.

' CMS refers to the effective date of Petitioner’s participation as June 18, 2014. That is
technically incorrect. June 18 is the earliest date for which CMS will reimburse for items
or services provided by Petitioner. Regulations allow a participating supplier to claim
reimbursement for services provided up to 30 days prior to the effective date of
participation. Petitioner’s effective date of participation is July 18, 2014 and the earliest
date for which her claims may be reimbursed is June 18, 2014.
With its motion, CMS filed exhibits that it identified as CMS Ex. 1 - CMS Ex. 13. I
receive these into the record.

IL. Findings of Fact and Conclusions of Law

The undisputed facts are as follows. Petitioner filed three applications to enroll as a
participating Medicare supplier at a new practice location. She filed the first two
applications on or about April 4, 2014. CMS Ex. 1; CMS Ex. 2. These applications were
incomplete. CMS advised Petitioner that the applications were incomplete and Petitioner
requested CMS to return the applications to her. CMS Ex. 5; CMS Ex. 6. On July 18,
2014 Petitioner filed a third application. CMS Ex. 7. This application also was
incomplete. On July 23, 2014 CMS sent Petitioner a request for corrections. CMS Ex. 9.
Petitioner filed the requested information and CMS then approved Petitioner’s
application effective the date she filed it (with Petitioner being entitled to claim
reimbursement for services that she provided on June 18 and thereafter).

The effective date of a supplier’s enrollment in Medicare is governed by 42 C.F.R.

§ 424.520(d). That regulation provides that the effective date of enrollment shall be the
later of the following: (1) the date on which an applicant files a Medicare enrollment
application that is subsequently approved by a Medicare contractor acting on behalf of
CMS; or (2) the date on which the supplier first begins furnishing services at a new
practice location.

Here, the earliest effective date on which Petitioner could participate was July 18, 2014.
That is the date on which Petitioner filed a Medicare enrollment application that CMS
subsequently approved. Petitioner could not be granted an earlier effective participation
date based on the two prior applications that she filed because she withdrew those
applications and CMS never acted on them.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

GQ Food Mart LLC
d/b/a GQ Food Mart,

Respondent.

Docket No. C-15-705
FDA Docket No. FDA-2014-H-2233

Decision No. CR3993

Date: June 29, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, GQ Food Mart LLC d/b/a GQ Food Mart that alleges facts and legal
authority sufficient to justify the imposition of a civil money penalty of $5,000. During
the hearing process, Respondent has failed to comply with a judicial direction regarding
CTP’s discovery request. Therefore, I strike Respondent’s answer and issue a default
judgment against Respondent and assess a civil money penalty of $5,000.

CTP began this case by serving a Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent’s staff unlawfully sold individual
cigarettes, sold cigarettes to minors, and failed to verify that cigarette purchasers were of
sufficient age, thereby violating the Federal Food, Drug, and Cosmetic Act (Act) and its
implementing regulations, found at 21 C.F.R. pt. 1140. CTP seeks a civil money penalty
of $5,000.
On December 23, 2014', CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days Respondent should pay the penalty, file
an answer, or request an extension of time within which to file an answer. CTP warned
Respondent that if it failed to take one of these actions within 30 days an Administrative
Law Judge could issue an initial decision by default ordering Respondent to pay the full
amount of the proposed penalty. 21 C.F.R. § 17.11.

On January 21, 2015, Respondent timely answered CTP’s Complaint denying the
allegations and asserting that the civil money penalty was too high. I issued an
Acknowledgement and Prehearing Order (APHO) that set deadlines for the parties’
submissions, including the March 2, 2015 deadline to request that the opposing party
provide copies of documents relevant to this case. Additionally, the APHO stated that a
party receiving such a request must provide the requested documents no later than 30
days after the request. CTP served Respondent with its request for documents on
February 25, 2015.

On April 15, 2015, CTP filed a Motion to Compel Discovery indicating that Respondent
did not respond to its February 25, 2015 request within the time limit. See C.F.R.

§ 17.23(a). CTP also filed a Motion to Hold Deadlines in Abeyance on April 15, 2015.
On April 29, 2015, I issued a By Direction Letter advising the parties that “Respondent
ha[d] until May 11, 2015 to either comply, with CTP’s Motion to Compel Discovery or
file a Motion for Protective Order. Failure to do so may result in sanctions, including the
issuance of an Initial Decision and Default Judgment finding Respondent liable for the
violations listed in the Complaint and imposing a civil money penalty.” (emphasis
removed). In response to CTP’s Motion to Hold Deadlines in Abeyance, the By
Direction Letter also extended the pre-hearing exchange deadlines for both parties,
allowing CTP until May 26, 2015 to file its pre-hearing exchange, and allowing
Respondent until June 15, 2015 to file its pre-hearing exchange.

On June 16, 2015, CTP filed an updated status report requesting that sanctions be
imposed against Respondent for failure to comply with my April 29, 2015 By Direction
Letter, which gave Respondent until June 15, 2015 to comply with CTP’s Motion to
Compel Discovery.

The harshness of the sanctions I impose upon either party must relate to the nature and
severity of the misconduct or failure to comply, and I find the failure to comply here
sufficient to warrant striking the answer and issuing a decision without further

"On March 12, 2015, CTP filed a Motion for Leave to Amend its Complaint to change
the name of Respondent from GQ Food Mart LLC / Mohamed Masikh d/b/a Food Mart
to GQ Food Mart LLC d/b/a GQ Food Mart. On April 29, 2015, I granted the Motion to
Amend the Complaint.
proceedings. See 21 C.F.R. § 17.35(b). Respondent did not comply with the order nor
did it provide any adequate justification for not doing so. Therefore, I am striking
Respondent’s Answer, issuing this default decision, and assuming the facts alleged in
CTP’s complaint to be true. See 21 C.F.R. § 17.35(c)(3), 17.11 (a).

Striking Respondent’s Answer leaves the Complaint unanswered. Therefore, I am
required to issue an initial decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must determine whether the allegations in
the Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true.
21 C.F.R. § 17.11(a). Specifically, CTP alleges the following facts in its Complaint:

Respondent owns GQ Food Mart, an establishment that sells tobacco products and
is located at 3 Hill Street, Ansonia, Connecticut 06401. Complaint { 3.

CTP previously initiated a civil money penalty action, CRD Docket Number C-13-
1388, FDA Docket Number FDA-2013-H-1191, against Respondent for three
violations of 21 C.F.R. pt. 1140 within a 24-month period. Specifically, those
violations included selling individual cigarettes, selling tobacco products to a
minor, and failing to verify, by means of photographic identification, that the
tobacco purchaser was 18 years of age or older” on May 16, 2012, and two
violations on April 12, 2013, when Respondent sold tobacco products to a minor
and failed to verify, by means of photographic identification, that the tobacco
purchaser was 18 years of age or older. Complaint § 10.

The previous civil money penalty action concluded when Mohamed Masikh,
Respondent’s authorized representative, settled the action with CTP on
Respondent’s behalf. On October 11, 2013, Mr. Masikh signed an
Acknowledgment Form in which he “admitt[ed] that the violations . . . occurred,
waiv[ed][ Respondent’s] ability to contest the violations in the future, and stat[ed]
that he understood that the violations may be counted in determining the total
number of violations for purposes of future enforcement actions.” The
Administrative Law Judge closed the case on December 13, 2013.

Complaint § 11.

During a subsequent inspection of Respondent’s establishment conducted on June
25, 2014, FDA-commissioned inspectors documented that “a person younger than
18 years of age was able to purchase a package of Newport Box cigarettes . . . at

> CTP’s March 12, 2015 Complaint lists the May 16, 2012 violations as unspecified, but
the October 7, 2013 Complaint lists the actual violations.
approximately 10:27 AM[.] The inspectors also noted that “the minor’s
identification was not verified before the sale... .” Complaint § 1.
These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if sold or distributed in violation of regulations issued under section 906(d) of the Act.
21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). The regulations prohibit the sale of
cigarettes or smokeless tobacco to any person younger than 18 years of age. 21 C.F.R.
§ 1140.14(a). The regulations also require retailers to verify, by means of photographic
identification containing the purchaser’s date of birth, that no purchaser of cigarettes or
smokeless tobacco is younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1). In
addition, no retailer may sell or distribute individual cigarettes. 21 C.F.R.
§ 1140.14(d)

Here, Respondent had five violations of regulations found at 21 C.F.R. pt. 1140 within a
36-month period. Respondent acknowledged that three violations occurred when its
representative settled the previous civil money penalty action. Most recently, on June 25,
2014, Respondent sold cigarettes to a person younger than 18 years of age, in violation of
21 C.F.R. § 1140.14(a). During that same transaction, Respondent failed to verify, by
means of photographic identification containing the bearer’s date of birth, that the
cigarette purchaser was 18 years of age or older, in violation of 21 C.F.R.

§ 1140.14(b)(1). Therefore, Respondent’s actions constitute violations of law that merit a
civil money penalty.

CTP has requested a fine of $5,000, which is a permissible fine for five violations of the
regulations found at 21 C.F.R. pt. 1140. 21 C.F.R. § 17.2. Therefore, I find that a civil
money penalty of $5,000 is warranted and so order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge