Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Cynthia M. Ramkelawan, D.D.S., DATE: March 25, 1996
Petitioner,

Docket No. C-95-088
Decision No. CR415

-v-

The Inspector General.

DECISION

By letter dated January 19, 1995, Cynthia M. Ramkelawan,!
D.D.S. (Petitioner), was notified by the Inspector
General (I.G.) of the Department of Health and Human
Services (DHHS) that, as a result of her failure to repay
her Health Education Assistance Loans (HEALS) or to enter
into an agreement to repay her HEALs, with which she had
financed her dental education, she was being excluded
from participation in the Medicare program. The I.G.
informed Petitioner that she was being excluded from
participation in Medicare pursuant to section 1892 of the
Social Security Act (Act).* The I.G. further informed
Petitioner that she was being excluded from participation

' Petitioner is known also as Cynthia Marie
Williams Langford-Ramkelawan, D.D.S. See I.G. notice
letter dated January 19, 1995.

2? This decision does not address Petitioner's
exclusion under section 1892 of the Act. It is not clear
that I have the authority to review an exclusion imposed
pursuant to section 1892. See I.G. Brief at 7; Mohammad
H. Azarpira, D.D.S., DAB CR372 (1995); James F. Cleary,
D.D.S., DAB CR252 (1993); Charles K. Angelo, Jr., M.D.,
DAB CR290 (1993); and Joseph Marcel-Saint Louis, M.D.,
DAB CR320 (1994). Moreover, for purposes of my decision
in this case, the issue is moot, because I have found
Petitioner's exclusion to be authorized under section
1128(b) (14) of the Act.

2

in Medicaid’ pursuant to section 1128(b) (14) of the Act.
The I.G. advised Petitioner that she would be excluded
until her debt had been satisfied completely.

By letter dated February 28, 1995, Petitioner filed a
timely request for a review of the I.G.'s action by an
administrative law judge (ALJ). In her letter requesting
a hearing, Petitioner does not dispute any specific issue
or finding stated in the January 19, 1995 letter from the
I.G. During the initial telephone prehearing conference
call, I granted the parties a stay in order for them to
negotiate settlement. By letter dated August 26, 1995,
Petitioner indicated that she was unable to work out a
financial settlement with the United States Attorney's
Office. During a subsequent telephone prehearing
conference call on September 20, 1995, the I.G. suggested
that this case be decided by submission of written
documentation and that an in-person hearing was not
necessary. September 20, 1995 Order and Schedule for
Filing Briefs and Documentary Evidence. Petitioner did
not object to the I.G.'s request.

Upon careful consideration of the record before me, I
find that there exist no facts of decisional significance
genuinely in dispute and that the only matters to be
decided are the legal implications of the undisputed
material facts. I find that DHHS has taken all
reasonable steps available to secure Petitioner's
repayment of her HEALS. Thus, it was reasonable for the
I.G. to exclude Petitioner from participation in Medicare
and to direct her exclusion from participation in
Medicaid. Act, section 1128(b)(14). I conclude that the
term of the exclusion imposed pursuant to section

1128(b) (14) is reasonable based on the I.G.'s
representation to me that, under the exclusion imposed
pursuant to section 1128(b) (14), Petitioner will be
eligible to apply for reinstatement to Medicare and
Medicaid at such time as the Public Health Service (PHS)
notifies the I.G. that Petitioner's HEAL default is cured
or that Petitioner's indebtedness has been resolved to
PHS' satisfaction. 1.G. Brief at 2; 42 C.F.R. §
1001.1501(b).

3 "State health care program" is defined by
section 1128(h) of the Act to cover three types of
federally financed health care programs, including
Medicaid. Unless the context indicates otherwise, I use
the term "Medicaid" hereafter to represent all State
health care programs from which Petitioner was excluded.
3

APPLICABLE LAW

Section 1128(b)(14) of the Act permits the Secretary of
DHHS to exclude from participation in the Medicare and
Medicaid programs "any individual who the Secretary
determines is in default on repayments of scholarship
obligations or loans in connection with health
professions education made or secured, in whole or in
part, by the Secretary and with respect to whom the
Secretary has taken all reasonable steps available to the
Secretary to secure repayment of such obligations or
loans."

PETITIONER'S POSITION

Petitioner contends that she is unable to generate
sufficient income to repay her debts. Furthermore she
believes that excluding her would be counterproductive,
inasmuch as such action would reduce her income further,
making repayment less likely. She suggests that
repayment is particularly difficult for her because she
intentionally established her practice in a poor section
of the community.

FINDINGS OF FACT AND CONCLUSIONS OF LAW
The facts are undisputed:
1. While studying dentistry, Petitioner applied for and

received the following three HEALs through the Wisconsin
Health Education Assistance Board (WHEAB) :

$15,000 October 1983 I.G. Exs. 1, 4°

20,000 September 1984 I.G. Exs. 2, 5

20,000 September 1985 I.G. Exs. 3, 6
2. To provide additional financing for her dental

education, Petitioner applied for and received the
following two additional HEALs through the Student Loan
Marketing Association (SLMA):

$20,000 September 1986 I.G. Exs. 25, 27
5,000 September 1987 I.G. Exs. 26, 28

4 The I.G. submitted 34 exhibits (1.G. Exs. 1 -
34) with her motion and brief for summary disposition.
Petitioner did not object to the I.G.'s exhibits.
Petitioner did not submit any exhibits. Thus, I am
admitting I.G. Exs. 1 - 34 into evidence.
4

3. Petitioner signed promissory notes for each of the
five HEALs and she promised to make payments beginning on
the first day of the tenth month she ceased being a full-
time student at a HEAL-recognized school, or an intern,
or resident in an approved program. I.G. Exs. 4 - 6, 27,
28.

4. By signing the promissory notes, Petitioner further
agreed that, if she defaulted upon her repayments, the
entire amount she owed would become immediately due and
payable. I.G. Exs. 4 ~- 6, 27, 28.

5. Petitioner graduated from dental school in December
1988. I.G. Ex. 22 at 3.

6. Petitioner failed to repay principal or interest as
provided in each of the five loan agreements. I.G. Exs.
7-9, 13-17.

7. As of February 19, 1992, Petitioner owed $126,452.36
on the three loans that she received from WHEAB
(including principal and interest). As of September 24,
1993, Petitioner owed $44,835 (including principal and
interest) on her two loans with SLMA. I.G. Exs. 22, 34.
Findings 2, 3.

8. Petitioner was granted several deferments from her
obligation to repay the HEALs by both WHEAB and SLMA.
I.G. Exs. 7 - 9, 29, 30.

9. When Petitioner failed to repay her HEALS, WHEAB
sent delinquency notices on April 15 and May 15, 1991.
I.G. Exs. 13, 14.

10. WHEAB subsequently issued repayment schedules to
Petitioner. I.G. Exs. 10 - 12.

11. On June 15, 1991, WHEAB advised Petitioner that if
she did not repay her HEALs, her account would be filed
as a default claim. I.G. Ex. 16.

12. On June 28, 1991, WHEAB filed a claim with PHS based
on Petitioner's failure to repay her HEALs to WHEAB.
I.G. Exs. 17, 18.

13. On January 7, 1992, a suit was filed against
titioner in Wisconsin circuit court to collect the
tstanding balance of Petitioner's HEALs with WHEAB.
3. Ex. 22.

The court entered judgment against Petitioner. I.G.
22.
5

15. On May 4, 1992, PHS agreed to pay WHEAB the amount
of $129,562 for unpaid principal and interest on
Petitioner's HEALs. I.G. Ex. 19.

16. On May 20, 1992, PHS notified Petitioner that it had
been authorized by the United States Government to
collect the unpaid interest and principal on Petitioner's
HEALs and demanded that Petitioner repay the loans. I.G.
Ex. 20; Findings 12 - 15.

17. On May 20, 1993, Petitioner was offered a Medicare
and Medicaid offset arrangement to repay her indebtedness
for the loans initially with WHEAB. I1.G. Ex. 21; Finding
1.

18. SLMA issued a repayment schedule to Petitioner.
I.G. Ex. 31; see also Findings 3, 4, 6, 7.

19. On August 16, 1993, SLMA filed a claim with PHS
based on Petitioner's failure to repay her HEALs. I.G.
Ex. 32.

20. On September 8, 1993, PHS agreed to pay SLMA the
amount of $44,835 for unpaid principal and interest on
Petitioner's HEALs. I.G. Ex. 33.

21. On September 29, 1993, PHS notified Petitioner that
she had been placed in default by the previous loan
holder (SLMA) and the HEAL debt had been assigned by SLMA
to PHS. I.G. Ex. 34.

22. On January 19, 1995, the I.G. excluded Petitioner
from participating in the Medicare and Medicaid programs.

23. As of January 19, 1995, Petitioner had not repaid
her HEAL debts. Findings 1 - 22.

24. The I.G. had authority to impose and direct an
exclusion pursuant to section 1128(b)(14) of the Act.
Findings 1 - 23.

25. The Secretary has taken all reasonable steps
available to secure repayment of Petitioner's HEALs. 42
C.F.R. § 1001.1501(a) (2); Finding 17.

26. An exclusion imposed pursuant to section 1128(b) (14)
of the Act is reasonable if the excluded party is
excluded until such time as PHS notifies the I.G. that
the default has been cured or the debt has been resolved
to PHS' satisfaction. 42 C.F.R. § 1001.1501(b).
6

27. The exclusion imposed against Petitioner pursuant to
section 1128(b)(14) of the Act was intended by the I.G.
to exclude Petitioner until such time as PHS notifies the
I.G. that Petitioner's default of her HEAL debt has been
cured or that her HEAL debt has been resolved to PHS'
satisfaction. I.G. Brief at 2.

28. The exclusion which the I.G. imposed against
Petitioner pursuant to section 1128(b)(14) of the Act is
reasonable. Findings 1 - 27.

ISSUES
1. Whether the I.G. had authority to exclude Petitioner
from participation in the Medicare program pursuant to
section 1128(b) (14) of the Act.

2. Whether the term of exclusion imposed pursuant to
section 1128(b) (14) of the Act is reasonable.

DISCUSSION

1. The I.G. had authority under section 1128(b) (14) of
the Act to exclude Petitioner from participating in
Medicare and Medicaid.

Section 1128(b) (14) of the Act provides that the
Secretary (or her delegate, the I.G.) may exclude a party
from participating in Medicare or Medicaid who:

» . . is in default on repayments of scholarship
obligations or loans in connection with health
professions education made or secured, in whole or
in part, by the Secretary and with respect to whom
the Secretary has taken all reasonable steps
available to the Secretary to secure repayment of
such obligations or loans...

There is no dispute that in this case Petitioner's HEAL
debts arise from loans made "in connection with health
professionals education." There is also no dispute that
Petitioner defaulted on repayment of her HEALs. Thus, if
I conclude that the Secretary took "all reasonable steps
available" to secure repayment from Petitioner of her
HEALS, I must find that the I.G. had authority to exclude
Petitioner under section 1128(b) (14) of the Act.

The parties to this case do not disagree that Petitioner
applied for and received five HEALS to pursue her
education as a dentist. The parties do not disagree that
7

Petitioner defaulted on her HEALs. Petitioner does
contend, however, that she is unable to generate
sufficient income to repay her HEALS. Petitioner did not
specifically assert that PHS failed to take all
reasonable steps available to secure repayment from
Petitioner of her HEAL debts. However, her assertion
that she has been unable to repay even a part of her debt
can be construed as an argument that PHS failed to take
all reasonable steps to secure repayment. I do not
accept Petitioner's argument. It is apparent, both from
the law and from the undisputed material facts of this
case, that the Secretary took "all reasonable steps
available" to her to secure repayment from Petitioner of
her HEAL debts prior to the I.G. excluding Petitioner
under section 1128(b) (14).

The intent of Congress in enacting section 1128(b) (14) of
the Act was, in part, to provide the Secretary with a
mechanism by which she could assert some leverage over
individuals who default on their HEALs. Thus, section
1128(b)(14) is, among other things, a debt collection
tool by which the Secretary can collect a debt once
voluntary persuasion has failed. In assuming
Petitioner's HEAL debts, the Secretary acquired the right
-- and the obligation -- to collect on that debt.
Mohammad H. Azarpira, D.D.S., DAB CR372 at 8; Charles K.
Angelo, Jr., M.D., DAB CR290 at 11 (1993).

Section 1128(b)(14) of the Act requires the Secretary
only to take all reasonable steps available to secure
repayment. I construe the term "all reasonable steps
available" to mean all reasonable and legitimate means of
debt collection. The relevant regulation states that all
reasonable steps will have been taken to collect a HEAL
debt if PHS offers a debtor a Medicare and Medicaid
reimbursement offset arrangement as required by section
1892 of the Act prior to the I.G.'s imposing an
exclusion. 42 C.F.R. § 1001.1501(a) (2).

Inasmuch as Petitioner herein borrowed the money needed
for her dental education from a loan program established
by the federal government to assist individuals seeking
to enter the health care professions, it is evident that
her loans are exactly the kind contemplated by section
1128(b) (14) and that, upon her default, DHHS was entitled
to exclude her.

It is also apparent that, inasmuch as Petitioner (1) was
granted a delay in repayment (forbearance); (2) was also
given the opportunity to reduce her debt by surrendering
a portion of payments she received from government

programs; and (3) was given several warnings before being
8

declared delinquent, DHHS took reasonable measures to
collect the indebtedness before deciding on this
exclusion.

The Secretary reasonably could infer, from Petitioner's
conduct, that Petitioner was unlikely to repay her debt
voluntarily. The Secretary provided Petitioner with many
opportunities to repay her debt and to enter into a
repayment agreement. Petitioner was offered the
opportunity to enter into a Medicare and Medicaid
reimbursement offset agreement prior to her exclusion.
Petitioner did not avail herself of any of these
opportunities for repayment. I conclude that the
Secretary did that which was necessary to establish
conclusively that all reasonable steps available were
taken to collect Petitioner's HEAL debts. 42 C.F.R. §
1001.1501(a) (2).

2. The exclusion which the I.G. imposed under section
1128(b) (14) of the Act is reasonable.

The notice of exclusion which the I.G. sent to Petitioner
advised her that she would be excluded, both under
sections 1128(b) (14) and 1892 of the Act, until her HEAL
debt had been completely satisfied. However, the I.G.
contends now that Petitioner's exclusion remains in
effect until such time as PHS notifies the I.G. that the
default has been cured or the obligations have been
resolved to PHS' satisfaction. I.G. Brief at 2.

The I.G.'s clarification is consistent with the
requirements of 42 C.F.R. § 1001.1501(b). I conclude
that the exclusion which the I.G. imposed under section
1128(b) (14) is reasonable, and I sustain it. I find that
the exclusion is reasonable because, on its face, it
enables Petitioner to negotiate an agreement with PHS to
repay her HEAL debt.

CONCLUSION

I conclude that the I.G. had authority to exclude
Petitioner from participating in Medicare and Medicaid
under section 1128(b)(14) of the Act. I conclude further
that the exclusion which the I.G. imposed under section
1128(b) (14) is reasonable.

/s/

Joseph K. Riotto
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Brenda J. Motley, DATE: March 21, 1996
Petitioner,

Docket No. C-95-157
Decision No. CR414

-v-

The Inspector General.

DECISION

By letter dated June 16, 1995, Brenda J. Motley, the
Petitioner herein, was notified by the Inspector General
(I.G.), of the United States Department of Health & Human
Services (HHS), that it had been decided to exclude her
for a period of five years from participation in the
Medicare, Medicaid, Maternal and Child Health Services
Block Grant and Block Grants to States for Social
Services programs.' The I.G. asserted that an exclusion
of at least five years is mandatory under sections
1128(a)(1) and 1128(c) (3)(B) of the Social Security Act
(Act) because Petitioner had been convicted of a criminal
offense related to the delivery of an item or service
under Medicaid.

Petitioner filed a timely request for review of the
I.G.'s action. On August 21, 1995, I held a prehearing
conference in this case. During the conference, the
parties agreed to proceed by filing briefs supported by
documentary evidence.

Thereafter, the I.G. filed a brief and eight exhibits. I
identify these exhibits as I.G. Ex. 1 through 8.
Petitioner filed a response brief. The I.G. filed a
reply. Since Petitioner has not objected to the exhibits

' Unless the context indicates otherwise, I refer
to all programs from which Petitioner has been excluded,
other than Medicare, as "Medicaid."
2

offered by the I.G., I admit I.G. Ex. 1 through 8 into
evidence.

I have considered the parties' arguments, supporting
exhibits, and the applicable law. I conclude that there
are no material factual issues in dispute (i.e., the only
matter to be decided is the legal significance of the
undisputed facts). I conclude also that Petitioner is
subject to the minimum mandatory exclusion provisions of
sections 1128(a)(1) and 1128(c)(3)(B) of the Act, and I
affirm the I.G.'s determination to exclude Petitioner
from participation in Medicare and Medicaid for a period
of five years.

APPLICABLE LAW

Sections 1128(a)(1) and 1128(c)(3)(B) of the Act make it
mandatory for any individual who has been convicted of a
criminal offense related to the delivery of an item or
service under Medicare or Medicaid to be excluded from
participation in such programs for a period of at least
five years.

FINDINGS OF FACT AND CONCLUSIONS OF LAW (FFCLs)

1. During the period relevant herein, Petitioner was
employed as a Lead Community Living Specialist at Tresco,
Inc. (Tresco). I.G. Ex. 1.

2. Tresco is a Medicaid provider of "Developmental
Disabilities (DD) Home and Community-Based Waiver
Services," including supervised living, assisted living,
supported living, day habilitation, individual and group
supported employment, personal and social support,
behavior therapy, behavior implementation, and personal
care. As part of its program, Tresco provides oversight
and management of funds belonging to Medicaid recipients.
I.G. Ex. 8; Petitioner's Response Brief at 5.

3. As part of her duties as a Lead Community Living

Specialist, Petitioner was responsible for the funds

belonging to disabled Medicaid recipients assigned to
her. Petitioner's Response Brief at 5.

4. Based on results of an investigation conducted by the
Medicaid Fraud Division of the New Mexico Office of the
Attorney General, the Attorney General filed a criminal
complaint on November 2, 1995 in the Magistrate Court,
Dona Ana County, New Mexico charging Petitioner with the
felony offense of "Exploitation of a Resident's Property
3

in excess of two hundred fifty dollars ($250) but not
More than two thousand five hundred dollars ($2500)"
(exploitation of a resident's property). The complaint
alleges that Petitioner, while employed as a Lead
Community Living Specialist for Tresco, knowingly and
intentionally took at least $300 belonging to J.M.,’ a
disabled individual to whom Tresco provided services, and
converted J.M.'s money to her own use. I.G. Ex. 1, I.G.
Ex. 2.

5. On December 1, 1994, Petitioner entered into a plea
agreement with the State of New Mexico in which she
agreed to plead guilty to the misdemeanor offense
“attempt to commit felony," by attempting to commit the
offense of exploitation of a resident's property. I.G.
Ex. 3.

6. On December 1, 1994, the State Attorney General
entered a Nolle Prosequi to the charge of exploitation of
a resident's property and filed a criminal information
charging that Petitioner "attempted to commit a felony,"
by attempting to commit the offense of exploitation of a
resident's property. The information alleges that
Petitioner, while employed as a Lead Community Specialist
for Tresco, knowingly and intentionally attempted to take
at least $300 belonging to J.M., a disabled individual to
whom Tresco provided services, and attempted to convert
J.M.'s money to her own use. I.G. Ex. 4, I.G. Ex. 5.

7. Pursuant to the plea agreement, on December 1, 1994,
Petitioner pled guilty to attempting to commit the
offense of exploitation of a resident's property. Based
on its acceptance of Petitioner's plea, the court imposed
a suspended sentence, ordered her to pay restitution, and
required her to pay a fine or to perform community
service. P. EX. 6.

8. At the time of the offense for which Petitioner was
convicted, J.M. was a Medicaid recipient. Petitioner's
Brief at 2; see I.G. Ex. 7.

9. The Secretary of HHS has delegated to the I.G. the
authority to determine and impose exclusions pursuant to
section 1128 of the Act. 48 Fed. Reg. 21662.

10. Petitioner's guilty plea, and the court's acceptance
of that plea, constitutes a conviction within the meaning
of sections 1128(a)(1) and 1128(i) of the Act.

2? I do not disclose the name of this individual, so
as to respect his privacy.
4

11. Petitioner was convicted of a criminal offense
related to the delivery of an item or service under
Medicaid, within the meaning of section 1128(a)(1) of the
Act. FFCLs 1 - 8.

12. A defendant in a criminal proceeding does not have
to be advised of all the possible consequences which may
flow from a guilty plea, such as temporarily being barred
from receiving government reimbursement for professional
services.

13 The I.G. properly excluded Petitioner from
participation in Medicare and Medicaid for a period of
five years pursuant to sections 1128(a)(1) and
1128(c)(3)(B) of the Act.

14. Neither the I.G. nor an administrative law judge has
the authority to reduce a five-year minimum exclusion
mandated by sections 1128(a)(1) and 1128(c) (3) (B) of the
Act.

IScuU fe)

There are no disputed material facts in this case. The
record establishes that Petitioner was convicted of a
criminal offense related to the delivery of an item or
service under Medicaid, within the meaning of section
1128(a)(1) of the Act. For this reason, Petitioner's
five-year exclusion is required as a matter of law.

The first requirement that must be satisfied in order to
establish that the I.G. had the authority to exclude
Petitioner under section 1128(a)(1) of the Act is that
Petitioner must have been convicted of a criminal
offense. In this case, it is undisputed that Petitioner
was convicted of a criminal offense within the meaning of
the applicable provision of section 1128 of the Act.

Section 1128(i) of the Act defines the term "convicted of
a criminal offense" to include those circumstances in
which a plea of guilty by an individual has been accepted
by a federal, State, or local court. Act, section
1128(i)(3). In the case at hand, the undisputed facts
establish that Petitioner pled guilty to attempting to
commit the offense of exploitation of a resident's
property. The court's acceptance of that plea is
demonstrated by the fact that it imposed a suspended
sentence, ordered Petitioner to pay restitution, and
required Petitioner to pay a fine or to perform community
service. FFCL 7. Therefore, I conclude that Petitioner
5

was convicted of a criminal offense within the meaning of
sections 1128(a)(1) and 1128(i) of the Act.

I further conclude that the second requirement of section
1128(a)(1) -- that the criminal offense leading to the
conviction must be related to the delivery of an item or
service under Medicare or Medicaid -- has also been met.
Petitioner disputes this, arguing in effect that the
criminal offense which formed the basis for her
conviction was not related to the delivery of an item or
service under Medicaid because funds were not stolen
directly from the Medicaid program. Instead, Petitioner
contends that the underlying criminal offense involves
the "alleged misuse of private funds." Petitioner's
Response Brief at 4.

Relevant case precedent establishes that section
1128(a)(1) encompasses far more than just the theft of
Medicare and Medicaid funds or frauds directed against
the programs. For example, in Jerry L. Edmonson, DAB
CR59 (1989), the petitioner, who was a nursing home
administrator, was convicted of the offense of
misapplying funds that he had held in a fiduciary
capacity for a Medicaid recipient. The administrative
law judge in Edmonson found that the protection of
Medicaid recipients' funds is an integral element of the
Medicaid services delivered by nursing facilities. Since
the petitioner in Edmonson had been convicted of a
criminal offense affecting an integral element of
Medicaid services, the administrative law judge reasoned
that the petitioner's offense was related to the delivery
of Medicaid services within the meaning of section
1128(a)(1) of the Act.

In the case at hand, the record establishes that
Petitioner's employer, Tresco, provided Medicaid services
to individuals with developmental disabilities. The
essential elements of Petitioner's criminal offense,
which was admitted by Petitioner when she pled guilty,
are that Petitioner, in the course of performing her
duties as a Lead Community Specialist, knowingly
attempted to take money belonging to J.M., a disabled
person to whom Tresco provided services, and attempted to
convert J.M.'s money to her own use.

Petitioner admits that at the time of the criminal
offense, J.M. was a Medicaid recipient. In addition,
Petitioner does not dispute that one of the services
Tresco provided to Medicaid recipients was the oversight
and management of their personal funds. Petitioner does
not dispute that as part of her duties as a Lead
Community Living Specialist, she was responsible for the
6

personal funds of disabled Medicaid recipients assigned
to her.

I conclude that, in the present case, as in Edmonson, the
protection of personal funds belonging to Medicaid
recipients is an integral element of the Medicaid
services delivered by Tresco. As a Lead Community Living
Specialist employed by Tresco, Petitioner had a duty, as
part of the services she provided, to protect those
funds. Petitioner's criminal acts interfered with J.M.'s
expectation that he could depend on Tresco to protect his
personal funds. I conclude that Petitioner's criminal
offense related to the delivery of Medicaid services
provided by Tresco. In this case, as in Edmonson,
Petitioner's criminal offense had a direct impact on
Medicaid's integrity and it justifies an exclusion under
section 1128(a)(1) of the Act. More recently, I reached
this same conclusion in Roberta E. Miller, DAB CR367
(1995).

Petitioner attempts to minimize her culpability by
arguing that she was only an employee of Tresco.
Instead, Petitioner attempts to shift the blame for her
misconduct to her employer, Tresco. Petitioner argues
that she was punished for "inept supervision" and that
she was forced "to suffer the consequences for [Tresco's]
failure to provide safeguards" for protecting funds
belonging to Medicaid recipients. Petitioner argues also
that her misconduct involved bookkeeping errors, rather
than the actual conversion of funds. Petitioner's
Response Brief at 4 - 6. These arguments are essentially
an attempt to collaterally attack her conviction on the
basis that she was innocent of any wrongdoing. It is
well settled that a hearing before an administrative law
judge to challenge the basis of an exclusion may not be
used to collaterally attack a State criminal conviction.
Richard G. Philips, D.P.M., DAB CR133 (1991). The
mandatory exclusion in this case arises from the fact of
the conviction, not its actual validity. It is the fact
of the conviction which triggers the exclusion.
Petitioner has recourse in the court system to rectify
errors; they will not be considered here.

Petitioner suggests that the I.G. could have proceeded
against her under the permissive exclusion portion of
section 1128(b) rather than the mandatory exclusion law.
However, it is well established that when a mandatory
exclusion is appropriate, it is irrelevant that a
petitioner's conduct might also satisfy the permissive
exclusion provisions of section 1128(b). Douglas Schram
R.Ph., DAB CR215 (1992), aff'd DAB 1372 (1992).

7

In addition, Petitioner challenges the exclusion on the
grounds that she entered a guilty plea based on
assurances by the office of the State Attorney General
that her plea to a misdemeanor offense would not affect
her employment. This argument is essentially the same as
an argument made by a petitioner in the Schram case. In
rejecting this argument, I cited U.S. v. Suter, 755 F.2d
523, 525 (7th Cir. 1985) for the proposition that a
defendant in a criminal proceeding does not have to be
advised of all the possible consequences which may flow
from a guilty plea, including temporarily being barred
from receiving government reimbursement for professional
services. Schram, DAB CR215, at 6.

CONCLUSION

Based on the law and the undisputed material facts in
this case, I conclude that the I.G. properly excluded
Petitioner from Medicare and Medicaid pursuant to section
1128(a)(1) of the Act. I further conclude that the five-
year minimum period of exclusion imposed and directed
against Petitioner is mandated by section 1128(c) (3) (B)
of the Act. Neither the I.G. nor an administrative law
judge is authorized to reduce a five-year mandatory
minimum exclusion.

The five-year exclusion is therefore sustained.

/s/

Joseph K. Riotto
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
In the Case of:

National Hospital for Kids
in Crisis, DATE: March 5, 1996
Petitioner,

Docket No. C-94-333
Decision No. CR413

-ve-

Health Care Financing
Administration.

DECISION

In this decision I conclude that, on June 24, 1993, the
Health Care Financing Administration (HCFA) properly
determined not to certify Petitioner as a participant in
the Medicare program based on its finding that Petitioner
was not complying with a condition of participation in
Medicare. The effect of my decision is to sustain HCFA's
later determination that Petitioner first became

eligible to participate in Medicare on October 25, 1993.

I. Background

The facts and law which I recite as background to this
case are not disputed by the parties. Petitioner is a
nonprofit hospital that provides care to children who are
hospitalized for treatment of mental disorders.
Petitioner applied to participate in the Medicare program
as a psychiatric hospital.

An applicant for participation in Medicare may not
participate in the program until HCFA certifies that the
applicant is complying with all Medicare participation
requirements. 42 C.F.R. § 489.13. HCFA directs that an
applicant for participation in Medicare be surveyed in
order to ascertain whether the applicant is complying
with participation requirements. On May 24 - 25, 1993,
Petitioner was surveyed by two psychiatric consultants
who had been retained by HCFA. The surveyors evaluated
2

Petitioner's operations pursuant to regulations which
govern Medicare participation of psychiatric hospitals.

The regulations that govern Medicare participation of
psychiatric hospitals are contained in 42 C.F.R. Part
482. These regulations describe three levels of
requirements that a psychiatric hospital must comply with
in order to participate in Medicare. These three levels
of requirements are known as "conditions," "standards,"
and "elements" of participation. Conditions of
participation are fundamental requirements of
participation. For example, 42 C.F.R. § 482.61, which
prescribes the medical records that must be maintained by
a participating psychiatric hospital, states as a
condition of participation that the medical records
maintained by a psychiatric hospital must permit
determination of the degree and intensity of treatment
provided to patients.

A standard of participation is a subpart of a condition
of participation. For example, a standard of the medical
records condition, contained in 42 C.F.R. § 482.61(a), is
that medical records must stress the psychiatric
component of the patient's record. An element of
participation is a subpart of a standard. Thus, 42
C.F.R. § 482.61(a)(1) provides, as an element of the
preceding standard, that identification data ina
patient's medical record must include that patient's
legal status.!

HCFA will not permit an applicant to participate in
Medicare until the applicant corrects any deficiency
identified during a survey. 42 C.F.R. § 489.13. HCFA
furnishes the applicant with a written notice of any
deficiency ascertained at a survey. See 42 C.F.R. §§
488.24, 488.26.?

' As I discuss below, at Part III.A, a failure to
comply with a standard or an element of participation may
be so egregious as to comprise a failure to comply with
the condition of participation of which the standard or
element is a subpart.

? fhe regulations governing survey, certification,
and enforcement procedures were revised, effective July
1995. 59 Fed. Reg. 56116, 56237 (1994). My citations to
regulations in this decision are to regulations which
were in effect prior to July 1995, inasmuch as the
actions at issue occurred prior to that date. However,
the revised regulations would not appear to direct a
3

An applicant who is found not to be in compliance with a
standard or element of certification may obtain HCFA's
permission to participate if it assures HCFA that it is
making the correction. The applicant may submit a plan
of correction to HCFA. 42 C.F.R. §488.28(a). HCFA will
permit an applicant who submits an acceptable plan of
correction to participate, as of the date that the
deficiency is corrected, or on the date of the plan of
correction, whichever is the earlier date. 42 C.F.R. §
489.13(b).

HCFA does not provide an applicant who fails to comply
with a condition of participation the opportunity to
submit a plan of correction. See 42 C.F.R. § 488.28(a).
An applicant who fails to comply with a condition of
participation must submit a new application for
participation to HCFA, and HCFA will have the applicant
resurveyed. The applicant will be certified only after
the resurvey, assuming that the resurvey establishes that
the applicant is complying with all conditions of
participation and that no additional deficiencies are
identified. The necessity for a resurvey to establish
compliance with a condition of participation means that,
often, substantial time will elapse between
identification of a condition-level deficiency at the
first survey and the eventual date of certification.

The consultants who surveyed Petitioner on May 24 - 25,
1993 found that Petitioner was not in compliance with a
Medicare condition of participation stated in 42 C.F.R. §
482.62, which describes special staffing requirements for
psychiatric hospitals. HCFA accepted this finding, and,
on June 24, 1993, it informed Petitioner that Petitioner
did not meet the special staffing condition of
participation in Medicare.

Consistent with HCFA's procedures, Petitioner was not
afforded the opportunity to submit a plan of correction
to HCFA to show that the condition-level deficiency had
been corrected. HCFA advised Petitioner that Petitioner
had a right to request reconsideration of HCFA's
determination that Petitioner did not meet the special
staffing condition. Petitioner requested
reconsideration. While this request was pending with
HCFA, Petitioner reapplied to HCFA to be certified as a
participating provider. On September 24, 1993,
Petitioner was resurveyed by consultants working on
behalf of HCFA. The surveyors concluded that, as of that
date, Petitioner was complying with all Medicare

different outcome.
conditions of participation. However, they concluded
also that Petitioner was not complying with elements of
standards of participation contained in 42 C.F.R. §
482.61(a), the regulation which governs medical records
maintained by psychiatric hospitals.

HCFA afforded Petitioner the opportunity to submit a plan
of correction which addressed the deficiencies in
elements of participation that were identified at the
September 24, 1993 resurvey of Petitioner. Petitioner
submitted a plan of correction, which HCFA received on
October 25, 1993. On November 2, 1993, HCFA advised
Petitioner that HCFA had accepted the plan of correction.
Petitioner was certified to participate in Medicare
effective October 25, 1993.

Petitioner continued to request that HCFA reconsider its
June 24, 1993 determination that Petitioner did not meet
a condition of participation in Medicare. On January 24,
1994, HCFA advised Petitioner that HCFA was sustaining
its June 24, 1993 determination that Petitioner failed to
meet a condition of participation. HCFA restated that
the effective date of Petitioner's participation in
Medicare was October 25, 1993.

Petitioner requested a hearing. In its request,
Petitioner disputed that the deficiencies that were found
at the May 24 - 25, 1993 survey were so severe as to
establish that Petitioner was not in compliance with a
condition of participation in Medicare. Petitioner
asserted that HCFA should have afforded Petitioner the
opportunity to submit a plan of correction to HCFA to
address the deficiencies that had been identified at the
May 24 - 25, 1993 survey of Petitioner.

The case was assigned to me for a hearing and decision.
On September 26 - 27, 1995, I conducted a hearing in
Philadelphia, Pennsylvania.’ I base my decision in this

3 The parties made prehearing motions for
disposition of this case. On February 28, 1995, I denied
those motions and ruled that disputed issues of material
fact existed which needed to be heard. My ruling is
contained in the transcript of oral argument of those
motions, which I cite to as "Tr. of oral argument and
ruling, February 28, 1995, at (page)."

The transcript of the hearing which I conducted on
September 26 - 27, 1995 is a separate document. I cite
to that transcript as "Tr. at (page)."
5

case on the record of that hearing, on the parties'
arguments, and on the applicable law.

II. Issue, findings of fact, and conclusions of law

Petitioner concedes that, as of the May 24 - 25, 1993
survey, it was not complying with all requirements of
participation. However, Petitioner argues that it was
complying with all conditions of participation as of May
24 - 25, 1993. It contends that any deficiencies which
existed as of that date were not so severe as to be
condition-level deficiencies.

Petitioner asserts that HCFA was required to afford
Petitioner the opportunity to submit a plan of correction
to address the deficiencies that were identified at the
May 24 - 25, 1993 survey.‘ Petitioner argues that, had
HCFA permitted Petitioner to submit a plan of correction,
Petitioner would have established compliance with HCFA's
requirements of participation by no later than June 30,
1993. Much of the evidence that Petitioner introduced at
the September 26 - 27, 1995 hearing addressed its efforts
prior to June 30, 1993 to correct the deficiencies that
were identified by HCFA at the May 24 - 25, 1993 survey
of Petitioner.

The issue in this case is whether, based on the May 24 -
25, 1993 survey, HCFA properly determined that Petitioner
was ineligible to participate in Medicare due to a
failure by Petitioner to comply with a condition of
participation in Medicare. If HCFA concluded properly
that, as of May 24 - 25, 1993, Petitioner failed to
comply with a condition of participation, then HCFA
correctly determined that Petitioner could not be
certified until Petitioner was resurveyed and found to be
in compliance with all participation requirements.

If Petitioner was not complying with a condition of
participation on May 24 - 25, 1993, then evidence that it
offered to show that it corrected deficiencies prior to
June 30, 1993 is irrelevant. On the other hand, if the
deficiencies identified by HCFA as a result of the May 24

4 Petitioner does not argue that HCFA would have
been obligated to afford Petitioner the opportunity to
submit a plan of correction to HCFA, if HCFA determined
correctly that Petitioner was failing to comply with a
condition of participation as of the May 24 - 25, 1993
survey.
6

- 25, 1993 survey were not so severe as to be condition-
level deficiencies, then HCFA would have been required
under its regulations to afford Petitioner the
opportunity to submit a plan of correction to HCFA. In
that event, evidence proving that Petitioner corrected
the deficiencies prior to the resurvey conducted on
September 24, 1993 becomes relevant.

I make the following findings of fact and conclusions of
law (Findings) which support my decision that, based on
the May 24 - 25, 1993 survey, HCFA properly determined
that Petitioner was not complying with a condition of
participation. I discuss these Findings, in detail,
below.

1. An applicant for participation in Medicare does
not comply with a Medicare condition of
participation where its failure to satisfy
requirements of participation substantially limits
that applicant's capacity to provide care or where
that failure adversely affects the health and safety
of patients.

2. A condition-level deficiency exists where the
deficiency results in a potential for harm to
patients.

3. It is a condition of participation in Medicare
that a psychiatric hospital have adequate numbers of
qualified professional staff, including nurses, to
evaluate patients, formulate written, individualized
comprehensive treatment plans, provide active
treatment measures, and engage in discharge
planning.

4. HCFA's finding of a condition-level deficiency
in this case relies on the plain meaning of the
regulation which governs the professional staff
which must be present at a psychiatric hospital.

5. The facility for which Petitioner sought
certification treats children who are suffering from
serious mental problems.

6. Nursing services provided by Petitioner include
assessment of patients' physical and mental status,
secluding and restraining patients when necessary,
administering medications to patients, and
monitoring the effects of medications.
7

7. As of May 24 - 25, 1993, some of the nursing
services that Petitioner provided to its patients
were being provided by child care counselors who did
not have the professional training of nurses and who
were not supervised by nurses.

8. As of May 24 - 25, 1993, Petitioner did not have
an adequate number of nurses on duty at its facility
to perform all of the services that should be
provided by nurses.

9. As of May 24 - 25, 1993, Petitioner's failure to
have an adequate number of nurses to provide the
services that should be provided by nurses
threatened the health and safety of Petitioner's
patients and substantially limited Petitioner's
ability to provide adequate care to patients.

10. As of May 24 - 25, 1993, Petitioner was not
complying with the condition of participation in
Medicare governing staffing in psychiatric
hospitals.

III. Discussion
A. Applicable law (Findings 1 - 4)

Under regulations which govern participation in the
Medicare program, a provider or supplier fails to meet a
condition of participation where it manifests
deficiencies that are:

+ + . Of such character as to substantially
limit the provider's or supplier's capacity to
render adequate care or which adversely affect
the health and safety of patients; ...

42 C.F.R. § 488.24(a).5

In determining the level of a deficiency, it is necessary
to examine the actual or potential impact that the
deficiency may have on an entity's capacity to provide
care or on the health and safety of patients. An
entity's failure to comply with the requirements of a
standard or element of a condition of participation also

% In the revised regulations which became effective
in July 1995, this identical language is contained at 42
C.F.R. § 488.24(b). 59 Fed. Reg. 56237 (1994).
8

may be a failure to comply with the overall condition if
the failure substantially compromises the entity's
ability to provide care or adversely affects the health
and safety of patients.

Petitioner argues that, in order to show that an entity
is not complying with a condition of participation, HCFA
must prove that a deficiency in that entity's operations
is not just potentially harming, but is actually harming,
patients. Petitioner Reply to HCFA Posthearing Brief at
5 - 6. I do not agree with this argument. It is not
supported by either the language of 42 C.F.R. § 488.24(a)
or by logical application of that language.

I read the regulation as encompassing not only the
circumstance where demonstrable harm results from a
deficiency, but also the circumstance where the potential
for harm results from a deficiency. The regulation does
not state that a condition-level deficiency exists only
where that deficiency is causing actual, measurable harm
to patients. The regulation explicitly provides that a
deficiency will be of a condition level of severity where
the deficiency impairs an entity's capacity to provide
adequate care. A finding of impairment of an entity's
capacity to provide adequate care encompasses both
circumstances where the deficiency causes actual harm to
patients and where it creates the potential for harm to
patients. Also, the regulation specifically defines a
condition-level deficiency as being a circumstance that
adversely affects the health and safety of patients. A
finding of a deficiency that adversely affects the safety
of patients plainly would encompass a situation where the
deficiency poses a potential for harm to patients.

Furthermore, it would undermine the purpose of Medicare
certification to read the regulation as defining a
condition-level deficiency to exist only where there is
proof of harm to patients. The purpose of certification
is to protect the health and safety of program
beneficiaries from acts and omissions that either cause
them harm or which might cause them harm. It would be
contrary to the purpose of certification to require HCFA
to wait until there is proof of actual harm to patients
before taking action against a deficiency that poses the
potential for causing harm.

The condition which HCFA determined Petitioner not to be
complying with is in the regulation which governs the
staffing of psychiatric hospitals that participate in
9

Medicare. 42 C.F.R. § 482.62. The regulation states
that a psychiatric hospital must have:

+ + « adequate numbers of qualified
professional and supportive staff to evaluate
patients, formulate written, individualized
comprehensive treatment plans, provide active
treatment measures, and engage in discharge
planning.

Id. The regulation restates this general requirement as
a standard for hospital personnel. 42 C.F.R. §
482.62(a). The regulation contains a standard governing
nursing staff, which requires a psychiatric hospital to
have adequate numbers of registered nurses, licensed
practical nurses, and mental health care workers to
provide necessary care to patients. 42 C.F.R. §
482.62(d), (a) (2).

The regulation does not quantify the numbers of
professional staff that must be on hand to provide
services to patients. It states only that the
professional staff must be "adequate" to provide
necessary services.

Petitioner asserts that HCFA premises its determination
that Petitioner failed to comply with the condition in 42
C.F.R. § 482.62 on an interpretation of the regulation
that departs from the regulation's plain meaning.
Petitioner Posthearing Brief at 5. I discuss in detail
the surveyors' findings which are central to HCFA's
determination below, at Parts III.B. and III.C. However,
I recite the conclusions on which HCFA premises its
determination and the surveyors' findings here so that I
may decide Petitioner's argument concerning HCFA's
asserted interpretation of the regulation.

HCFA determined that Petitioner failed to comply with the
standards contained in 42 C.F.R. §§ 482.62(a) and (d)
because Petitioner did not have an adequate number of
nurses on hand to provide necessary nursing care to
patients. HCFA determined that this failure was so
egregious as to substantially limit Petitioner's capacity
to provide care to its patients. HCFA found also that
the deficiency jeopardized the health and safety of
Petitioner's patients.°®

6 In its prehearing motion for disposition,
Petitioner argued that HCFA's finding of a condition-
level deficiency was insufficient because the notice of
10

Central to HCFA's determination is the surveyors' finding
that, as of May 24 - 25, 1993, Petitioner did not have a
sufficient number of nurses on hand to provide all
nursing services directly. Also central is the
surveyors! finding that some nursing services were in
fact being provided by child care counselors, who were
not nurses, who were not professionally qualified to
provide nursing services, and who were not supervised by
nurses. In sum, the surveyors found that Petitioner had
an inadequate number of nurses on hand to provide nursing
services and that Petitioner was using non-nursing
personnel who were not under the supervision and control
of nurses to provide those services.

Petitioner contends that HCFA interprets 42 C.F.R. §
482.62 to mean that, where a psychiatric hospital employs
child care counselors, the counselors must be supervised
by nurses. Petitioner Posthearing Brief at 5.

Petitioner asserts that the deficiency identified by HCFA
under HCFA's reading of the regulation is that Petitioner
dic not have its child care counselors supervised by
nurses. Petitioner argues that the regulation is silent
as to the supervisory controls that a psychiatric
hospital must exercise over its child care counselors.
Petitioner thus argues that HCFA premises its
determination as to the adequacy of Petitioner's
professional staff on an interpretation of 42 C.F.R. §
482.62 that departs from the plain meaning of the
regulation.

Petitioner argues additionally that, inasmuch as HCFA's
interpretation of the regulation is not within the
regulation's plain meaning, then HCFA cannot reasonably
hold Petitioner accountable to that interpretation.
Petitioner Posthearing Brief at 5. Alternatively,
Petitioner argues that HCFA cannot reasonably hold
Petitioner accountable to HCFA's interpretation without

that finding which HCFA sent to Petitioner did not
specifically recite that Petitioner manifested a
deficiency which substantially limited Petitioner's
capacity to provide care or which adversely affected the
health and safety of patients, as described in 42 C.F.R.
§ 488.24(a). I did not agree with this argument. I
concluded that a finding of a condition-level deficiency
by HCFA incorporated the definition of a condition-level
deficiency stated in the regulation. Tr. of oral
argument and rulings Feb. 28, 1995, at 12. Petitioner
has not restated this argument again in its posthearing
briefs. I conclude that there is no need for me to
address it again in detail.
11

first providing Petitioner with notice of that
interpretation. Id.

Petitioner mischaracterizes HCFA's determination that
Petitioner failed to comply with 42 C.F.R. § 482.62. The
gravamen of HCFA's determination is that Petitioner
failed to employ an adequate number of nurses to provide
necessary nursing services. HCFA's determination is
based on the plain meaning of 42 C.F.R. § 482.62.

The plain meaning of the regulation is that a psychiatric
hospital must have adequate numbers of professionals on
hand, including nurses, to perform the duties that are
within the province of the professional staff. Contrary
to Petitioner's characterization of HCFA's determination,
HCFA did not determine that, under 42 C.F.R. § 482.62,
child care counselors necessarily must be supervised by
nurses. HCFA did not determine that there exists any
particular supervisory requirement in the regulation
applicable to child care counselors. Where child care
counselors perform duties that are not nursing duties,
there would be no need for them to be supervised by
nurses.

HCFA determined that Petitioner may not make up for a
shortfall in nursing personnel by assigning nursing
duties to non-nurses who are not under the supervision
and control of nurses. Under HCFA's analysis, child care
counselors need to be supervised by nurses only if they
are being used to assist nurses in the performance of
nursing duties. That is entirely consistent with the
regulation's requirement that there be adequate
professional staff, including nurses, to perform the
duties assigned to that staff.

Petitioner corrected its nursing staff deficiency by
placing its child care counselors under the direct
supervision and control of nurses. The child care
counselors became assistants to the nurses and were used
to augment nurses providing services. Ultimately, HCFA
accepted this arrangement as an adequate way to meet the
nursing staff requirements of 42 C.F.R. § 482.62. P. Ex.
19. The fact that HCFA accepted this restructuring of
Petitioner's operations as a way to correct a deficiency
in those operations does not suggest that HCFA
interpreted the staffing regulation to require this
arrangement. Petitioner could have corrected the
deficiency by hiring additional nurses and by assigning
only non-nursing duties to child care counselors.
12

It is unnecessary for me to decide Petitioner's argument
that HCFA failed to provide Petitioner with adequate
notice of HCFA's interpretation of 42 C.F.R. § 482.62,
given my conclusion that HCFA's determination comports
with the plain meaning of the regulation. I would note
however, that I am not persuaded that HCFA was obligated
in this case to provide Petitioner with advance notice of
its interpretation of the regulation, assuming the
interpretation to be reasonable.

I have concluded in other cases that HCFA is obliged to
give a provider notice of its interpretation of a
regulation before using that interpretation as grounds
for finding a condition-level deficiency and terminating
the provider's participation in Medicare, where the
interpretation, albeit reasonable, is not evident from
the language of the regulation. Hospicio en el Hogar de
Utuado, DAB CR371 (1995). My rationale is that it would
not be reasonable for HCFA to terminate a provider who
has an ongoing relationship with HCFA, where HCFA's
interpretation of a regulation is not apparent from the
face of the regulation, without HCFA first giving the
provider notice of that interpretation. Here, however,
Petitioner did not have an ongoing provider relationship
with HCFA. As of May 24 - 25, 1993, it was an applicant
for provider status. The regulations provide plainly
that an applicant for participation in Medicare may not
be certified as a participating provider until it
complies with all participation requirements. 42 C.F.R.
§ 489.13.

B. The facts supporting HCFA's determination
(Findings 5 - 9)

I ruled that HCFA had the burden of proving, by a
preponderance of the evidence, the facts on which it
based its determination that Petitioner was not complying
with a Medicare condition of participation. HCFA
established the facts on which I base my Findings 5 - 9
by a preponderance of the evidence.

The evidence offered by HCFA consists largely of the
testimony of the two surveyors who conducted the May 24 -
25, 1993 survey, Chester A. Woffard, R.N. (Tr. at 67 -
176) and Raymond E. Ackerman, M.D. (Tr. at 177 - 225).’
Dr. Ackerman testified additionally as a rebuttal witness

7 The transcript refers to Mr. Woffard,
inaccurately, as Mr. "Wofford."
13

for HCFA (Tr. at 408 - 413). I find these witnesses to
be credible and their testimony to be persuasive.

The testimony of Mr. Woffard and Dr. Ackerman includes
observations that the surveyors made concerning the way
in which Petitioner was providing care to its patients.
Their testimony includes also opinions on the questions
of whether Petitioner had an adequate number of nurses on
its staff to perform all nursing duties, whether duties
assigned to child care counselors were, in fact, nursing
duties and, whether Petitioner's staffing arrangements
potentially harmed patients.

Mr. Woffard is a registered nurse with a master's degree
in psychiatric nursing. P. Ex. 12 at 1. He has many
years of experience in the field of psychiatric nursing,
including extensive supervisory experience. Id. Mr.
Woffard has performed certification surveys on behalf of
HCFA since 1983, and his experience as a surveyor
includes many surveys of psychiatric hospitals for the
purpose of determining whether the hospitals are
complying with Medicare staffing requirements. Id.

Dr. Ackerman has been board-certified as a psychiatrist
since 1969. HCFA Ex. 2 at 1. He has performed surveys
on behalf of HCFA or its predecessor since 1977. Tr. at
178. He has surveyed more than 125 hospitals for
compliance with Medicare participation requirements,
including professional staffing requirements. Id. at 178
- 179.

Mr. Woffard is qualified to testify about the duties that
fall within the province of nurses and about the risks
that are inherent in assigning nursing duties to non-
nurses. Both Mr. Woffard and Dr. Ackerman are qualified
to testify as to whether duties that were assigned by
Petitioner to child care counselors were in the nature of
nursing duties. Both of these witnesses are qualified to
opine as to the effect of Petitioner's professional
staffing arrangements of the welfare of patients.
Petitioner now argues that I should not accept the
opinions of Mr. Woffard and Dr. Ackerman as expert
opinions. Petitioner Reply to HCFA Posthearing Brief at
2. Petitioner premises this argument on HCFA's failure
at the September 26 - 27, 1995 hearing to announce
explicitly that it intended to offer the opinions of
these two witnesses as experts. I do not find that
HCFA's failure at the hearing to announce explicitly that
it intended to offer the expert opinions of Mr. Woffard
and Dr. Ackerman bars me from considering the expert
opinions that were offered by these witnesses and
attaching to those opinions the weight that is due to
14

them. Petitioner cannot claim credibly that it was
ambushed by HCFA. It was obvious at the hearing that
HCFA intended that these witnesses be considered as
experts in the way psychiatric hospitals provide services
to their patients. Petitioner had ample opportunity to
cross-examine these witnesses on their expertise and
their opinions and to impeach their testimony.

Mr. Woffard and Dr. Ackerman are qualified to opine
whether Petitioner's staffing arrangements were
inadequate or whether they created a potential for harm
to patients. The witnesses are not qualified to opine as
to whether the inadequacies they attested to prove a
failure by Petitioner to comply with the requirements of
42 C.F.R. § 482.62, or whether the potential for harm
resulting from those inadequacies meets the definition of
a condition-level deficiency contained in 42 C.F.R. §
488.24(a). A finding as to whether facts prove a failure
to comply with the terms of a regulation, or whether the
facts prove a condition-level deficiency requires an
application of law to evidence which the witnesses are
not qualified to make.

In many respects, the findings made by Mr. Woffard and
Dr. Ackerman as to the way in which Petitioner organized
its professional staff are not challenged by Petitioner.
As I discuss below, a central finding by the surveyors is
that nurses on duty for Petitioner did not have
supervisory authority over child care counselors. This
central finding is corroborated by Petitioner's own
witnesses. See, e.g., P. Ex. 17.

However, Petitioner denies that the effect of its
organization of staff was to pose a potential for harming
Petitioner's patients. In concluding that the potential
for harm existed, I have considered carefully the
testimony of Petitioner's witnesses, especially that of
Petitioner's expert witness, Christine M. Doleski, R.N.
(Tr. at 377 - 404).

Ms. Doleski, like Mr. Woffard, is a registered nurse with
a master's degree in psychiatric nursing and substantial
experience in the field of psychiatric nursing. P. Ex.
13; Tr. at 379. I find her well qualified to testify as
an expert. Furthermore, I find her testimony to be
credible. However, I am not persuaded by Ms. Doleski's
testimony that Petitioner rebutted the key concern raised
by HCFA's surveyors, that the organization of
Petitioner's professional staff created a potential for
harming patients. I discuss my reasons for this
conclusion at Part III.B.4. of this decision.
15

1. Petitioner's facility and patients (Finding
5)

As of May 24 - 25, 1993, the facility for which
Petitioner was applying for certification as a
psychiatric hospital consisted of a building wing which
was housing approximately 12 patients. P. Ex. 18 at 1.
At that time, the facility consisted of a nursing
station, eight bedrooms, some of which were occupied by
one patient and some of which were occupied by two
patients, and two contiguous rooms which were used for
patient therapy and activities. Id. Then, and now,
Petitioner's facility treats children who range in age
from about six to about 18 years. Tr. at 246. The
duration of a typical patient stay, then, and now, is
about three weeks. Tr. at 249.

Petitioner's patients are seriously ill. Patient
diagnoses include major depressive disorders, personality
disorders, schizophrenia, or other psychotic disorders,
including drug-induced disorders. Tr. at 250. Ina
majority of cases, the patients pose threats, either to
themselves or to others. Tr. at 251. Some patients
require continuous, direct observation and supervision.
See P. Ex. 17 at 3; Tr. at 137. At times, it is
necessary to seclude (isolate) a patient or to physically
restrain a patient. See P. Ex. 17 at 3; Tr. at 136.

Most of the patients are on medication. Tr. at 187. The
medications administered to the patients may have side
effects which affect the patients’ physical and mental
activities. Id. Some of the patients suffer from
disorders, including epilepsy, which may produce
seizures, and organic brain disorders. Tr. at 187 - 188.

2. Nursing services provided by Petitioner
(Finding 6)

Petitioner asserts that HCFA has not offered a definition
of what comprises nursing services. Petitioner Reply to
HCFA Posthearing Brief at 4. Petitioner argues that HCFA
cannot hold Petitioner accountable for failing to comply
with the regulation governing a psychiatric hospital's
professional staff, because HCFA has never defined what
comprises nursing services. Id.

I disagree with this assertion. This case focuses on
HCFA's allegation that Petitioner lacked a sufficient
number of nurses to perform certain specific nursing
services. HCFA identified what nursing services are at
issue and proved by a preponderance of the evidence that
these services fall within the generally accepted
understanding of what comprises nursing services at a
16

psychiatric hospital. Petitioner did not argue that any
of these services are not nursing services, nor did it
offer evidence to rebut the evidence that HCFA introduced
to prove that the services are nursing services.

It is true that the regulation which governs staffing at
psychiatric hospitals does not define nursing services.
See 42 C.F.R. § 482.62(d). Nor did HCFA attempt through
the presentation of evidence to offer a comprehensive
definition of what comprises nursing services. However,
Mr. Woffard and Dr. Ackerman persuasively defined the
services which I describe in this section to constitute
nursing services which a psychiatric hospital should
assign to its nurses. Tr. at 88 - 89, 185 - 191.
Petitioner cannot now assert credibly that it could not
have been expected to know that these services should be
provided by nurses. The services fall within the scope
of services that nurses are licensed to provide. Tr. at
91. Additionally, they fall within the scope of services
that psychiatric hospitals commonly assign to nurses.
Id.

The nursing services which Petitioner provides to its
patients include the monitoring of patients' conditions,
the assessment of patients' mental and physical status,
and secluding and restraining patients when necessary.
Tr. at 86, 88 - 91, 185 - 191. These services fall
within the unique professional training and licensure of
nurses.

It is necessary for people who are monitoring the status
of psychiatric patients to be trained and qualified to
make informed judgments about what they are monitoring.
Tr. at 187 - 188. For example, observed behaviors such
as restlessness and agitation may be the consequence of
an illness or they may be the side effects of medication.
Id. It is important to be able to differentiate between
possible causes of an observed behavior in order to be
able to make an informed judgment and a recommendation
about the treatment that should be administered to the
patient. Nurses possess the necessary skills and
training to make an informed judgment about the cause or
causes of observed behavior. Tr. at 186 - 191.

3. The manner _in which Petitioner provided
nursing services (Findings 7 - 8)

As of May 24 - 25, 1993, Petitioner had a total of four
registered nurses providing nursing services to patients.
P. Ex. 9 at 43; see Tr. at 102 - 103. Each of the four
nurses was assigned to work a specific eight-hour shift.
P. Ex. 9 at 43. One nurse was assigned to work the day
17

shift, one nurse was assigned to work the evening shift,
and two nurses were assigned to work the night shift.
Id. Thus, on two of the three shifts there was only one
nurse on hand to provide nursing services to the
approximately 12 patients who were hospitalized at
Petitioner's facility.

As of May 24 - 25, 1993, Petitioner did not have an
adequate number of nurses on duty to provide all nursing
services. Tr. at 102 - 103. It was not possible for the
one nurse who was on duty most of the time to directly
observe all of Petitioner's patients and to provide
nursing services to all of them. Id. Petitioner relied
on child care counselors, who are not nurses, who are not
qualified to provide nursing services, and who were not
supervised by nurses, to provide nursing services.

Petitioner assigned child care counselors to work with
the nurse or nurses on duty on each shift. P. Ex. 9 at
51. Child care counselors are individuals who are
experienced in dealing with children who suffer from
mental illnesses but who lack the training and licensure
of nurses. See P. Ex. 20. Generally, three or four
child care counselors were assigned to the day shift,
four or five child care counselors were assigned to the
evening shift, and two child care counselors were
assigned to the night shift. Id.; P. Ex. 17 at 1.

As of May 24 - 25, 1993, the nurses who were on duty on a
shift had no supervisory authority over the child care
counselors who were on duty with them. P. Ex. 17 at 1;
see Tr. at 83. There were no articulated lines of
reporting between the child care counselors and the
nurses. Tr. at 83 - 84. Petitioner organized its
nursing staff and its child care counselor staff under
two separate lines of authority, with each staff having
its own supervisors. Tr. at 83 - 84.

That is not to say that there was an absence of
communication between nurses and child care counselors.
Individuals on each staff worked with each other as
teams. P. Ex. 17 at 1. The teams met frequently to
discuss the treatments being given to patients and to
develop treatment goals. P. Ex. 17 at 3. Nurses and
child care counselors cooperated closely with each other.
P. Ex. 20 at 2 - 3; Tr. at 395 - 396.

However, although the child care counselors may have
worked closely with nurses, and may even have deferred to
them, the child care counselors were not subordinate to
nurses, nor were the child care counselors required to
obtain the permission of nurses before initiating direct
18

patient care. Tr. at 95 - 96; see P. Ex. 17 at 2 - 4.
Crisis intervention activities were not under the
supervision of nurses. Tr. at 95. Child care counselors
had authority to initiate decisions to implement
seclusion and restraint of patients without first
consulting with, or obtaining the permission of, nurses.
Tr. at 96.

Furthermore, the fact that on two of three shifts there
was only one nurse present meant that Petitioner used
child care counselors to provide one-to-one observation
of patients without the supervision of nurses. HCFA Ex.
4 at 4. One-to-one observation is used in treating
seriously disturbed patients, patients who are
aggressive, suicidal, or in danger of injuring
themselves, and patients who suffer from organic
disturbances such as seizure disorders. Id.

The training and experience possessed by child care
counselors did not qualify them to work unsupervised by
nurses to assess a patient's mental status, to
differentiate between symptoms that might be caused by a
patient's conditions or which might be produced by
medications, or to initiate seclusion or restraint of a
patient. Tr. at 86, 88 - 92, 191 - 192. The fact that
Petitioner assigned nursing services, including one-to-
one observation of patients, to child care counselors who
were not supervised by nurses meant that nursing services
were being provided by individuals who were not qualified
to provide such services.

4. The consequences of Petitioner's staffing
arrangement (Finding 9)

There is no evidence that the manner in which Petitioner
provided nursing services to its patients harmed
patients. For example, there is no evidence to show that
a child care counselor inappropriately secluded or
restrained a patient or that a child care counselor
misinterpreted the cause of a patient's symptoms, with
detrimental effect to the patient. However, the
preponderance of the evidence is that a potential for
harm to patients existed in the way in which Petitioner
provided nursing services as of May 24 - 25, 1993. HCFA
Ex. 4; Tr. at 196 - 197.

Petitioner's failure to have an adequate number of nurses
to provide nursing services, or to supervise nursing
services provided by child care counselors, substantially
limited Petitioner's ability to provide adequate care to
its patients. Id.
19

Patients can experience harm from the failure to provide
psychiatric nursing services properly. For example, an
incorrect decision to seclude or restrain a patient can
cause harm to that patient. HCFA Ex. 4 at 3 - 4.

Failure to have a nurse perform one-to-one observation of
a patient, or to supervise that observation, can also
cause harm to a patient. Id. at 5.

Petitioner argues that no potential for harm existed from
its delegation of nursing duties to child care counselors
who were not supervised by nurses. Petitioner bases this
argument on the close cooperation that existed between
its nurses and child care counselors as of May 24 - 25,
1993. According to Petitioner, the close working
relationship between the nursing and counseling staffs
assured that the staffs functioned in an integrated
manner and that there was an effective flow of
information between child care counselors and nurses.

I am not persuaded that the close cooperation and
information flow that existed between child care
counselors and nurses eliminated the risk caused by
assigning nursing duties to child care counselors who
were not supervised by nurses. Close cooperation between
child care counselors and nurses is not an acceptable
substitute for supervision of child care counselors by
nurses, where such supervision is required. The fact is
that child care counselors were assigned duties that they
were not qualified to perform in the absence of
supervision by nurses, and the child care counselors were
not supervised by nurses in performing these duties.

That arrangement created the potential for harm to
patients.

I have carefully considered Ms. Doleski's testimony in
reaching my conclusion that the staffing arrangement
utilized by Petitioner as of May 24 - 25, 1993 was
potentially harmful to patients and substantially limited
Petitioner's capacity to provide adequate care to
patients. Ms. Doleski attested to the high degree of
cooperation and teamwork that existed between the child
care counselors and nurses. Tr. at 392 - 393, 395. She
asserted that the staffing arrangement at Petitioner's
facility did not impede the ability of nurses to direct
the providing of care to patients. Tr. at 395.

Ms. Doleski's testimony supports the conclusion that
there existed an excellent working relationship at
Petitioner's facility between child care counselors and
nurses. It reinforces the testimony of members of
Petitioner's staff that they cooperated closely with each
other. P. Exs. 17, 20. However, it does not overcome
20

the conclusion that a potential for harm to patients
existed in the way Petitioner organized its staff.
Despite the cooperation attested to by Ms. Doleski, there
remain the facts that child care counselors were assigned
duties that were beyond the scope of their education and
training, and that they were not supervised by nurses in
the performance of those duties. That created the
possibility that a child care counselor could make a
decision that harmed a patient, even if that possibility
may have been ameliorated somewhat by a high level of
cooperation among Petitioner's staff.

Cc. The level of Petitioner's deficiency (Finding
10)

As of May 24 - 25, 1993, Petitioner was not complying
with the condition of participation contained in 42
C.F.R. § 482.62. Petitioner did not have an adequate
number of nurses on duty to provide nursing services to
its patients. That failure created a potential for harm
to patients and substantially limited Petitioner's
ability to provide adequate care to its patients.

The consequence of this failure to comply with a
condition of participation is that HCFA was not obligated
to accept a plan of correction from Petitioner, or other
assurances from Petitioner that it had corrected the
deficiency, prior to conducting a resurvey of Petitioner
to assure that the deficiency had been corrected. 42
C.F.R. §§ 488.28, 489.13. Evidence that Petitioner
offered to prove that it corrected the staffing
deficiency prior to the September 24, 1993 resurvey is
thus irrelevant.

As I describe in Part I of this decision, the surveyors
found, on September 24, 1993, that Petitioner had
corrected its failure to comply with the condition of
participation contained in 42 C.F.R. § 482.62. However,
the surveyors found that, as of that date, Petitioner was
not complying with elements of another condition of
participation. Petitioner has not denied that, as of the
date of the resurvey, it was not complying with these
elements. Therefore, HCFA afforded Petitioner the
opportunity to submit to HCFA a plan of correction
showing how it would correct the additional deficiency.
That plan was submitted on October 25, 1993, and HCFA
accepted the plan. Thus, HCFA certified Petitioner to
participate in Medicare effective October 25, 1993. That
date was appropriate, in light of HCFA's previous finding
of a condition-level deficiency and in light of the
unchallenged findings made by the surveyors at the
September 24, 1993 resurvey of Petitioner.
21

IV. Conclusion
I conclude that HCFA correctly determined that, as of May

24 - 25, 1993, Petitioner was not complying with a
condition of participation in the Medicare program.

/s/

Steven T. Kessel
Administrative Law Judge