Department of Health and Human Service
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: Date: September 16, 2009

Rancho Mesa Care Center (CCN: 55-5521),
Docket Nos. C-09-73

C-09-348
Decision No. CR2006

Petitioner,
Vv.

Centers for Medicare & Medicaid Services.

errr SS SH SH SH YS

DECISION

The request for hearing of Petitioner, Rancho Mesa Care Center, is dismissed pursuant to
42 C.F.R. § 498.70(b), as Petitioner has no right to a hearing.

I. Background

Petitioner requested a hearing before an administrative law judge (ALJ) by letter dated
November 3, 2008. Petitioner requests review as to deficiencies cited by the survey of its
facility completed on August 7, 2008, by the California Department of Public Health
(state agency) and related enforcement remedies, including a denial of payment for new
admissions (DPNA), civil money penalties (CMP), and withdrawal of Petitioner’s
authority to conduct a nurse aide training and competency evaluation program
(NATCEP). The request for hearing was docketed as C-09-73 and assigned to me for
hearing and decision. On February 25, 2009, I notified the parties that the case was set
for hearing from July 13 through 17, 2009. On February 23, 2009, Petitioner filed a
motion for partial summary judgment that was opposed by the Centers for Medicare and
Medicaid Services (CMS). On April 1, 2009, I issued a notice advising the parties that I
would defer a ruling on Petitioner’s motion until a decision on the merits.
On March 17, 2009, Petitioner filed a second request for hearing challenging the results
of a revisit survey concluded at Petitioner’s facility by the state agency on October 9,
2008. The second request for hearing was docketed as C-09-348 and assigned to me for
hearing and decision on March 27, 2009. On March 31, 2009, Petitioner moved that the
cases be consolidated. On April 1, 2009, I ordered that C-09-73 and C-09-348 be
consolidated for hearing and decision under the lead case number.

CMS advised me by letter dated June 25, 2009, that it had reopened and revised its initial
determination in this case and rescinded all enforcement remedies, and that, as a result,
Petitioner’s authority to conduct a NATCEP would not be withdrawn. CMS provided a
copy of its June 25, 2009 letter advising Petitioner of the reopening and revision. CMS
also advised me that a motion to dismiss Petitioner’s appeal would be filed. On June 30,
2009, CMS filed a motion to dismiss this case and a motion to stay further proceedings
pending a ruling upon its motion. On July 2, 2009, I convened a telephonic prehearing
conference to discuss Petitioner’s intention regarding the CMS motion to dismiss and the
impact upon the scheduled hearing. The substance of the prehearing conference is
memorialized in my Ruling and Order dated July 2, 2009, in which I granted the CMS
motion to stay; I postponed the hearing indefinitely; and I directed that Petitioner file any
opposition to the CMS motion to dismiss or a withdrawal of its request for hearing not
later than July 20, 2009. On July 20, 2009, Petitioner filed an opposition to the CMS
motion to dismiss (P. Opp.). On July 27, 2009, CMS moved for leave to file a reply to
Petitioner’s opposition. CMS filed its proposed reply on August 7, 2009. On August 10,
2009, Petitioner filed a request for a telephonic hearing for me to hear oral argument on
the CMS motion to dismiss. The CMS motion for leave to file a reply is denied. The
CMS reply adds no argument that is pertinent to my decision of its motion that was not
discussed in the motion or that should have been discussed in the motion. Petitioner’s
request for oral argument is also denied. The parties’ arguments are clearly articulated in
the CMS motion and Petitioner’s opposition. There is no factual dispute and the issue for
resolution is a matter of law. Oral argument would not be helpful. I note for the benefit
of both parties that their characterization of their settlement discussions is simply not
relevant to and has no impact upon my resolution of the issue of law that causes me to
dismiss Petitioner’s case.

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

My conclusions of law are set forth in bold followed by my findings of fact and
discussion.
A. CMS rescinded the enforcement remedies in this case and thereby
eliminated Petitioner’s basis for review by an ALJ.

B. Ihave no jurisdiction or authority to review allegations of
deficiencies from a survey absent enforcement remedies based upon
those deficiencies.

C. Dismissal of Petitioner’s request for hearing pursuant to 42 C.F.R.
§ 498.70(b) is appropriate because Petitioner has no right to a hearing.

1. Pertinent Facts

These following facts are undisputed and are based upon the parties’ Supplemental Joint
Stipulation of Facts filed on June 10, 2009.

The state agency completed an annual standard survey of Petitioner on August 7,
2008, finding 17 deficiencies, i.e., violations of 17 regulatory participation
requirements that posed the risk for more than minimal harm to facility residents.
CMS notified Petitioner by letter dated September 5, 2008, that Petitioner was not
in substantial compliance with program participation requirements and that CMS
was imposing the following enforcement remedies: a DPNA effective September
20, 2008, and two per instance CMPs of $5000 for two separate violations.

On October 9, 2008, the state agency conducted a revisit survey and found that
Petitioner had not returned to substantial compliance based upon three
deficiencies. CMS notified Petitioner by letter dated February 6, 2009, that CMS
agreed with the state agency that Petitioner had not returned to substantial
compliance and that the DPNA that was effective September 20, 2008, would
remain in effect.

On February 11, 2009, CMS notified Petitioner that it had reopened and revised its
initial determination of September 5, 2008, and CMS reduced its determination for
the severity of two alleged deficiencies and reduced the CMP imposed for one
from $5000 to $1200.

On June 25, 2009, CMS filed its letter dated June 25, 2009, by which CMS notified
Petitioner that it had reopened and revised its initial determination pursuant to 42 C.F.R.
§ 498.30. CMS advised Petitioner that it determined to reduce the alleged severity of one
deficiency; rescind all remedies; and, as a result, Petitioner would not be denied authority
to conduct a NATCEP.
2. Analysis

CMS argues in its motion to dismiss that Petitioner is no longer subject to an enforcement
remedy; that Petitioner has no right to a hearing; and that dismissal of the request for
hearing is required. Petitioner argues that the request for hearing should not be dismissed
and that Petitioner should be accorded a hearing. I conclude that Petitioner’s request for
hearing must be dismissed. CMS has rescinded all enforcement remedies, Petitioner has
no right to review, and I have no authority to render a decision that addresses the merits
of the alleged deficiencies.

Petitioner advances two theories in its opposition to the CMS motion to dismiss, which I
summarize as follows: (1) Petitioner’s right to a hearing was triggered by the imposition
of an enforcement remedy and the right is not lost simply because CMS decided to
rescind the remedies (P. Opp. at 4-5); and (2) if the regulatory scheme permits CMS to
deprive Petitioner of the right to a hearing by unilaterally withdrawing enforcement
remedies, then the regulatory scheme deprives Petitioner of due process. Petitioner
alleges a due process violation because, if enforcement remedies are withdrawn,
Petitioner’s property interest is nevertheless adversely affected because the deficiencies
remain on the record of the facility and may be considered when determining future civil
money penalties and also adversely effect Petitioner’s “Five Star Nursing Home Quality
Rating” (P. Opp. at 5-8). I conclude that the theories Petitioner presents in its opposition
to the motion to dismiss are without merit.

Petitioner does not dispute that CMS has rescinded the enforcement remedies imposed in
this case. Petitioner does not specifically address the rationale of various ALJs and
appellate panels of the Departmental Appeals Board (the Board) in prior cases in which a
long-term care facility has been found to lose the right to ALJ review when CMS
reopened and revised an initial determination and rescinded all enforcement remedies
resulting in dismissal of a pending request for hearing pursuant to 42 C.F.R. § 498.70(b).
I find the rationale expressed in the prior Board and ALJ decisions persuasive.

A provider does not have a right to a hearing to challenge every action by CMS with
which it disagrees. Only certain actions by CMS or its delegates trigger hearing rights.
In general, a participating long-term care facility will have a right to a hearing if CMS
makes an initial determination to impose an enforcement remedy against that facility. 42
C.F.R. § 498.3(b)(13). The possible remedies that CMS might impose against a facility
are specified at 42 C.F.R. § 488.406(a). No right to a hearing exists pursuant to 42
C.F.R. § 498.3(b)(13) unless CMS determines to impose - and actually imposes - one of
the specified remedies. 42 C.F.R. § 488.408(g)(‘‘facility may appeal a certification of
noncompliance leading to an enforcement remedy”); Fountain Lake Health &
Rehabilitation, Inc., DAB No. 1985 (2005); The Lutheran Home - Caledonia, DAB
CR674, aff'd, DAB No. 1753 (2000); Schowalter Villa, DAB CR568, aff'd, DAB No.
1688 (1999); Arcadia Acres, Inc., DAB CR424, aff'd, DAB No. 1607 (1997); Twin Pines
Nursing and Rehabilitation Center, DAB CR1601 (2007). The Secretary of Health and
Human Services specifically rejected a proposal to grant hearing rights for deficiency
findings that were made without the imposition of remedies. 59 Fed. Reg. 56,116, 56,158
(Nov. 10, 1994) (“if no remedy is imposed, the provider has suffered no injury calling for
an appeal”).

Contrary to Petitioner’s argument that CMS improperly relies upon prior administrative
decisions and that the regulations do not permit CMS to deprive a facility of the right to
pursue its appeal by withdrawing enforcement remedies, there is nothing in the
regulations that prohibits CMS from reopening and revising its initial determination
pursuant to 42 C.F.R. § 498.30 within 12 months of the date of notice of the initial
determination. It is specifically the imposition or proposed imposition of an enforcement
remedy and not the citation of a deficiency that triggers the right to a hearing under 42
C.F.R. Part 498. When the enforcement remedy is eliminated, so too, is Petitioner’s right
to review and my authority to conduct the review. Fountain Lake Health &
Rehabilitation, Inc., DAB No. 1985; Twin Pines Nursing and Rehabilitation Center,
DAB CR1601; see EagleCare, Inc. d/b/a/ Beech Grove Meadows, DAB CR923 (2002);
Schowalter Villa, DAB No. 1688; Arcadia Acres, Inc., DAB No. 1607; see also The
Lutheran Home — Caledonia, DAB No. 1753; Walker Methodist Health Center, DAB
CR869 (2002); Charlesgate Nursing Center, DAB CR868 (2002); D.C. Association for
Retarded Citizens, DAB CR776 (2001); Alpine Inn Care, Inc., d/b/a Ansley Pavilion,
DAB CR728 (2001); Woodland Care Center, DAB CR659 (2000); Fort Tryon Nursing
Home, DAB CR425 (1996). In each of these cases, the failure or inability of the
petitioner to demonstrate that the appealed survey findings and deficiency determinations
had resulted in a remedy was fatal to its appeal. In each of the cases, the appeal was
dismissed. The appellate panels of the Board and the ALJs who decided the cases have
uniformly concluded that a citation of deficiency that is not the basis for an enforcement
remedy, or that results in the imposition of a remedy that is later rescinded or reduced to
zero, does not trigger the right to a hearing under 42 C.F.R. Part 498.

Petitioner’s argument that the regulatory scheme as interpreted deprives Petitioner of due
process is not an issue within my authority to decide.

Petitioner does not have a right to a hearing in this case. The undisputed facts establish
that while CMS initially determined to impose enforcement remedies against Petitioner,
CMS rescinded the enforcement remedies. Petitioner no longer suffers any injury that I
am authorized to redress and Petitioner no longer has a right to hearing pursuant to 42
C.F.R. Part 498."

* The relief Petitioner seeks may be addressed through regulatory and legislative reform,
such as was done to obtain authority for ALJ and Board review of a facility’s loss of
authority to conduct nurse aide training and competency evaluation programs. See, e.g.,
64 Fed. Reg. 39,934 (Jul. 23, 1999).
II. Conclusion

For the foregoing reasons, Petitioner’s request for hearing is dismissed pursuant to 42
C.F.R. § 498.70(b).

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Decision No. CR2004
Centers for Medicare & Medicaid
Services.

In the Case of: )
)
Onelia Del Pozo Saavedra, M.D., )
) Date: September 16, 2009
Petitioner, )
)
-V.- ) Docket No. C-09-532
)
)
)
)

DECISION DISMISSING REQUEST FOR HEARING

I dismiss the request for hearing filed by Petitioner, Onelia Del Pozo Saavedra,
M.D. Petitioner requested a hearing before the Centers for Medicare & Medicaid
Services (CMS), or its agent, made a reconsideration determination. In this
circumstance Petitioner has no right to a hearing.

I. Background

Petitioner is a physician. On June 18, 2009 Petitioner filed a hearing request to
challenge a determination made on behalf of CMS to deny enrollment as a
participant in the Medicare program. The case was assigned to me for a hearing
and a decision.

CMS then moved to dismiss the hearing request, arguing that Petitioner had no
right to a hearing at this time. Petitioner did not reply to the motion.

CMS filed three proposed exhibits in connection with its motion to dismiss, which
it has designated as CMS Ex. | — CMS Ex. 3. I receive these exhibits into the
record.
II. Issues, findings of fact and conclusions of law
A. Issue

The issue in this case is whether Petitioner has a right to a hearing at this time.
B. Findings of fact and conclusions of law

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

1. A party is not entitled to a hearing to challenge denial of a
Medicare enrollment application until reconsideration of the
denial is complete.

A prospective provider or a supplier who is dissatisfied with a determination to
deny or revoke his or her enrollment in Medicare is entitled to request
reconsideration of that determination. 42 C.F.R. § 498.5(a)(1), (d)(1). The
prospective provider or supplier may request a hearing before an administrative
law judge to challenge an unfavorable reconsideration determination. 42 C.F.R.
§ 498.5(a)(2), (d)(2). The regulations do not permit a prospective provider or
supplier to bypass the reconsideration step nor do they permit a prospective
provider or supplier to request reconsideration and a hearing simultaneously.

2. Petitioner is not entitled to a hearing because reconsideration
has not been completed.

CMS avers without disagreement from Petitioner that Petitioner requested
reconsideration and a hearing simultaneously. CMS avers, also without
Petitioner’s disagreement, that reconsideration of its initial determination has not
yet been completed.

These unchallenged allegations by CMS establish that Petitioner has no right to a
hearing at this time. A right to a hearing exists only after reconsideration has been
completed and that has not yet occurred. Consequently, I must dismiss
Petitioner’s hearing request.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
José Castillo, O.D., ) Date: September 04, 2009

)
Petitioner, )
)

“Vee ) Docket No. C-09-521

) Decision No. CR2003
Centers for Medicare & Medicaid )
Services. )
)

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services
(CMS) to revoke the provider enrollment of Petitioner, José Castillo, O.D., for a
period of one year.

I. Background

Petitioner, an optometrist who is located in Hialeah, Florida, requested a hearing
to challenge CMS’s determination to revoke his Medicare provider enrollment.
The case was assigned to me for a hearing and a decision. I issued a pre-hearing
order in which I directed CMS and Petitioner to file pre-hearing exchanges of their
proposed exhibits and briefs. CMS complied with my order by filing its exchange
on July 20, 2009. Petitioner filed nothing in response.

CMS filed eight proposed exhibits with its exchange which it identified as CMS
Exhibit (CMS Ex.) 1 - CMS Ex. 8. I receive these exhibits into the record.
II. Issue, findings of fact and conclusions of law
A. Issue

The issue in this case is whether CMS is authorized to revoke Petitioner’s provider
enrollment for a period of a year.

B. Findings of fact and conclusions of law

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

1. CMS may revoke a provider’s Medicare enrollment if the
provider is no longer operational.

Enrollment in the Medicare program is conditioned on compliance with Medicare
enrollment requirements. Among these is the requirement that a provider be
operational. 42 C.F.R. § 424.535(a)(5). An “operational” provider must, at a
minimum, have a place of business at which he or she offers services to the public
during normal business hours. The provider must also notify the Medicare
program of the location of his or her business. Failure by a provider to comply
with either of these requirements is grounds for revocation of that provider’s
Medicare enrollment and his or her Medicare billing privileges.

2. The uncontested facts establish that Petitioner was not
operational at the address that he gave Medicare as his practice
location and that he failed to notify Medicare of his change of
business address. Therefore, CMS was authorized to revoke his
Medicare enrollment.

In his application for provider enrollment Petitioner certified that his practice
location was at 3001 W 12 Ave., Suite 9, in Hialeah, Florida. CMS Ex. 1, at 17,
27. CMS asserts that, on September 16, 2008, investigators for a contractor
working on behalf of Medicare drove by Petitioner’s asserted practice location in
order to determine whether Petitioner in fact had a practice at that address. The
investigators found the office doors to be locked and no signs at the location that
indicated that there was an active business there. The tenant next door informed
the investigators that Petitioner had ceased operating a business at the location
several months previously. A forwarding telephone number associated with the
address indicated that the office had been closed effective July 1, 2008.
n his hearing request Petitioner admits that he closed his office in June of 2008.
CMS Ex. 2, at 1-2. He asserts that, after June of 2008, he continued to practice at
another address. He admits that he failed to notify Medicare of his change of
ocation. Essentially, he argues that he intended nothing improper by his action.

These uncontested facts are sufficient to establish that Petitioner was no longer
operational at the address he had given in his provider enrollment application and
‘ailed to notify Medicare of his change of business location. These are sufficient
‘or CMS to revoke his enrollment pursuant to the provisions of 42 C.F.R.

§ 424.535(a)(5). The fact that Petitioner may not have intended anything improper
by his action is not a defense. He was obligated to notify Medicare that he was no
onger operational at the address he had certified as his practice location and his
‘ailure to do so in and of itself justifies revocation of his provider enrollment.

3. CMS revoked Petitioner’s provider enrollment for the minimum
period authorized by regulation.

Where revocation of enrollment is authorized CMS may revoke a provider’s
enrollment for a period of not less than one year and not more than three years. 42
C.F.R. § 424.535(c). The length of the revocation period depends on the severity
of the basis for revocation. Jd. CMS opted to revoke Petitioner’s enrollment for
the minimum period of one year. That is justified as a matter of law.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Oakwood Nursing Center, Inc., )
(CCN: 10-5183), ) Date: September 03, 2009
)
Petitioner, )
) Docket Nos. C-08-737
-v. ) C-09-194
) Decision No. CR2001
Centers for Medicare & )
Medicaid Services. )
)
DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
impose the following remedies against Petitioner, Oakwood Nursing Center, Inc.:

¢ Civil money penalties of $5050 per day for each day of a period that began on July
2, 2008 and which ran through July 16, 2008; and

¢ Civil money penalties of $3400 per day for each day of a period that began on
October 31, 2008 and which ran through November 22, 2008.!

'CMS imposed additional civil money penalties against Petitioner in amounts of $200 per
day for each day of a period that began on May 22, 2008 and which ran through July 6,
2008, and of a period that began on July 17, 2008 and which ran through October 30,
2008. Petitioner did not contest the imposition of these penalties. Furthermore, and by
virtue of the noncompliance that I find in this decision, additional remedies were imposed
against Petitioner consisting of a denial of payment for new Medicare admissions for
each day of a period that began on August 1, 2008 and which ran through November 22,
2008, and loss of authority to conduct nurse aide training. Petitioner has not challenged
(continued...)
I. Background

Petitioner is a skilled nursing facility located in Ocala, Florida. It participates in the
Medicare program and its participation is governed by sections 1819 and 1866 of the
Social Security Act (Act) as well as by implementing regulations at 42 C.F.R. Parts 483
and 488. Its right to a hearing in this case is governed by regulations at 42 C.F.R. Part
498.

Petitioner requested hearings to challenge CMS’s determination to impose the remedies
that I discuss in the opening paragraph of this decision and the two cases were assigned to
me for a hearing and a decision. I consolidated them and I held a hearing by telephone
on June 10, 2009. During the hearing I received into evidence exhibits from CMS which
l identified as CMS Ex. 1 — CMS Ex. 38, and CMS Ex. 40 — CMS Ex. 50. I received into
evidence exhibits from Petitioner which I identified as P. Ex. | — P. Ex. 23. I heard the
cross examination testimony of several of CMS’s witnesses whose sworn direct
testimony had been received as CMS exhibits.

IL. Issues, findings of fact and conclusions of law
A. Issues
The issues in this case are whether:

1. Petitioner failed to comply substantially with Life Safety Code and
Medicare participation requirements;

2. Petitioner proved to be clearly erroneous CMS’s determinations of
immediate jeopardy level noncompliance; and

3. CMS’s civil money penalty determinations are reasonable in amount
and duration.

B. Findings of fact and conclusions of law

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

'(.. continued)

CMS’s authority to impose these additional remedies assuming that I sustain CMS’s
determinations of noncompliance. Therefore, I do not address them specifically in this
decision.
1. Petitioner failed to comply substantially with Life Safety Code and
Medicare participation requirements.

The noncompliance findings that are at issue here were made at two surveys of
Petitioner’s facility. The first survey was conducted on July 2, 2008 (July survey) and it
addressed Petitioner’s compliance with the Life Safety Code. Numerous instances of
noncompliance were found at this survey including one instance of immediate jeopardy
level noncompliance.” The second survey was completed on October 31, 2008 (October
survey) and it addressed complaints concerning Petitioner’s compliance with Medicare
regulations governing discharge and transfer of residents. At this survey three instances
of immediate jeopardy level noncompliance were identified.

I address all of the immediate jeopardy level deficiencies that were identified at the two
surveys. In this Finding I decide the issue of Petitioner’s compliance with Life Safety
Code and Medicare participation requirements. In Finding 2 I decide the issue of
whether Petitioner’s noncompliance was at the immediate jeopardy level.

a. Petitioner failed to comply with Life Safety Code requirements.

Regulations governing participation in Medicare by skilled nursing facilities state that a
facility:

must be designed, constructed, equipped, and maintained to protect the
health and safety of residents, personnel and the public.

42 C.F.R. § 483.70. In order to comply with this requirement a facility must meet the
applicable provisions of the 2000 edition of the Life Safety Code of the National Fire
Protection Association. 42 C.F.R. § 483.70(a)(i). The Life Safety Code incorporates by
reference another code, the 1999 edition of the National Fire Alarm Code and, so, a
facility must meet these additional requirements as well.

CMS offered overwhelming proof that Petitioner failed to comply with Life Safety Code
requirements. The surveyors who conducted the July survey found that Petitioner failed
to comply with the Life Safety Code at an immediate jeopardy level of scope and severity
because it did not have an automatic sprinkler system on its premises. CMS Ex. 45; CMS
Ex. 46; CMS Ex. 48; CMS Ex. 49; Life Safety Code, sections 19.1.6.2; 19.1.6.3;
19.1.6.4; 19.3.

> The term “immediate jeopardy” is defined at 42 C.F.R. § 488.301 to mean
noncompliance that is so egregious as to cause or to have the likelihood of causing
serious injury, harm, impairment, or death to a resident or residents of a skilled nursing
facility.
An automatic sprinkler system is not mandated in all facilities but it is mandated ifa
facility is constructed without certain other fire prevention safeguards. An automatic
sprinkler system was mandated here, because Petitioner’s facility had: non-rated ceiling
tile assembly throughout its structure; ceiling tiles that were not of a uniform
manufacture; and roof trusses with exposed steel beams. Moreover, Petitioner’s
management could not demonstrate that a one hour fire rated ceiling assembly was being
used to protect the steel roof supports. Jd. The problems posed by these structural
deficits were exacerbated because: the facility had exposed duct work which passed
through the ceiling tile assembly; its ceiling tile assembly lacked dampers to prevent the
passage of smoke in the event of a fire; the facility had recessed light fixtures throughout
that were not tented or one hour fire rated; and the facility’s ceiling tiles were not clipped
into place. Id.

Petitioner presented no evidence to rebut the surveyors’ noncompliance findings and,
evidently, does not contest them. Its arguments concerning the Life Safety Code
deficiencies reduce to arguments of law concerning CMS’s authority to impose civil
money penalties for those deficiencies and I address them below, at Finding 3.°

b. Petitioner failed to comply with Medicare participation
requirements.

The three immediate jeopardy level deficiencies that were identified at the October
survey were alleged failures by Petitioner to comply with the following Medicare
participation requirements.

e 42C.F.R. § 483.12(a). This regulation establishes criteria for transfer and
discharge of skilled nursing facility residents. Subsection (a)(5) of this regulation
requires generally that residents be given a minimum of 30 days’ notice before
being transferred from a facility.

e 42C.F.R. § 483.12(a)(7). This subsection requires that a facility that transfers a
resident must provide the resident with sufficient preparation and orientation to
ensure safe and orderly transfer or discharge from the facility.

> There were several additional non-immediate jeopardy level findings of Life Safety
Code violations made by the surveyors who conducted the July survey and Petitioner has
not challenged any of them. These noncompliance findings are, therefore,
administratively final.
© 42C.F.R. § 483.15(g)(1). This subsection requires a facility to provide each
resident with medically-related social services in order to attain or maintain his or
her highest practicable physical, mental, and psychosocial well-being.

These three subsections are written so as to protect the rights and well-being of
individuals who are by definition unable to protect themselves. Residents of a skilled
nursing facility are among the most helpless individuals in our society. They are in
nursing facilities because they are utterly dependent on others to provide for their basic
needs and for their survival. Transfer from a facility for an individual who is so helpless
can be a traumatic — even life endangering experience — and, for that reason, the
regulations impose on a facility’s management and staff the obligation to do the utmost to
protect its residents and their family members from the trauma associated with transfer.
The regulations require nothing less than a careful and compassionate effort in the case of
each transfer to make the move as physically and emotionally painless as is possible.

Petitioner decided to close its facility in September 2008. Doing so necessitated the
transfer and or discharge of residents. The decision to close the facility imposed on
Petitioner’s management and staff the heavy burden of assuring that each of Petitioner’s
approximately 60 residents be treated with the utmost respect, compassion, and dignity
and it required Petitioner to comply with all regulatory requirements governing resident
discharges and transfers.

The evidence presented by CMS depicts a glaring failure by Petitioner to carry out its
obligations to its residents. The evidence paints a picture of an enterprise that was
determined to accomplish the discharge/transfer process hastily and without regard for
the niceties of protecting its residents’ rights. As a consequence, residents were not
provided with the care and attention they were entitled to and Petitioner’s management
flagrantly disregarded regulatory requirements governing transfers of residents.

CMS presented the testimony of two former members of Petitioner’s staff who were at
the facility during critical dates in September and October 2008 when the facility was in
the process of being closed and the residents were being transferred. | find their
testimony to be graphic, compelling, and credible on all key points.

These witnesses — Kathleen Harkins, Petitioner’s interim administrator in early October,
and Hedye Massey, formerly a social worker at Petitioner’s facility — describe a transfer
process that was expedited for the purpose of moving residents out of Petitioner’s facility
as quickly as possible. CMS Ex. 37; CMS Ex. 38. And, they describe actions by
Petitioner’s management that flagrantly disregarded the rights and needs of the residents.
Id.
Ms. Harkins’ testimony is especially compelling. She testified that she was present at
Petitioner’s facility in the capacity of acting administrator for about six weeks in 2008,
beginning on October 6 of that year and continuing through mid-November. CMS Ex.
37, at 1. She testified that, despite her job title, she was essentially a figurehead.
Decisions concerning resident transfers were made by another individual, Terry
Carpenter, who had been appointed by Petitioner’s owners to oversee the transfer
process. Id. at 2-3.

Ms. Harkins was appalled at the conditions she observed when she arrived at the facility.
Id. at 2. Residents had been transferred without being given a choice as to where they
were sent. Jd. Some of the residents were not told where they were being transferred.

Id. at 5. Rather, they were loaded into cars or vans and driven to other facilities in
communities that were remote from Petitioner’s facility. Jd. Often, residents’ families
were not notified about the transfer. Family members who visited Petitioner’s facility for
visits with residents were shocked to find out that their loved ones were no longer there.
Id. at 2. Moreover, although Petitioner’s management informed residents’ families on
October 24, 2008 that the facility would close on November 23, 2008, Mr. Carpenter’s
actual goal was to have residents out of the facility effective immediately. /d. at3. Ata
meeting of Petitioner’s department managers on October 27, 2008, Mr. Carpenter
informed those present that his goal was to have all residents out of the facility by the end
of that week. Id.

Ms. Harkins testified that, not only were residents rushed out of Petitioner’s facility in
violation of the requirement that they be given 30 days’ notice of a transfer, but that the
process of planning and implementing transfers was done with total disregard for
professionally accepted standards governing such actions. CMS Ex. 37, at 4. She
averred that, in addition giving each resident and his or her family 30 days notice of a
transfer, Petitioner was obligated to accomplish at least the following before effectuating
a transfer: (1) meeting with residents or their representatives to explain the reason for the
transfer; (2) engaging in detailed discharge planning which included taking sufficient
time to assure that each resident’s individual needs were addressed; (3) meeting with as
many family members of each resident as was possible; (4) providing the residents and
their family members with placement choices; (5) notifying the State health care agency
about each transfer; and (6) notifying other facilities so that their staff could come and
assess each resident prior to a transfer. Id.

Ms. Harkins averred that, in fact, no discharge planning actually occurred. In fact,
Petitioner performed none of the actions that she described as being essential
prerequisites to transferring residents. CMS Ex. 37, at 4. She asserted that, not only was
Petitioner’s social worker not permitted to provide discharge planning, but she was fired
when she attempted to intervene on residents’ behalf. Jd.
Ms. Massey corroborated Ms. Harkins’ testimony in important respects. Ms. Massey
described an operation in October 2008 that was conducted by Mr. Carpenter and
personnel from Petitioner’s management company in the back rooms of Petitioner’s
facility from which they directed resident transfers. CMS Ex. 38, at 2. She testified that
she was unable to perform her normal duties which included providing discharge
planning for residents who were to be transferred because Mr. Carpenter and his staff
excluded her from being involved in resident transfers. Jd. She averred that residents
who were transferred from Petitioner’s facility in October 2008 did not receive discharge
planning. Id.

Ms. Massey testified that she was advised by members of residents’ families that the
residents had not received discharge planning. She asserted that, in some instances,
residents had no idea where they were being transferred to. CMS Ex. 38, at 2. She
averred that in October 2008 she was asked by a member of Mr. Carpenter’s staff to write
ischarge notes and to certify that discharge planning had been accomplished for multiple
residents of Petitioner’s facility. Jd. at 2-3.

She refused to do so because she hadn’t provided discharge planning and didn’t believe
that anyone else had performed it. Jd. According to Ms. Massey, Mr. Carpenter directed
her to falsify resident records and told her that someone else from his staff would do it if
she refused. Jd. at 3. Mr. Carpenter then fired her. Jd.

As I have stated, Ms. Harkins and Ms. Massey corroborate each other’s testimony. I find
their testimony to be extremely persuasive even without additional corroboration. The
two witnesses were cross-examined during the June 10, 2009 hearing and nothing that
transpired during the hearing impeached their credibility. And, although I would find
these witnesses’ testimony credible without additional supporting evidence, CMS offered
a wealth of additional evidence which provides ample corroboration and support for what
these two witnesses said.

Their testimony was closely supported by Robert Mondrone, an administrator from
another facility, who has 24 years’ experience in facility administration. CMS Ex. 34.
Mr. Mondrone testified that he was periodically present at Petitioner’s facility during the
last few days of October and the first few days of November 2008. He averred that,
although Petitioner gave most of its residents notice of the facility’s closing in late
October 2008, it actually transferred or discharged all of them by the end of the first week
of November. /d. at 2. He testified that Petitioner’s management told family members of
residents that the residents had to be out of the facility on the same day that they were
notified of the impending shutdown. Id. at 3.

Mr. Mondrone testified that he had never seen a transfer/discharge process run so poorly
as that which he witnessed at Petitioner’s facility, describing the atmosphere at the
facility as constituting “widespread chaos.” Jd. at 2. He characterized the transfer
process as being run “like a production line” from a back room at Petitioner’s facility
with residents being systematically excluded from the decision making process. Id. at 3.
Mr. Mondrone asserted that he saw no evidence that Petitioner took steps to assist any of
its residents with transfer. There were no specific plans developed for transfer, no
discussions between the facility’s social services staff and residents and their families,
and no team meetings between Petitioner’s staff and residents and their families to assist
with the transfer process. Jd. at 2-3.

Additional support for CMS’s contentions comes as testimony given by residents’
relatives. The nephew of a resident testified that, near the end of October 2008, he was
called by Petitioner regarding the transfer of his aunt who was then a resident of
Petitioner’s facility. CMS Ex. 36, at 1-2. This telephone call was the only call that he
received from Petitioner concerning his aunt’s transfer. /d. at 2. He was told that his
aunt would be transferred either that evening or the following day and that he must
choose one of two facilities as a transfer site. Jd. at 1-2. Neither of the two facilities was
geographically close to Petitioner’s facility. The sister of another resident testified that in
late October her brother told her that he was being pressured by Petitioner’s management
to move as soon as possible from Petitioner’s facility to another facility. CMS Ex. 35, at
1-2. She was able to relocate him to another facility in the vicinity of Petitioner’s facility.
But, she effectuated this transfer without any help from Petitioner and in the face of
constant pressure from Petitioner’s management to move her brother as fast as possible.
Id. at 2.

The witnesses’ testimony is substantiated by Petitioner’s own resident records. In
September, 2008 Petitioner transferred four of its residents — who are identified in the
October survey report as Residents #s 13, 14, 16, and 17 — to other facilities without
providing these residents with the required 30 day notice of intent to transfer. CMS Ex.
1, at 3-5. The facility records for Residents #s 13, 14, and 17 are devoid of any evidence
that Petitioner provided these residents with social services during the transfer process.
CMS Ex. 1, at 21-24.

I have considered Petitioner’s arguments and evidence and find them not to be
persuasive. In many respects Petitioner simply avoids coming to grips with CMS’s
specific allegations of noncompliance. Rather, it relies on broad and bland assertions that
it provided appropriate notice and planning for residents who were transferred without
providing detailed evidence that would support these statements. In other instances,
Petitioner purports to rely on evidence that proves its compliance which, on close
examination, either does not support Petitioner’s assertions or undercuts them.

Petitioner filed the affidavit of Terry Carpenter, the individual who orchestrated the
discharge of Petitioner’s residents in September and October 2008. P. Ex. 5. Mr.
Carpenter’s testimony is remarkable in that it fails to come to grips with the specific
allegations of noncompliance made by CMS and supported by CMS’s witnesses. For
example, Mr. Carpenter says nothing that refutes Ms. Harkins’ explicit assertion that Mr.
Carpenter had announced that he intended to transfer all of Petitioner’s residents by the
end of the last week of October 2008. Nor did he deny Ms. Massey’s assertion that he
directed her to falsify resident records to make it appear as if the residents had received
transfer counseling when, in fact, they had not.

Mr. Carpenter does not rebut the specific allegations of CMS’s witnesses that Petitioner
failed to provide individualized discharge planning for its residents who were transferred.
Rather, he states, without elaboration, that Petitioner’s social workers worked with
families of residents and the residents themselves to resolve disagreements “between
resident and family members (and between family members) on where a resident should
be transferred.” P. Ex. 5, at 2.

Petitioner asserts that the transfers of Residents #s 13, 14, 16, and 17 were exempted
from the regulatory requirement that Petitioner provide 30 days’ advance notice because
they were “resident and/or family initiated transfers.” Petitioner’s post-hearing brief at 7.

Petitioner’s assertions are simply not supported by the record. There is no evidence to
show that any of these four residents requested transfers on their own volition much less
is there evidence to show that Petitioner was simply acting to effectuate the residents’
desires.

For example, in the case of Resident # 13, there is nothing in the exhibit cited by
Petitioner — CMS Ex. 15 — that supports a finding that the resident made an informed and
voluntary transfer request and that Petitioner was merely carrying out the resident’s
wishes. If anything, the exhibit supports the opposite conclusion. There is evidence in
that exhibit that makes it obvious that the resident was not capable of making an
informed decision about a transfer. Petitioner’s staff described the resident as confused
on more than one occasion and related that the resident hallucinates. CMS Ex. 15, at 1, 2.
That confusion was evident when staff spoke to the resident on September 23, 2008 about
transferring her. The resident:

began getting tearful . . . [and] talking about a doctor that was going to
court and was going to be on trial for sexual assault and then her comments
became noncoherent.

Id. at 2. It was only in that context that the resident was reported to say that she would
like to go to some place new. Jd. It was cruel for Petitioner’s management to act on a
statement like that as if it was a voluntary request given the resident’s obvious confusion
and emotional duress.
10

Petitioner contends that no 30-day notice was required prior to transferring Resident # 14
“because this transfer was initiated by the resident and family.” Petitioner’s post-hearing
brief at 8. Petitioner introduced no evidence that supports this contention. Petitioner
cites to a document that it characterizes as “the official ‘3008’ form that AHCA [the
Florida State health care agency] recognizes for transfers of residents” evidently as
support for its argument that the resident and her family voluntarily sought a transfer.
Id.; P. Ex. 22, at 4. However, this document contains nothing supporting Petitioner’s
assertion of a voluntary request. On the other hand, the document lists “dementia” as the
resident’s principal diagnosis and I infer from this that the resident would have been
incapable of making a meaningful voluntary transfer request. /d. There is nothing in the
records cited by Petitioner to show that the resident’s family made a transfer request on
the resident’s behalf.

Petitioner contends that “[t]he transfer of Resident # 16 was initiated by a family
request.” Petitioner’s post-hearing brief at 8. This contention is belied by the record.
The evidence cited by Petitioner as support for its assertion - CMS Ex. 17 — contains
nothing that suggests a family request to transfer Resident # 16. At most, it supports a
conclusion that the family agreed to transfer the resident to another facility (Lakewood
Nursing Center) in response to a directive by Petitioner’s administration that the resident
be transferred. CMS Ex. 17, at 4, 6. Agreement to a transfer in the face of management
pressure is no defense to a failure to provide requisite notice and discharge planning for
this resident.

As respects Resident # 17 Petitioner asserts that the resident’s transfer was “initiated by
the resident.” Petitioner’s post-hearing brief at 8. There is absolutely nothing in the
exhibit cited by Petitioner —- CMS Ex. 18 — that supports this contention. On the other
hand, the exhibit strongly supports an inference that Petitioner’s staff failed to do
discharge planning for the resident. On September 24, 2008, a social worker made the
following entry in the resident’s record:

Received notice from the Administrator that Res transferring to another
SNF [skilled nursing facility]. This SW did not participate in this Res D/C
plan. Administrator made all D/C arrangements.

CMS Ex. 18, at 8."
Petitioner cites to the cross-examination testimony of Mr. Mondrone as support for its

contention that the transfers of its residents were “appropriate.” Petitioner’s post-hearing
brief at 9; Tr. at 73-74. Petitioner does not explain what it means by that term nor did its

+The social worker who wrote and signed this note is an individual other than Ms.
Massey. The note provides additional support for Ms. Massey’s and Ms. Harkins’
testimony that Petitioner transferred residents without performing discharge planning.
11

counsel do so when he asked Mr. Mondrone whether some of the transfers were
appropriate. /d. I will not speculate as to what counsel or Mr. Mondrone thought the
word “appropriate” meant, but there is, in fact, nothing in Mr. Mondrone’s testimony to
suggest that he agreed that Petitioner complied with regulatory requirements in
transferring its residents. Jd.

Much of Petitioner’s case appears to be built around the theory that it should be excused
from complying with regulatory requirements because the staff and management of
facilities who accepted transfers of Petitioner’s residents acted diligently to protect the
residents’ interests and welfare. Petitioner’s post-hearing brief at 9-10. That is no
defense. It may be that other facilities were more caring than was Petitioner and that they
acted to protect the residents whose transfers they accepted. But that gave no license to
Petitioner to ignore its obligations under the regulations. Moreover, nothing that other
facilities did or could have done would have insulated Petitioner’s residents from the
shock of being pushed out the door of Petitioner’s facility by Petitioner’s management.

Petitioner asserts also that it advised residents and their family members that they could
return to Petitioner’s facility after it became operational again. Petitioner’s post-hearing
brief at 10. But, assuming the truth of this statement, it provides no excuse for the way in
which Petitioner handled resident transfers. There is simply nothing in the regulations
governing transfers that permits a facility to ignore its obligations to residents when
transferring them premised on the possibility that the residents might return to the facility
at some date in the future.

Petitioner relies on the testimony of four individuals — Brenda Boucher, Lita Flowers,
Cynthia Evans, and Victoria Medley — to support its assertion that it handled resident
transfers in accordance with regulatory requirements. P. Ex. 6; P. Ex. 7; P. Ex. 8; P. Ex.
9. I find the testimony of these individuals to be unpersuasive. Their affidavits are
essentially boilerplate documents, virtually identical in content, which provide very little
substance. Much of the language in these affidavits essentially repeats verbatim the
contents of Mr. Carpenter’s affidavit without providing any additional information.

Ms. Boucher and Ms. Flowers both assert in identical language that the transfers of
Residents #s 13, 14, 16, and 17 were requested either by the residents themselves or by
members of the residents’ families. P. Ex. 6, at 2; P. Ex. 7, at 2. However, neither of
these witnesses cites to any documentation that supports these assertions. Moreover,
their testimony is deliberately vague. Ms. Boucher states that “Oakwood’s
representatives merely talked to the residents about transferring to another facility...”
And Ms. Flowers states that “I spoke with the resident and the responsible party (usually
a family member) identified on the ‘face sheet’ about the transfer,” without providing any
details about the alleged conversations. Id.
12

All four of the affiants describe in virtually identical words the process that Petitioner
used to transfer residents. P. Ex. 6, at 2-3; P. Ex. 7, at 3-4; P. Ex. 8, at 2-3; P. Ex. 9, at 2-
3. Their description of the process does not address any of the allegations made by CMS
nor does it rebut the testimony of CMS’s witnesses and supporting exhibits. There is
nothing in these witnesses’ testimony that supports a conclusion that Petitioner performed
individualized discharge planning for any of the residents who were transferred. For
example, the affiants all say that directors or coordinators from other facilities met with
residents privately or in Petitioner’s common areas. Assuming that to be true that does
not substitute for the requirement that Petitioner perform and coordinate discharge
planning, on an individualized basis, for each of its residents. Moreover, there is nothing
in the affidavits which discloses what was discussed between the residents and the
directors and coordinators nor do the affidavits present any evidence to show that all of
Petitioner’s residents or their family members had the benefit of these meetings.

Petitioner argues also that it should be immune from allegations of noncompliance
because residents who were interviewed after they had been transferred expressed few or
no complaints or even assert that they are happier in their new facilities than they were at
Petitioner’s facility. Petitioner’s post-hearing brief at 11; P. Ex. 10— P. Ex. 14. This isa
“no harm no foul” argument that has no relevance to the issue of Petitioner’s compliance
with regulatory requirements. That some residents may have been relatively uninjured by
the transfers effectuated by Petitioner or may in fact be happier in their new facility than
they were at Petitioner’s facility is no defense to Petitioner’s failure to protect those
residents during the process.

2. Petitioner did not prove to be clearly erroneous CMS’s determinations
of immediate jeopardy.

The evidence offered by CMS strongly supports CMS’s determinations that Petitioner’s
noncompliance with Life Safety Code and Medicare participation requirements posed
immediate jeopardy for residents. Petitioner did not establish these determinations to be
clearly erroneous.

a. Petitioner offered no evidence to prove to be clearly erroneous
CMS ’s determination of immediate jeopardy level Life Safety
Code noncompliance.

Petitioner offered neither evidence nor argument to refute CMS’s finding of an
immediate jeopardy level Life Safety Code deficiency.

Petitioner’s failure to have a functioning sprinkler system in its facility posed obvious —
and very serious — risks for residents of the facility. As is attested to by Vincent E.
Avenatti, who conducted the July survey of Petitioner’s facility:
13

the facility’s deficient practices resulted in the demolishment of the
minimum protection required for the residents with unacceptable
construction type without sprinkler coverage, de-compartmentalization and
unacceptable corridor walls without sprinkler coverage. ... These
deficiencies constituted immediate jeopardy as they placed the residents at
potential risk of injury and death in the event of a fire.

CMS Ex. 48, at 3. Mr. Avenatti’s testimony becomes more compelling when considered
in light of the nature of Petitioner’s facility and people who lived there. Petitioner’s
residents were among society’s most vulnerable individuals and among them were
persons who would have been utterly helpless to protect themselves in the event of a fire.

b. Petitioner failed to prove to be clearly erroneous CMS’s
determination of immediate jeopardy level noncompliance
with Medicare participation requirements.

The evidence supporting a finding of immediate jeopardy level noncompliance with
Medicare participation requirements is very strong. As I discuss at Finding 1.b.,
Petitioner flagrantly disregarded the rights of its residents in effectuating their transfers to
other facilities. In some instances it failed to give the residents the requisite 30-day
notice of their impending transfers. In others, it gave the residents notice but made that
notice essentially meaningless by pressuring residents to leave the facility on a greatly
accelerated schedule. Petitioner failed on a wholesale basis to plan for the individual
needs, wants, and desires of its residents and it misled members of residents’ families as
to their relatives’ circumstances.

Behavior like this would be traumatic for anyone on the receiving end but would be
especially so for individuals like those who were housed at Petitioner’s facility. As I
have discussed these persons were extraordinarily frail and vulnerable and were at risk
for grave emotional and even physical distress as a consequence of being transferred in
haste and without necessary planning. That is strong basis for concluding that residents
of Petitioner’s facility faced a likelihood of serious injury, harm, or even death as a
consequence of Petitioner’s actions.

The grave emotional distress experienced by at least some of Petitioner’s residents as a
consequence of Petitioner’s actions is evidenced by the testimony of Allison Hillhouse,
one of the surveyors who conducted the October survey. She testified that:

Multiple residents and family members indicated to me that they were
being pressured to move out as soon as possible — and they were shocked
and upset at the sudden notice that the facility was closing. In fact, on
October 28, 2008 facility staff informed me that the facility had already
ordered them to start loading up residents and their belongings onto vans
14

for transfer — often to other cities. These residents were extremely upset,
many had no idea of where they were being sent — and often their
responsible parties (i.e., family members) had not yet received notices that
these residents were already being moved.

CMS Ex. 32, at 3-4. Petitioner did not rebut the evidence of immediate jeopardy level
noncompliance. For the most part, it asserts that it did not violate residents’ rights in
orchestrating their transfer out of the facility. I have dealt with these assertions at
Finding 1.b. and I need not revisit Petitioner’s contentions and arguments here. Petitioner
also relies heavily on its assertion that at least some of the residents were happier in their
new quarters than they were while at Petitioner’s facility. That is no defense. The fact
that some of Petitioner’s residents may have decided ultimately that they were better off
at the facility that they were transferred to than at Petitioner’s facility doesn’t excuse
Petitioner from its compliance obligations. Nor does it diminish the likelihood of harm
that these residents were exposed to during the process of their being transferred out of
Petitioner’s facility.

3. CMS’s civil money penalty determinations are reasonable.

CMS determined to impose immediate jeopardy level civil money penalties to remedy
Petitioner’s noncompliance with Life Safety Code and Medicare participation
requirements. The Life Safety Code penalties are in amounts of $5050 per day for each
day of a period that began on July 2, 2008 and which ran through July 16, 2008. The
Medicare participation requirement penalties are in amounts of $3400 per day for each
day of a period that began on October 31, 2008 and which ran through November 22,
2008.

Civil money penalties of from $3050 to $10,000 per day are authorized for each day of
immediate jeopardy level noncompliance. 42 C.F.R. § 488.438(a)(1)(). Deciding ona
penalty amount within this range must be based on evidence relating to factors which
include: the seriousness of a facility’s noncompliance; its noncompliance history; and its
financial condition. 42 C.F.R. §§ 488.438(f)(1)-(4); 488.404 (incorporated by reference
into 42 C.F.R. § 488.438(f)(3)).

I find the penalties that CMS determined to impose to be supported by evidence
establishing the seriousness of Petitioner’s noncompliance. Petitioner has not adduced
evidence or arguments that support reducing the penalty amounts.

I note as a threshold to my discussion of penalty amounts that Petitioner did not argue
that it lacks the financial wherewithal to pay the civil money penalties that CMS
determined to impose.
15

The evidence pertaining to the immediate jeopardy level Life Safety Code deficiency
establishes it to be extremely serious. Residents at Petitioner’s facility were individuals
who would be at great risk for injury or death in the event of any fire at the facility. But
here, the risk to these residents was increased exponentially by the facility’s failure to
maintain a proper sprinkler system. The penalty amounts of $5050 per day are only
slightly more than one half the total amount that could have been imposed and are
certainly justified by the seriousness of the noncompliance.

Petitioner argues that the penalties for Life Safety Code noncompliance are unlawfully
retroactive. It asserts that it first learned on July 17, 2008 that its Life Safety Code
noncompliance was, in CMS’s eyes, immediate jeopardy and that it acted immediately to
abate the jeopardy. It argues that it should not be held accountable for something that it
was unaware of and asserts that any penalties covering dates prior to July 17 are punitive.

This argument is incorrect as a matter of law. There is no language in either the Act or
regulations which precludes CMS from imposing penalties to remedy noncompliance that
predates the date of its discovery. To the contrary, regulations specifically authorize the
imposition of civil money penalties for past noncompliance going back to the date of the
survey that precedes the survey at which noncompliance is discovered. 42 C.F.R. §
488.430(b). Consequently, CMS was well within its rights to impose civil money
penalties to remedy noncompliance on dates that predate the completion date of the July
survey.

Moreover, Petitioner, by asserting that the penalties are unreasonably retroactive,
attempts to stand on its head the regulatory scheme governing its Medicare compliance.
As Petitioner would have it, its obligation to comply with Medicare participation
requirements should be likened to a game of “catch” in which it should be able to avoid
remedies so long as its noncompliance goes undetected. But, that is not how the law
operates. A skilled nursing facility is charged by the Act and regulations with being in
compliance at all times with Medicare participation requirements including Life Safety
Code requirements. It is Petitioner’s responsibility to know its obligations and to assure
that it meets them.

Petitioner also asserts that the penalties for its Life Safety Code violation are excessive
because it was given a waiver for a short period of time to allow it to function
notwithstanding its noncompliance. I find no inconsistency between the waiver grant and
CMS’s penalty determination. As of July 17, 2008 Petitioner abated its Life Safety Code
noncompliance by instituting a rigorous fire watch on its premises. In that circumstance
a waiver might be justified if only for a short time to allow Petitioner to make
arrangements to rectify its deficiency on a more durable basis. But, that says nothing
about the period running up to and including July 16 when Petitioner was in egregious
noncompliance with the Life Safety Code.
16

The evidence that relates to Petitioner’s noncompliance with Medicare participation
requirements other than Life Safety Code requirements also establishes noncompliance to
have been egregious. The penalties imposed by CMS were well-justified by the
seriousness of Petitioner’s noncompliance. As I have discussed, Petitioner cavalierly,
and in fact brutally, disregarded its residents’ rights in order to usher them out of its
facility as quickly as possible. The disregard for the rights of Petitioner’s residents was
shocking to those individuals when it was perpetrated by Petitioner’s management and
remains shocking to this day. The penalties that CMS determined to impose of $3400 per
day for Petitioner’s noncompliance were actually mild in comparison to what CMS
would have been justified in imposing based on the seriousness of Petitioner’s
noncompliance.

/s/
Steven T. Kessel
Administrative Law Judge