Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Crawford Healthcare and Rehabilitation,
(CCN: 04-5326),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1565
Decision No. CR4466

Date: November 25, 2015

DECISION

Petitioner, Crawford Healthcare and Rehabilitation (Petitioner or facility), is a long-term
care facility that participates in the Medicare program. Based on a survey that was
completed on May 2, 2014, the Centers for Medicare & Medicaid Services (CMS)
determined that Petitioner was not in substantial compliance with multiple Medicare
participation requirements. CMS imposed against Petitioner a civil money penalty
(CMP) of $6,050.00 per day, effective March 20 through April 7, 2014, for a total of
$114,950.00, and a CMP of $600.00 per day, effective April 8 through June 3, 2014, for a
total of $34,200.00.

Petitioner contests only the deficiency cited under 42 C.F.R. § 483.25(h) (Tag F323,
relating to accident prevention and adequate supervision), CMS’s determination that this
deficiency posed immediate jeopardy, and the amount of the CMP imposed for the
deficiency.

For the reasons set forth below, I sustain CMS’s determinations. I find that Petitioner
was not in substantial compliance with the requirements for participation at 42 C.F.R.
§ 483.25(h), that CMS’s immediate jeopardy determination was not clearly erroneous,
and that the penalty imposed is reasonable.

I. Background

The Social Security Act (Act) sets requirements for skilled nursing facility (SNF)
participation in the Medicare program. The Act authorizes the Secretary of the U.S.
Department of Health & Human Services (Secretary) to promulgate regulations
implementing those statutory provisions. Act § 1819 (42 U.S.C. § 1395i-3). The
Secretary’s regulations are found at 42 C.F.R. part 483.

A facility must maintain substantial compliance with program requirements in order to
participate in the program. To be in substantial compliance, a facility’s deficiencies may
pose no greater risk to resident health and safety than “the potential for causing minimal
harm.” 42 C.F.R. § 488.301.

The Secretary contracts with state agencies to conduct periodic surveys to determine
whether SNFs are in substantial compliance with the participation requirements. Act

§ 1864(a) (42 U.S.C. § 1395aa(a)); 42 C.F.R. §§ 488.10, 488.20. The Act and
regulations require that facilities be surveyed on average every twelve months, and more
often if necessary, to ensure that identified deficiencies are corrected. Act

§ 1819(g)(2)(A) (42 U.S.C. § 1395i-3(g)(2)(A)); 42 C.F.R. §§ 488.20(a), 488.308.

Petitioner is an SNF that operates in Van Buren, Arkansas. Surveyors from the Arkansas
Department of Human Services, Division of Medical Services, Office of Long Term Care
(state agency) conducted a survey of Petitioner that concluded on May 2, 2014. The state
agency found that the facility was not in substantial compliance and the conditions
constituted immediate jeopardy.' Petitioner Exhibit (P. Ex.) 12 at 1. Based on the survey
findings, CMS determined that, among other deficiencies, the facility was not in
substantial compliance with the participation requirement at 42 C.F.R. § 483.25(h) (Tag
F323), concerning accident prevention and adequate supervision, and that the
noncompliance constituted immediate jeopardy and substandard quality of care to
residents’ health and safety from March 20 through April 7, 2014.” Based on all the cited

A separate survey and CMS Form 2567, dated April 29, 2014, addresses the Life Safety
Code deficiencies. CMS Exhibit (Ex.) 5.

> Petitioner does not dispute the remaining deficiencies and related CMPs, which include
findings that it was not in substantial compliance with the following nine other standards
at a scope and severity level of either “E” (pattern - no actual harm with potential for
more than minimal harm that is not immediate jeopardy) or “F” (widespread - no actual
harm with potential for more than minimal harm that is not immediate jeopardy): 42
C.F.R. § 483.25(a)(3) (Tag F312, relating to activities of daily living care provided for
deficiencies, by letter dated July 21, 2014, CMS imposed a CMP in the amount of
$6,050.00 per day effective March 20 through April 7, 2014, and a CMP in the amount of
$600.00 per day effective April 8 through June 3, 2014. CMS Exhibit (Ex.) 3 at 1.

On July 14, 2014, Petitioner requested a hearing. On August 1, 2014, Administrative
Law Judge (ALJ) Carolyn Cozad Hughes issued an acknowledgment and initial
prehearing order establishing a briefing schedule. In accordance with the schedule, CMS
and Petitioner filed prehearing exchanges, including prehearing briefs (CMS Br. and P.
Br., respectively), exhibit and witness lists, and proposed exhibits. CMS moved for
summary judgment, and Petitioner objected. CMS submitted CMS Exs. | to 41, and
Petitioner submitted P. Exs. 1 to 17. As neither party has objected to any of the proposed
exhibits, I admit all of them into the record.*

IL. Issues

The issues are:
1) Whether summary judgment is appropriate;
2) Whether Petitioner failed to comply substantially with the requirements of
42 C.F.R. § 483.25(h) (Tag F323, relating to accident prevention and adequate
supervision);

3) If Petitioner was not substantially compliant with 42 C.F.R. § 483.25(h), then
whether CMS’s immediate jeopardy determination was clearly erroneous; and

4) Whether the CMP that CMS imposed is reasonable.

Ill. Findings of Fact and Conclusions of Law

dependent residents); 42 C.F.R. § 483.25(m)(1) (Tag F332, relating to a facility being free
of medication error rates of 5 percent or more); 42 C.F.R. § 483.25(m)(2) (Tag F333,
relating to residents being free of significant medication errors); 42 C.F.R. § 483.35(c)
(Tag F363, relating to menus meeting resident needs); 42 C.F.R. §§ 483.35(d)(1) and (2)
(Tag F364, relating to nutritional value, appearance, palatability, and temperature of
food); 42 C.F.R. § 483.70(a) (relating to four Life Safety Code standards under Tags
K038, K052, K067, and K069). Petitioner’s Brief (P. Br.) at 1 n.1.

> The case was reassigned to me on October 21, 2015.

* Several exhibits submitted by CMS and Petitioner contain identical documents. In
some instances, when referring to these documents, I have identified the document by
only CMS’s or Petitioner’s exhibit number, and not by both exhibit numbers.
A, Summary judgment is appropriate.

Summary judgment is appropriate if there is “no genuine issue as to any material fact,
and the moving party is entitled to judgment as a matter of law.” Mission Hosp. Reg’!
Med. Ctr., DAB No. 2459, at 5 (2012) (citations omitted). In order to prevail on a motion
for summary judgment, the moving party must show that there is no genuine dispute of
material fact requiring an evidentiary hearing and that it is entitled to judgment as a
matter of law. Jd. If the moving party meets this initial burden, the non-moving party
must “come forward with ‘specific facts showing that there is a genuine issue for trial . . .
.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). “To
defeat an adequately supported summary judgment motion, the non-moving party may
not rely on the denials in its pleadings or briefs, but must furnish evidence of a dispute
concerning a material fact — a fact that, if proven, would affect the outcome of the case
under governing law.” Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3
(2010). In moving for summary judgment, CMS must present evidence sufficient to
show, if uncontradicted, that it is entitled to judgment as a matter of law and that there are
no genuine issues of material fact in dispute. Chicago Ridge Nursing Ctr., DAB No. 2151
at 5. If CMS makes this demonstration, the SNF can avoid an adverse summary
judgment by: 1.) proffering evidence that there is a genuine dispute regarding facts that
are material to CMS’s basis for claiming judgment in its favor, or 2.) proffering evidence
from which a trier of fact could conclude—if accepted as true—that the facility could
carry the ultimate burden of persuasion (i.e., prove that the facility was in substantial
compliance). /d. In evaluating an SNF’s response to CMS’s motion for summary
judgment, the ALJ is to view the evidence in the light most favorable to the facility and is
to draw all reasonable inferences therefrom in the facility’s favor. Id.

The role of the ALJ in deciding a motion for summary judgment differs from the role of
an ALJ in resolving a case after a hearing: The ALJ does not address credibility or
evaluate the weight of conflicting evidence in evaluating a motion for summary
judgment. Holy Cross Village at Notre Dame, Inc., DAB No. 2291, at 5 (2009). Rather,
in examining the evidence to determine the appropriateness of summary judgment, the
ALJ must draw all reasonable inferences in the light most favorable to the non-moving
party. See Brightview Care Ctr., DAB No. 2132, at 10 (2007) (upholding summary
judgment where inferences and views of non-moving party are not reasonable). “[A]t the
summary judgment stage the judge's function is not... to weigh the evidence and
determine the truth of the matter but to determine whether there is a genuine issue for
trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, drawing
factual inferences in the light most favorable to the non-moving party does not require
that I accept the non-moving party’s legal conclusions. Cedar Lake Nursing Home, DAB
No. 2344, at 7 (2010).
Here, there is no genuine dispute of material fact. The documents in the record, the
majority of which were created and maintained by Petitioner itself, establish the
following undisputed material facts:

Resident # 14: Resident # 14, a 91-year-old woman, spilled coffee on herself on March 1
and 27, 2014. (P. Ex. 7 at 6, 22; CMS Ex. 18 at 19, 21). A January 14, 2014 care plan
conference summary report indicates, in pertinent part, that she has psychosis and that
she “feeds [her]self.” P. Ex. 7 at 20. In a subsequent evaluation on January 19, 2014 for
a Minimum Data Set (MDS) dated January 20, 2014, an evaluator determined that she
required a “[o]ne person physical assist” when eating. P. Ex. 7 at 14, 19. The MDS also
reported that Resident # 14 had highly impaired vision, a Brief Interview for Mental
Status (BIMS) score of 5,° communication ability limited to making concrete requests,
was totally dependent on staff for bed mobility, transfers, and locomotion, and that she
was always incontinent. P. Ex. 7 at 12-14. At the time of the hot liquid spill on March 1,
2014, Resident # 14 was drinking coffee in her bed. P. Ex. 7 at 22; CMS Ex. 18 at 19.
The Incident and Accident Report (incident report) does not indicate that, at the time of
the hot liquid spill, Resident 14 was receiving any assistance from a staff member while
she was drinking the coffee, that she was wearing lap or shirt protectors, or that the coffee
cup had a lid. /d. Petitioner does not deny that at the time of the spill Resident # 14 was
not receiving any staff assistance, not wearing any protectors, or that the coffee cup did
not have a lid. Staff was alerted when Resident # 14 began “hollering” for staff to help
her, at which time staff discovered she had spilled coffee and a “reddened area” was
immediately visible between her breasts. Jd. Per telephonic orders by her doctor, the
area was treated with triple antibiotic ointment twice daily through March 8, 2014. Id.; P.
Ex. 7 at 2-4; CMS Ex. 18 at 45-47. A March 12, 2014 treatment record provides a
diagnosis, of inter alia, end-stage dementia. (P. Ex. 7 at 24).

Resident # 14 spilled hot liquid on her chest again on March 27, 2014, at which time she
was drinking coffee in her bed without assistance while wearing a clothes protector. The
incident report does not document that a lid was on the coffee, and Petitioner does not
assert that the coffee cup had a lid. CMS Ex. 18 at 21. The area on which the coffee
spilled initially had redness following the spill, but upon examination one hour later there
was no redness or sign of injury. Jd. A new MDS was completed on April 18, 2014, at
which time Petitioner’s staff again assessed Resident # 14 as requiring a “[o]ne person
physical assist” when eating. CMS Ex. 18 at 7, 11. Regarding both thermal injuries, the

> A BIMS score below 7 indicates severely impaired cognitive ability. See CMS RAI
Version 3.0 Manual, https://www.cms.gov/Medicare/Quality-Initiatives-Patient-
Assessment-Instruments/NursingHomeQualityInits/Downloads/MDS-30-RAI-Manual-
V113.pdf, at C-14 (last visited November 12, 2015).
terms first, second, or third degree burn are not used in the nursing notes or incident
reports.°

Resident # 3: Resident # 3, a 92-year-old woman, sustained second degree burns of the
upper inner thighs when she spilled coffee on herself in the dining room on March 20,
2014. CMS Ex. 17 at 16, 22, 23; P. Ex. 6 at 17, 32. A November 15, 2013 social
services note reports that she “feeds self” and that she had recently lost her dentures and
that her family did not plan to replace them. P. Ex. 6 at 36. A February 18, 2014 setup
care plan conference summary reported that she was on a mechanical soft diet and that
she could feed herself. P. Ex. 6 at 9. A subsequent MDS completed shortly thereafter, on
February 20, 2014, assessed that Resident # 3 required only set-up assistance when
eating, along with “supervision” in the form of “oversight, encouragement, or cueing”
when eating. P. Ex. 6 at 4, 8. The MDS also reported that Resident # 3 was frequently
incontinent, required a one-person physical assist to walk, had communication ability
limited to only concrete requests, and had a BIMS score of 3. P. Ex. 6 at 2-4. A
February 21, 2014 social services note reported that she had diagnoses of Alzheimer’s
disease and depressive disorder and lived in the “secure unit.” P. Ex. 6 at 36.

On March 20, 2014, while eating in the dining room, Resident #3 sustained burns on her
right and left thighs when she spilled coffee on her lap. CMS Ex. 17 at 22, 125, 126.
Petitioner’s staff notified the nurse on duty, changed Resident #3’s clothing, and
contacted her doctor, who prescribed silvadene skin cream for the burns. CMS Ex. 17, at
104, 123-25. On March 24, the Resident was treated at a wound care center, where she
was diagnosed with second-degree burns on her left and right thighs. CMS Ex. 17 at 129.
The incident report from March 20 documents that a nursing assistant “reported she heard
resident yell & went to [illegible] & resident said she spilled coffee on her legs.” There is
no indication that Resident # 3 was supervised while eating her meal, that she was
wearing garment protectors, or that the coffee cup had a lid. CMS Ex. 17 at 22; P. Ex. 6
at 32. The report documents that the type of intervention that the facility initiated to
prevent further injury was: “If she request[s] coffee make sure it[’]s in a cup [with a] lid.”
Id. An April 16, 2014 care plan showed that Resident # 3 had the “[pJotential for injuries
related to hot liquid spills due to poor safety awareness related to cognitive impairment /
diagnosis of Alzheimer’s.” CMS Ex. 17 at 31; P. Ex. 6 at 46. The plan indicated that she
should use a cup with handles as needed, wear clothing protectors when eating and
drinking hot liquids, receive a lidded drinking cup, and have the temperature of hot

° CMS, in its brief, makes nine separate references to Resident # 14 sustaining a second
degree burn. However, CMS points to no specific evidence in support of this assertion,
and I found no evidence in the record that Resident # 14 sustained a second degree burn
on either March | or 27, 2014. I also observe that on no less than ten occasions, CMS
failed to include a citation in support of an evidentiary assertion (i.e., citing to “CMS Ex.
__”) or cited to wholly nonexistent evidence (i.e., citing to “CMS Ex. 52” and “CMS Ex.
19 at 88”).
liquids monitored. /d. Treatment records through the date of the survey, approximately
two months after the hot liquid spill, document continuing wound care for the burns and a
“complicated course” that involved wound infections requiring antibiotic treatment.

CMS Ex. 17 at 23-24, 38-74, 129-30; P. Ex. 6 at 37-38. Treatment for the burns included
debridement on March 24, 2014. CMS Ex. 17 at 130. On March 31, 2014, the left thigh
wound was assessed as .7 x 3.2 x. 2 centimeters in size, and the right thigh wound was
2.6 x 11.5 x .2 centimeters in size. CMS Ex. 17 at 49. Both wounds had a large amount
of necrosis. Jd.

Hot liquids assessments and training:

March 10, 2014: Following Resident # 14’s hot liquid spill on March 1, 2014,
Petitioner conducted in-service training on March 10, 2014 that covered numerous topics,
including the prevention of accidents and the spillage of hot liquids. P. Ex. 9 at 1-4;
CMS Ex. 33 at 14-16.

March 24, 2014: Following Resident # 3’s hot liquid spill on March 20, 2014,
Petitioner conducted another in-service training session on March 24, 2014, which
included numerous topics. P. Ex. 9 at 5-9. One of the topics listed in the training agenda
included: “Coffee cups & lids on carts — all hot liquids going down the hall and in the
dining rooms.” P. Ex. 9 at 5-9.

March 25, 2014: A small group of staff was given in-service training regarding
care requirements for Resident # 3 on March 25, 2014. The topic was “prevention of
burns” and staff was instructed as follows: “1. Hot liquids in cup [with] lid every time; 2.
Put shirt protector on and one in lap for protection there; 3. Cool down her hot liquids.”
CMS Ex. 17 at 36; P. Ex. 9 at 10.

April 7, 2014: A “QA” form, dated April 3, 2014, references the problem of
“spillage of hot liquids.” The four identified solutions were:

1. In-service of nursing staff by Director of Nursing;

2. Reduce temperature of coffee from kitchen to 160 [degrees];

3. Monitor coffee temperature by dietary department;

4. Nursing monitor meal service 3x/week for lids on cups, cooling down coffee,
etc. by [Director of Nursing].

P. Ex. 9 at 11. Shortly thereafter, on April 7, 2014, in-service training was given on at
least four topics that included “survey preparedness” and “prevention of spillage of hot
liquids.” P. Ex. 9 at 12-16. Petitioner’s plan of correction indicates that, on April 7,
2014, “[d]ietary and nursing staff were in-serviced ... to place lids on hot liquids, use
clothing protectors when available, use ice/cool water to cool liquids above 140° before
serving them to residents.” CMS Ex. 12 at 4.
April 16, 2014: In-service training was provided to a group of staff members
regarding hot liquids precautions on April 16, 2014. The following instructions were
given to the participants: “Temperature of coffee coming from kitchen is [160 degrees];
serve hot liquids [with] lids on cup; let dietary manager and nurse managers [know] of
residents [who are] noncompliant with lids; make sure hot coffee is cooled by adding ice;
residents to wear clothing protector/lap protector; residents are to be assisted with all hot
liquids; read policy and procedures on classifications of burns.” P. Ex. 9 at 17.

May 1, 2014: Petitioner performed hot liquid assessments on all residents on May
1, 2014 and reported that all residents who were identified as receiving “2 or more marks
will receive appropriate interventions when consuming hot liquids.” CMS Ex. 12 at 4.
While copies of the hot liquids evaluations have not been submitted by either party as
evidence, the Statement of Deficiencies (SOD) dated May 2, 2014, documents that 68
residents were identified as being at risk from hot liquid injuries. CMS Ex. 12 at 12.
Petitioner has not disputed this figure in its brief.’

Petitioner has not come forward with any evidence that raises a dispute of material fact.
While Petitioner’s brief includes a list of assertions titled “Statement of Facts About
Which There Is A Material Dispute,” I conclude that none of the items listed establishes a
genuine factual dispute. P. Br. at 7-8. Among other things, Petitioner states that it
disputes the state agency’s assessment of the deficiency cited under section 483.25(h) as
posing a pattern of immediate jeopardy to facility residents’ health or safety. P. Br. at 7.
Petitioner also states that it disputes the “immediate jeopardy finding because . . . it took
reasonable steps to ensure its residents received supervision and assistance devices that
met their assessed needs and mitigated foreseeable risks of harm.” Jd. at 8. Whether the
state agency erred in assessing the scope and severity of the deficiency, and whether the
facility took reasonable steps to ensure its residents received the requisite supervision and
assistance are legal issues, however, and not issues of fact. Petitioner’s assertions
represent legal allegations that are based on non-factual disagreements with the state
agency and CMS’s ultimate legal conclusions.

Petitioner also asserts that there are several material factual disputes relating to Resident
# 3’s and Resident # 14’s assessed physical conditions and functional statuses. For
example, Petitioner says that “Resident 3 had no skin issues at the time of the coffee
spill,” contrary to CMS’s allegations. P. Br. at 7. To support its statement, Petitioner
points to a March 19, 2014 assessment by Resident # 3’s doctor documenting Resident #3
had “[n]Jo skin issues” prior to the hot coffee spill. P. Ex. 6 at 34. CMS, however, has

7 Although CMS asserts that Petitioner served “extremely hot coffee” and Petitioner
counters that the coffee was not too hot, the precise temperature of the facility’s coffee is
not a material fact. The undisputed evidence shows that the coffee was served hot
enough to cause second degree burns to Resident # 3.
not disputed that assessment. Rather, CMS asserts that at the time of the survey, which
was several weeks after the resident sustained burns from the spill, Resident # 3 had a
propensity for issues related to skin integrity. CMS Br. at 6. While Resident’s # 3’s
physical condition apparently deteriorated between February and April 2014, after the
spill, this change does not signal a factual dispute. Petitioner also claims that contrary to
CMS’s characterization, Resident # 3 was able to eat without assistance and required help
from staff with meals only for “setup.” P. Br. at 7, citing P. Ex. 6 at4. The February 20,
2014 MDS states, however, that Resident # 3 needed “Supervision - oversight,
encouragement, or cueing,” along with “[s]etup help only” when eating. P. Ex. 6 at 4.
Thus, viewed in the light most favorable to Petitioner, the evidence shows that the facility
itself had determined that Resident # 3 required staff supervision when eating, even
though she could feed herself.

With respect to Resident # 14, Petitioner challenges CMS’s assertion that Resident # 14
“require[ed] limited assistance of one person for eating.” P. Br. at 8; CMS Br. at 8. In
disputing this factual assertion, Petitioner contends that Resident # 14 had a January 19,
2014 care plan that was “approved by her physician” that indicated “she was able to feed
herself.” P. Br. at 8. The document cited by Petitioner (P. Ex. 7 at 20) is a January 14,
2014 “Care Plan Conference Summary” that indicates that Resident # 14 “feeds self,” but
also remarks that she requires “extensive” two-person assistance and needs assistance
with activities of daily living. P. Ex. 7 at 20. In addition, the January 20, 2014 MDS
assessed Resident # 14 as requiring a one-person physical assist with eating. P. Ex. 7 at
14, 19.

Moreover, whether Resident # 3 had diagnosed skin integrity problems prior to sustaining
burns from the coffee spill or whether both Residents # 3 and # 14 were able to feed
themselves prior to the hot coffee spills are issues that are not material to the outcome of
this case. As explained more fully below, even accepting Petitioner’s factual assertions
as true, the facility did not ensure that conditions at the facility were “as free of accident
azards as is possible” in light of its residents’ compromised cognitive status, limited
mobility and communication deficits, as well as the facility’s failure to conduct hot
liquids assessments and take precautionary measures to protect its residents from severe
burns in the event they spilled hot liquids on themselves.

Finally, Petitioner disputes CMS’s assertion that “[o]n May 2, 2014, the Facility lowered
the brewing temperature of the coffee machine, which at the time brewed at 192 [degrees
Fahrenheit].” P. Br. 8; CMS Br. at 10. In disputing this assertion, Petitioner contends
that it “began requesting that its vendor lower the brewing temperature of its coffee
machine on April 17” and “began monitoring the temperature of individual residents’
coffee following the inservice training on March 10.” P. Br. at 8. The written declaration
of Petitioner’s witness Richard A. Scott, however, reports that the temperature that coffee
is served was lowered to below 140 degrees in May 2014 and that “[c]Joffee is usually
brewed at a higher temperature than it is served, usually at 190 to 200 degrees

10

Fahrenheit.” P. Ex. 2. Regardless, the temperature at which coffee was brewed in the
facility’s kitchen is not a material fact to this case; rather, whether the service of hot
coffee to residents caused or was likely to cause serious injury, harm, impairment, or
death to a resident is relevant to the questions at issue in this case. 42 C.F.R. § 488.301.

For the reasons explained above, I conclude that Petitioner has not come forward with
any evidence that raises a dispute of any material fact. Accordingly, summary judgment
is appropriate.

B. Petitioner was not in substantial compliance with 42 C.F.R. § 483.25(h)
because it did not address foreseeable risks of harm from accidents involving
hot liquids spills.

Program requirements. Subsection 483.25(h) is part of the quality of care regulation at
42 C.F.R. § 483.25, which states that “[e]ach resident must receive and the facility must
provide the necessary care and services to attain or maintain the highest practicable
physical, mental, and psychosocial well-being, in accordance with the comprehensive
assessment and plan of care.” Subsection 483.25(h) imposes specific obligations upon a
facility related to accident hazards and accidents, as follows: The facility must ensure
that —

(1) The resident environment remains as free of accident hazards as is possible; and

(2) Each resident receives adequate supervision and assistance devices to prevent
accidents.

The Departmental Appeals Board (the Board) has held that subsection 483.25(h)(1)
requires that a facility address foreseeable risks of harm from accidents “by identifying
and removing hazards, where possible, or where the hazard is unavoidable because of
other resident needs, managing the hazard by reducing the risk of accident to the extent
possible.” Maine Veterans’ Home - Scarborough, DAB No. 1975, at 10 (2005)
(explaining the inherent standard of care in section 483.25(h)(1)). The provisions of
section 483.25(h) “come into play when there are conditions in a facility that pose a
known or foreseeable risk of accidental harm.” Meridian Nursing Ctr., DAB No. 2265,
at 9 (2009), aff'd, Fal-Meridian, Inc. v. U.S. Dep’t of Health & Human Servs., 604 F.3d
445 (7th Cir. 2010). The Board has held that subsection 483.25(h)(2) requires that a
facility take “all reasonable steps to ensure that a resident receives supervision and
assistance devices that meet his or her assessed needs and mitigate foreseeable risks of
harm from accidents.” Briarwood Nursing Ctr., DAB No. 2115, at 11 (2007), citing
Woodstock Care Ctr. v. Thompson, 363 F.3d 583, at 589 (6th Cir. 2003)(facility must
take “all reasonable precautions against residents’ accidents”), affirming, Woodstock
Care Ctr., DAB No. 1726 (2000). Facilities are given “the flexibility to choose the
methods” they use to provide supervision or assistive devices to prevent accidents, so
11

long as the chosen methods constitute an adequate level of supervision for a particular
resident’s needs.” Windsor Health Care Ctr., DAB No 1902, at 5 (2003), aff'd, Windsor
Health Care Ctr. v. Leavitt, 127 F. App’x 843 (6th Cir. 2005)(unpublished).

The State Operations Manual (SOM), which provides guidance on the Secretary’s
regulations, addresses burns from spills of hot liquids. P. Ex. 15 at 13-14.8 The SOM
states that “[mJany residents in long-term care facilities have conditions that may put
them at increased risk for burns caused by scalding.” P. Ex. 15 at 13. The SOM notes
that these conditions include decreased agility (reduced reaction time), decreased
cognition or dementia, decreased mobility, and decreased ability to communicate. Id.

As discussed in the previous section, Residents # 3 and # 14 had cognitive, mobility, and
communicative deficits. Thus, Residents # 3 and # 14 were at an increased risk for burns
caused by scalding.

In the SOD dated May 2, 2014, CMS cited Petitioner for failing to ensure the
environment remains as free of accident hazards as possible and that each resident
receives adequate supervision and assistance devices to prevent accidents, in violation of
42 C.F.R. § 483.25(h). CMS Ex. 1 at 3. The SOD indicated that Resident # 14 had a first
degree burn to the chest on March 1, 2014, and that Resident # 3 had a second degree
burn to the right thigh on March 20, 2014, both of which were caused by spilled coffee.
Id. at 4. While the first hot liquid injury occurred on March 1, 2014, the state agency did
not find an immediate jeopardy situation until March 20, 2014, which is the time of the
second hot liquid spill resulting in injury that month. P. Ex. 12.

CMS asserts that Petitioner’s noncompliance began on March 20, 2014, when Resident
#3 sustained second degree burns to her thighs.” As previously discussed, at the time she
spilled hot coffee on herself, Resident # 3 required supervision and set-up assistance
during meals, and had a BIMS score of 3, which is indicative of severe cognitive
impairment. P. Ex. 6 at 2-4. Surveyors cited this as an incident of noncompliance at the
time of the May 2014 survey. CMS Ex. | at 3-8.

Petitioner now argues that it had no duty to provide hot liquids assessments of its
residents because such assessments were incorporated in its residents’ admission and
MDS assessments, yet it fails to appreciate that had it followed Resident # 3 and # 14’s

* The SOM has been revised since Petitioner filed its brief, and the updated version
(Revision 149, dated October 9, 2015) can be found at hitps://www.cms.gov/Regulations-
and-Guidance/Guidance/Manuals/downloads/som107ap_pp_guidelines_Itcf.pdf (last
visited November 12, 2015).

°’ CMS showed restraint in its determination that the noncompliance began on March 20,
2014. The evidence arguably demonstrates that noncompliance began at the time of
Resident # 14’s hot liquid spill on March 1, 2014.
12

assessments, these accidents may not have occurred in the first place. Thus, by not
proving a hot liquids assessment, and not adhering to the supportive requirements set
forth at the time of previous assessments of the residents’ ability to consume meals, the
facility did not make adequate efforts to protect these residents from hot liquid spills.

Specifically, Petitioner did not ensure that Resident # 14 received the adequate
supervision and assistance devices necessary to prevent the spillage of coffee on March 1,
2014. According to her MDS, dated January 20, 2014, Resident # 14 had a severe
cognitive impairment, and was totally dependent on staff for bed mobility, transfers,
locomotion, toileting, and dressing. P. Ex. 7 at 12-14. The MDS also indicated that she
required a one-person physical assist when eating. P. Ex. 7 at 14. However, on March 1,
2014, in contravention of the assessment, she was given a meal and hot coffee to
consume while unsupervised in her bed. At that time, she sustained a hot liquid spill
between her breasts. P. Ex. 7 at 22. The coffee was approximately 169 degrees
Fahrenheit in temperature (CMS Ex. 23 at 2), and in addition to not being given the
assistance she should have been afforded per her assessment, Resident # 14’s coffee cup
was not lidded and she was not wearing any clothing protectors. (P. Ex. 7 at 22). While
Petitioner argues that a separate hot liquids assessment was wholly unnecessary because
Resident # 14’s assessment adequately assessed her safety needs, Petitioner fails to
recognize that its utter disregard for the assistance requirements clearly listed in the
January 2014 assessment resulted in an unassisted and unprotected cognitively and
mobility-impaired resident spilling hot coffee on herself.

Despite the fact that the facility disregarded Resident # 14’s assessment and she sustained
a burn between her breasts, the surveyors did not cite the facility for noncompliance until
another resident was burned 19 days later, on March 20, 2014. Although the facility was
on notice that an unsupervised, cognitively-impaired resident could sustain a burn injury
when consuming hot coffee, the evidence does not show that the facility changed its
practices with respect to hot liquids service for anyone other than for Resident # 14.'° At
the time Resident # 3 was burned on her upper and inner thighs on March 20, 2014, the
facility once again allowed a resident with severe cognitive impairment and who required
supervision while eating, to drink coffee unsupervised and without any protection, in the
form of a lidded cup or clothing protectors. In this instance, the coffee was served at
approximately 165 degrees Fahrenheit, there was no lid on the coffee, and the resident

' The facility conducted in-service training on March 10, 2014. Petitioner claims that
the DON “discussed the issue of hot liquids and addressed ways to avoid hot-liquid
spills.” P. Br. at 17. However, the exact content of the training is not included in
exhibits submitted by the parties. P. Ex. 9 at 1; CMS Ex. 33 at 14-16. The plan of
correction submitted by Petitioner indicates that the Director of Nursing “inserviced staff
[on] 3/10/14 on the prevention of accidents and spillage of hot liquids” but gave no
further elaboration. CMS Ex. 12 at 4.
13

was not wearing any clothes protectors. P. Ex. 17; CMS Ex. 17 at 22; CMS Ex. 23 at 2.
Unfortunately for Resident # 3, she sustained second degree burns to her upper thighs.
Of particular significance is that the wound on her right thigh took approximately two
months to heal after a complicated course involving open blisters, debridement, and
infection. CMS Ex. | at 5-6,7; CMS Ex. 17 at 23-24, 38-74,118-23; P. Ex. 6 at 16-31,
37-38.

Following Resident # 3’s second degree burn injury, Resident # 14 spilled coffee on
erself for a second time on March 27, 2014, while drinking coffee in her bed. CMS Ex.
18 at 21. Fortunately, the injury was much less significant than the previous injuries
associated with hot liquid spills in the facility that month, in that the redness on Resident
# 14’s chest subsided within an hour. Jd. While the incident report indicates that
Resident # 14 was wearing a clothing protector while she was drinking her coffee, it does
not indicate that there was a lid on the coffee cup'' or that she was receiving a one-person
physical assist as was stated to be required in her MDS.”

Petitioner argues that a hot liquids assessment was unnecessary because the facility
conducts a “Resident Admission Nursing Assessment” and an MDS assessment, which
both involve “the gathering of information that would put [Petitioner’s] staff on notice if
a resident needed assistance on hot liquids.” P. Br. at 13. Petitioner further stated that
“{s]imply the absence of a separate form called a ‘hot liquids assessment’ form does not
mean that [Petitioner] was not doing its job in assessing in [sic] residents in general, and
in particular with regard to Resident # 3.” Jd. Petitioner essentially contends that
drinking hot liquids is a subcomponent of eating, and that its residents’ assessments
include the capability for consuming hot liquids that can be served at a temperature of
165 degrees or higher in an open and non-spillproof container. Even if this assertion is
true, neither Resident # 3 nor Resident # 14 was given the level of assistance for eating
that was specified in their existing assessments.

As shown by the fact that the facility did not adhere to the assessments previously in
place for its residents, in that Resident # 14 should have had a one-person assist and
Resident # 3 should have had supervision while eating, there is no indication that the
facility would have followed a plan required based on a separate hot liquids assessment if
such an assessment had been provided to each resident. After a severely cognitively-
impaired resident in the facility experienced a hot liquids spill on March 1, 2014, the

'! The March 1, 2014 incident report documented that the initiated interventions were lap
and shirt protectors and the use of a “spill proof lid.” CMS Ex. 18 at 19.

° The incident report documents that Resident # 14 was “yelling for help” and that the
“aide checked on her,” which demonstrates that Resident # 14 was drinking her coffee
without assistance. CMS Ex. 18 at 21.
14

facility made no systemic changes to prevent a significant burn affecting another severely
cognitively-impaired resident on March 20, 2014. And even after the second resident
was burned on March 20, 2014, a third incident occurred on March 27, 2014 involving a
resident who had already spilled hot liquid on herself earlier that month. At that time,
this resident, who required a one-person physical when eating, was injured yet again
when drinking her coffee alone and unassisted. It is noteworthy that this resident was to
have a lid on her cup and lap and shirt protectors, yet she was drinking coffee served at
approximately 164 degrees Fahrenheit without any supervision and potentially without a
lid on the cup.'* This series of hot liquid spills in the same month on elderly and
cognitively-impaired residents evidences a pattern of substantial noncompliance in
avoiding accident hazards for Petitioner’s residents.

Based on the March 1, 2014 incident, Petitioner was on specific notice of a foreseeable
risk of harm from hot liquid spills starting that date, yet it failed to take steps to protect
residents from the serious, foreseeable harm posed by that risk.

B. CMS’s determination of immediate jeopardy is not clearly erroneous.

CMS asserts that Petitioner’s deficiency constituted immediate jeopardy (at the “K”
scope and severity level) to resident health and safety from March 20 through April 7,
2014. Petitioner argues that if I were to find noncompliance, that such noncompliance
does not constitute immediate jeopardy.

Immediate jeopardy exists if a facility’s noncompliance has caused, or is likely to cause,
serious injury, harm, impairment, or death to a resident. 42 C.F.R. § 488.301. The
regulation does not require that a resident actually be harmed. Lakeport Skilled Nursing
Ctr., DAB No. 2435, at 8 (2012). I must uphold CMS’s determination as to the level of a
facility’s substantial noncompliance (which includes an immediate jeopardy finding)
unless it is “clearly erroneous.” 42 C.F.R. § 498.60(c). The Board directs that the
“clearly erroneous” standard imposes on facilities a heavy burden to show no immediate
jeopardy and has sustained determinations of immediate jeopardy where CMS presented
evidence “from which ‘[o]ne could reasonably conclude’ that immediate jeopardy
exists.” See, e.g., Barbourville Nursing Home, DAB No. 1962, at 11 (2005)(citing
Florence Park Care Ctr., DAB No. 1931, at 27-28 (2004)).

Here, CMS’s finding of immediate jeopardy is not “clearly erroneous.” Resident # 14
spilled hot liquid on herself twice, and Resident # 3 sustained second-degree burns from
spilling hot liquid on herself. The evidence shows that not only were these residents’
individual MDS assessments and care plans not followed as prescribed, but also, the

'8 The incident report documents that a clothes protector was worn but does not
document that a lid was on the cup. Petitioner has not asserted that the coffee cup had a
lid. CMS Ex. 18 at 21.
15

facility did not endeavor to timely assess if other residents were at risk for hot liquid spill
injuries. CMS Ex. 12 at 4. Although the facility determined, on April 3, 2014, that it
would reduce the temperature of coffee from the kitchen to 160 degrees Fahrenheit (P.
Ex. 9 at 11), coffee was routinely served at above that temperature for the remainder of
April 2014. CMS Ex. 23 at 1. It was not until April 7, 2014 that the facility began to
provide lids on coffee cups. CMS Ex. 12 at 4; CMS Ex. 21 at 1. It is noteworthy that,
following the universal administration of hot liquids assessments on May 1, 2014, 68
residents were ultimately deemed to be at risk for hot liquid injuries. CMS Ex. 12 at 4.

Contrary to Petitioner’s arguments, the risk of harm from hot liquid spills at the facility
was significant, affecting a potential population of 68 residents by the facility’s own
assessment. CMS Ex. | at 4. While Petitioner, in arguing against summary judgment,
contends that the two residents who were injured had previously been assessed as being
capable of eating and drinking with little or no assistance, Petitioner also acknowledged
that a different screening measure showed that 68 of its residents required protective
measures when drinking hot liquids, such as the use of a lid or clothing protectors. CMS
Ex. 12 at 4. While the hot liquid spills involving Residents #3 and # 14 were the impetus
for the state agency to find deficiencies resulting in a finding of immediate jeopardy, the
incidents involving these two residents showed a pattern of accident hazards and a lack of
supervision and adequate assistance devices to prevent accidents.

Petitioner argues that the “imposition of penalties based on Immediate Jeopardy should
be particularly troubling in this matter, because they were based on false evidence
submitted by” the surveyor to her supervisor. P. Br. at 9. Petitioner contends that the
state agency “included factual information in its worksheets and reports that simply was
not true, and effectively violated the standards in the State Operations Manual that
provide guidelines for Immediate Jeopardy determinations.” Jd. Petitioner focuses on an
“Immediate Jeopardy Worksheet” in which the state surveyor made a notation that
“Resident 8” had sustained a third degree burn. P. Br. at 15, citing CMS Ex. 33 at 4.
Petitioner also takes issue with a survey worksheet notation that Resident # 3 had third
degree burns to her right thigh. P. Br. at 15, citing CMS Ex. 33 at 6. I could not locate
any references to third degree burns involving either Resident # 3 or # 8; however, these
references were made in worksheets, and ultimately not listed in the deficiencies included
in the SOD. By not being included in the CMS Form 2567, these statements were not the
basis for, nor were they necessary to support, the findings of substantial noncompliance
and immediate jeopardy.

Furthermore, Petitioner attempts to minimize the injuries sustained by the two residents,
aged 91 and 92, whose safety was entrusted to its facility and its staff. In doing so,
Petitioner contends “Resident 14 had minor redness never diagnosed at any burn level,
and Resident 3 had second-degree burns covering a few inches on her thighs.” P. Br. at
15.

16

Petitioner disputes that Resident # 14 was ever burned, stating: “The only notation of any
injury resulting from Resident 14’s March | coffee spill was in the nurse’s notes, which
reflected a reddened area on her chest that quickly went away following the coffee spill.”
P. Br. at 16. Petitioner highlights that a skin assessment two days after the spill found no
evidence of any injury. P. Br. at 16, citing P. Ex. 7 at 30. However, I observe that an
assessment two days later, on March 3, 2014, indicated “[r]edness noted [at] breast.”
CMS Ex. 18 at 46. I also observe that the resident “hollered” and said “help me” when
the coffee spilled between her breasts, and that she had redness lasting for two days,
which certainly evidences an injury. CMS Ex. 18 at 19. Ido not see the term “first
degree burn” as a diagnosis for Resident # 14’s injury. However, the medical evidence
plainly shows that redness lasted at the site of the thermal injury for approximately two
days, and that treatment continued for a full week. CMS Ex. 18 at 46-47. I therefore
reject the allegation that the surveyors mischaracterized the injury as a “first-degree
burn.”

With respect to Resident # 3, Petitioner contends that her burns “were diagnosed as
second-degree burns, but they were not on a large surface area of her skin, resulting in
blisters that covered only a few inches in diameter on her thighs.” P. Br. at 15 (emphasis
added). While I did not observe any reference in the record to Resident # 3 having
sustained third-degree burns, I note that wound care specialists reported that Resident # 3
ad “complicated” wounds. CMS Ex. 17 at 69, 72. Furthermore, her wounds required
debridement, and she developed infections of the wounds on both thighs that required a
0-day course of antibiotic treatment. CMS Ex. 17 at 38-74. Resident # 3 also required
topical treatment and weekly wound care treatment. Jd. The wounds were clearly
painful, as nursing notes reflect that Resident # 3 would “barely let [the nurse] look” at
er wounds and she “tried hitting this nurse while [ointment] was applied.” P. Ex. 6 at
7. The nursing notes indicate that the wounds were at the “upper” and “inner” thighs
and that they were painful to touch. Jd. Resident # 3 continued to be treated by Sparks
Wound Care Center until May 20, 2014, which is approximately two months after the
injury. P. Ex. 6 at 25.

Petitioner argues that, per the SOM, Resident # 3’s burns should not result in an
immediate jeopardy situation, as they were not on a large surface area of her skin. P. Br.
at 15, referencing P. Ex. 15 at 29 (SOM statement that immediate jeopardy “might
include . . . a 2" degree burn covering a large surface area.”) Petitioner’s argument is
flawed; immediate jeopardy is defined as a “situation in which the provider’s
noncompliance with one or more requirements of participation has caused, or is likely to

4 See http://www.cdc.gov/masstrauma/factsheets/public/burns.pdf (last visited
November 12, 2015) (noting that “‘First-degree burns involve the top layer of skin” and
“Sunburn is a first-degree burn.” The Centers for Disease Control and Prevention (CDC)
reports that signs of a first degree burn include redness, pain on touch, and mild swelling.
17

cause, serious injury, harm, impairment, or death to a resident.” 42 C.F.R. § 488.301.
While there is no precise gauge as to whether Resident # 3 had burns over a “large
surface area,” it is clear that this 91-year-old’s injury was “serious,” in that it required
approximately 8 weeks of wound care treatment, along with debridement, antibiotics,
topical management, and a complicated course that involved wound infections. '°
Furthermore, assuming arguendo that Resident # 3’s injuries were not “serious” within
the meaning of the definition of immediate jeopardy, I note that the potential for serious
injury, harm, or impairment to a resident was significant in light of the facility’s pattern
of not assessing residents’ abilities to handle hot liquids in combination with its failure to
adhere to assessments specifying assistance that was required during meals.

C. The CMP that CMS imposed is reasonable in amount and duration.

With regard to the amount of the CMP, I examine whether a CMP is reasonable by
applying the factors listed in 42 C.F.R. § 488.438(f): 1) the facility’s history of
noncompliance; 2) the facility’s financial condition; 3) the factors specified in 42 C.F.R.
§ 488.404; and 4) the facility’s degree of culpability, which includes neglect,
indifference, or disregard for resident care, comfort, or safety. The absence of culpability
is not a mitigating factor. The factors listed in 42 C.F.R. § 488.404 include: 1) the scope
and severity of the deficiency; 2) the relationship of the deficiency to other deficiencies
resulting in noncompliance; and 3) the facility’s prior history of noncompliance in
general and specifically with reference to the cited deficiencies.

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

'S While not making a finding that this was a “major” second degree burn, I point out
that the aforementioned NIH discussion regarding burns (FN 19) remarks that a “major”
second degree burn is greater than 2-3 inches in diameter, as was this wound.
18

Unless a facility contends that a particular regulatory factor does not support the CMP
amount that CMS imposed, the ALJ must sustain it. Coguina Ctr., DAB No. 1860, at 32
(2002). CMS decided to impose a per-day CMP in this case, and I found that the
immediate jeopardy level of noncompliance was not clearly erroneous in this case. Thus,
the minimum CMP I am required to sustain is $3,050 per day. The $6,050 per day CMP
CMS imposed is in the low-to-middle range for immediate jeopardy level
noncompliance.

Neither party has addressed the regulatory factors listed above in its briefs. While
Petitioner has contended that another ALJ’s decision in St. Joseph Villa Nursing Ctr.,
DAB No. 2210 (2010), is instructive with respect to the amount of CMPs that should be
allowed, I disagree. P. Br. at 20. The St. Joseph case involved a per-instance CMP in
which the range of allowable CMPs differed and the finding of immediate jeopardy was
not subject to review.

I note that in evaluating the regulatory factors listed above, I conclude that Petitioner’s
history of noncompliance supports the CMP imposed, considering also that Petitioner
was cited for nine other deficiencies in the same survey. CMS Ex. 2. It is not lost on me
that the same resident, Resident # 3, was affected by two separate deficiencies that were
cited at the time of the May 2014 survey; Resident # 3 sustained a second-degree hot
liquids injury and was also kept in blood-stained clothing on April 29, 2014, in violation
of the requirement that the facility maintain good grooming. CMS Ex. | at 1-4. In
explaining the CMP, the stage agency discussed, in its May 15, 2014 letter, that the
facility had deficiencies “‘at the harm level or above on the previous survey of June 6,
2013.” P. Ex. 12 at 1; P. Ex. 13. Based on this regulatory factor alone, a CMP that is in
the low end of the middle range of allowable CMPs is not unreasonable.

Petitioner has not asserted that its financial condition should be considered in mitigation
of the CMP. Therefore, I do not consider this to be a mitigating factor.

The burden of persuasion regarding the duration of noncompliance is also Petitioner’s.
Owensboro Place and Rehab. Ctr., DAB No. 2397 (2011). Petitioner has not made any
arguments regarding the duration of the period of immediate jeopardy. I note that
Petitioner was first put on notice of the potential for harm created by its failure to prevent
residents from spilling hot liquids on themselves on March 1, 2014, when Resident # 14
spilled coffee on herself in bed. Although Petitioner did begin to address the problem, '®

16 : . a . : . . :
° As mentioned earlier, Petitioner conducted in-service training on various occasions

prior to the removal of immediate jeopardy on April 7, 2014. However, it was not until
April 7, 2014, based on the facility’s plan of correction, that Petitioner instructed its staff
to put lids on coffee cups. CMS Ex. 4 at 12. An April 16, 2014 record of in-service
19

the noncompliance continued. On March 20 and March 27, 2014, severely cognitively-
impaired residents spilled hot liquids on themselves in situations that were in
contravention of their established assessments. Not until Petitioner implemented its plan
of correction by ensuring that lids were placed on coffee cups, residents were donned
with clothes protectors, and coffee was served at a lower temperature did the facility
effectively prevent the risk for burns. CMS Ex. 12 at 4. Petitioner has not met its burden
to persuade me to find the facility returned to substantial compliance at any point earlier
than the date determined by CMS.

IV. Conclusion

For the reasons set forth above, I sustain CMS’s determinations. I find that Petitioner
was not in substantial compliance with the participation requirement at 42 C.F.R.

§ 483.25(h) and that the CMP imposed, a $6,050.00 per day CMP effective March 20
through April 7, 2014, and a $600.00 per day CMP effective April 8, 2014 through June
3, 2014, is reasonable.

/s/
Leslie C. Rogall
Administrative Law Judge

training indicates that a number of staff members were instructed to serve hot liquids with
lids on the cups and to use clothing and lap protectors. P. Ex. 9 at 17.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Zahid Imran, M.D.,
(OI No. 6-11-40736-9),
Petitioner,

v.

The Inspector General
Docket No. C-15-1908
Decision No. CR4465

Date: November 25, 2015

DECISION

In this case, I again consider the appropriate period of program exclusion for someone
who participated in Medicare fraud of massive proportions.

Petitioner, Zahid Imran, M.D. was a physician licensed to practice in the State of
Louisiana. He pled guilty in United States District Court to felony conspiracy to commit
health care fraud. Pursuant to section 1128(a)(1) of the Social Security Act (Act), the
Inspector General (I.G.) has excluded him from participating in Medicare, Medicaid, and
all federal health care programs for a period of 48 years. Petitioner Imran appeals. He
concedes that he must be excluded but challenges the length of that exclusion.

For the reasons set forth below, I find that the 48-year exclusion falls within a reasonable
range.
Background

Petitioner Imran was a physician who served as owner, director, officer, and manager of
two community mental health centers in Baton Rouge, Louisiana. He was also the
medical director at one of the centers. I.G. Ex. 4 at 5-6; I.G. Ex. 5 at 5. These
community mental health centers purportedly offered partial hospitalization programs. '

From about 2005 through October 2011, Petitioner Imran and his colleagues submitted
claims to the Medicare program for services they did not provide. Among other offenses,
Petitioner Imran admitted patients who did not qualify for partial hospitalization and for
whom those services were not medically necessary. I.G. Ex. 4 at 9; I.G. Ex. 5 at 5. He
signed false statements, claiming that he had provided treatment that he did not provide.
1.G. Ex. 4 at 10, 13; LG. Ex. 5 at 5-6. He falsified documents, including patient
treatment notes and attendance records, so that false claims could be submitted to the
Medicare program. I.G. Ex. 5 at 6.

On May 2, 2013, Petitioner Imran was charged with one count of felony conspiracy to
commit health care fraud (18 U.S.C. § 1349) and three counts of felony health care fraud
(18 U.S.C. §§ 1347 and 2). LG. Ex. 4. He pled guilty to the conspiracy charge; the court
accepted his plea and entered judgment against him on August 25, 2014. I.G. Ex. 6. The
court sentenced him to 86 months in prison, and ordered him to pay a whopping
$23,817,779 in restitution to the Centers for Medicare & Medicaid Services, which
administers the Medicare program. I.G. Ex. 6 at 2, 5.

Ina letter dated January 30, 2015, the I.G. advised Petitioner Imran that, because of his
conviction, he was excluded from participating in Medicare, Medicaid, and all federal
health care programs for a minimum period of 48 years. 1.G. Ex. 1. The letter explained
that section 1128(a)(1) of the Act authorizes the exclusion. Petitioner appealed.

In compliance with my orders, the I.G. has submitted an initial brief (I.G. Br.) and a reply
brief (IG. Reply). The LG. also submitted eight exhibits (I.G. Exs. 1-8). Petitioner
submitted a brief (P. Br.) and one exhibit (P. Ex. 1). In the absence of any objection, I
admit into evidence I.G. Exs. 1-8 and P. Ex. 1.

I directed the parties to indicate in their briefs whether an in-person hearing would be
necessary, and, if so, to “describe the testimony that [it] wishes to present and provide the
name of any witness and a summary of each witness’s proposed testimony.” I
specifically directed the parties to explain why the testimony would be relevant. Order

' A “partial hospitalization program” allows for the delivery of mental health and related
services in hospitals and community mental health centers. It is “a distinct and organized
intensive ambulatory treatment service offering less than 24-hour-daily care other than in
an individual’s home or in an in-patient or residential setting.” Act § 1861(ff)(3)(A).
and Schedule for Filing Briefs and Documentary Evidence at 3, Attachment | (Informal
Brief of Petitioner J 1V) and Attachment 2 (Informal Brief of I.G. § III) (June 9, 2015).
The L.G. responded that an in-person hearing is not necessary. I.G. Br. at 9.

Petitioner, on the other hand, claims that an in-person hearing is necessary and that he has
testimony that he wants to offer. However, contrary to the instructions in my order, he
did not identify any particular witness other than himself (“The party requesting the in-
person hearing must describe the testimony that the party wishes to present and provide
the name of any witness and a summary of each witness’s proposed testimony.”). Order
at 3. According to Petitioner, because of his incarceration, he and his attorney have not
ad an opportunity to confer regarding the identification and availability of witnesses.
However, Petitioner and others with medical expertise “would testify . . . that the vast
majority of the submitted and paid claims were legitimate and covered under the
Medicare program.” P. Br. at 5.

In fact, as discussed below, the criminal court has already determined that Petitioner was
complicit in submitting a significant number of erroneous claims to the Medicare
program and those erroneous claims cost the program nearly $24 million. Because I may
not look behind those findings, Petitioner’s proposed testimony would be irrelevant. I
must exclude irrelevant or immaterial evidence. 42 C.F.R. § 1001.2007(d); Roy Cosby
Stark, DAB No. 1746 (2000); George Iturralde, M.D., DAB No. 1374 (1992); Leonard
R. Friedman, M.D., DAB No. 1281 (1991). I would therefore exclude the testimony that
Petitioner proposes, and an in-person hearing would serve no purpose. I therefore decide
this case based on the written record.

Issue

Petitioner concedes that he was convicted of an offense related to the delivery of an item
or service under Medicare and is therefore subject to an exclusion of at least five years.
Order and Schedule for Filing Briefs and Documentary Evidence at 2; Request for
Hearing. The sole issue before me is whether the length of the exclusion in excess of five
years is reasonable.

Discussion

Based on the aggravating factors in this case and the
absence of any mitigating factor, the 48-year
exclusion falls within a reasonable range.”

> | make this one finding of fact/conclusion of law.
Section 1128(a)(1) of the Act requires that the Secretary of Health and Human Services
exclude an individual who has been convicted under federal or state law of a criminal
offense related to the delivery of an item or service under Medicare or a state health care
program. 42 C.F.R. § 1001.101.

An exclusion brought under section 1128(a)(1) must be for a minimum period of five
years. Act § 1128(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2). Federal
regulations set forth criteria for lengthening exclusions beyond the five-year minimum.
42 C.F.R. § 1001.102(b). Evidence that does not pertain to one of the aggravating or
mitigating factors listed in the regulations may not be used to decide whether an
exclusion of a particular length is reasonable.

Among the factors that may serve as a basis for lengthening the period of exclusion are
the four that the LG. relies on in this case: 1) the acts resulting in the conviction, or
similar acts, caused a government program or another entity financial losses of $5,000 or
more; 2) the acts that resulted in the conviction, or similar acts, were committed over a
period of one year or more; 3) the sentence imposed by the court included incarceration;
and 4) the convicted individual has been the subject of any other adverse action by any
federal, state, or local government agency or board, if the adverse action is based on the
same set of circumstances that serves as the basis for the exclusion. 42 C.F.R.

§ 1001.102(b). The presence of an aggravating factor or factors, not offset by any
mitigating factor or factors, justifies lengthening the mandatory period of exclusion.

Program financial loss (42 C.F.R. § 1001.102(b)(1)). In his plea agreement, Petitioner
conceded that the community mental health centers through which the conspirators
worked submitted claims to the Medicare program that totaled approximately
$258,582,075 and that a “significant portion of these claims was fraudulent” because
either 1) the center did not provide the service for which it billed; 2) the services were not
medically necessary or the beneficiary did not qualify for them; or 3) the beneficiary
came to the mental health center to receive an illegal kickback. I.G. Ex. 5 at 6 (emphasis
added). The sentencing court subsequently ordered Petitioner Imran to pay $23,817,779
in restitution.’ Restitution has long been considered a reasonable measure of program
losses. See Juan de Leon, Jr., DAB No. 2533 at 5 (2013); Jason Hollady, M.D., DAB
No. 1855 (2002).

> That the amount of restitution represents about 9% of total billings ($258,582,075)
arguably supports Petitioner’s claim that the “vast majority” of claims submitted were
legitimate. But $23,817,779 is a great deal of money, and the fact that Petitioner also
submitted a lot of legitimate claims in no way mitigates the enormity of his theft. “I stole
less than 10%” is hardly a creditable defense.
Ata minimum, then, Petitioner’s crimes cost Medicare staggering financial losses —
thousands of times greater than the $5,000 threshold for aggravation. The Departmental
Appeals Board (Board) has characterized amounts substantially greater than the statutory
standard as an “exceptionally aggravating factor” that is entitled to significant weight.
Jeremy Robinson, DAB No. 1905 (2004); Donald A. Burstein, Ph.D., DAB No. 1865
(2003). agree. If even a small percentage of program participants were capable of this
level of fraud, the Medicare program could not long survive. I therefore consider the
enormity of the program’s financial losses here an exceptionally aggravating factor that
compels a period of exclusion many, many times longer than the five-year minimum.

Petitioner nevertheless argues that denying him the right to present evidence regarding
the program financial loss constitutes a denial of his due process rights. First, I have no
authority to review Constitutional claims.

Second, Petitioner admitted in his plea agreement that “a significant portion” of the total
billings ($258,582,075) was fraudulent. By any standard, “a significant portion” of $258
million represents an exceptionally aggravating level of fraud. Moreover, during the
criminal proceedings, Petitioner was afforded an opportunity to challenge the amount of
program loss. Instead, he conceded the significant program losses. See P. Br. at 3 (“Dr.
Imran waived any right to appeal his restitution award in the plea agreement.”).

Finally, as the I.G. points out, the sentencing court was likely conservative in setting the
restitution amount. According to the pre-sentencing report, the government and
Defendant Imran stipulated “that the proper calculation of loss . . . based on the
defendant’s participation in the conspiracy . . . is more than $50,000,000 but not more
than $200,000,000.” P. Ex. 1 at 23-24.

Length of criminal conduct (42 C.F.R. § 1001.102(b)(2)). By his own admission,
Petitioner’s criminal activity began “from in or around 2005” and continued “through
October 2011.” I.G. Ex. 5 at 5. Thus, the acts that resulted in Petitioner’s conviction and
similar acts were committed over a period of about six full years or six times longer than
necessary to constitute an aggravating factor.

Incarceration (42 C.F.R. § 1001.102(b)(5)). The sentence imposed by the criminal court
included incarceration. The district court sentenced Petitioner to more than seven years
(86 months) in prison. I consider this significant jail time, and it underscores the
seriousness of his crime. I.G. Ex. 6 at 2.

Other adverse actions (42 C.F.R. § 1001.102(b)(9)). Petitioner Imran was the subject of
two additional adverse actions based on the circumstances underlying this exclusion.

e Effective March 13, 2014, the Louisiana Department of Health and Hospitals
excluded him from participating in the state Medicaid program. I.G. Ex. 7.
e Ina stipulation and agreement dated September 3, 2014, Petitioner Imran
voluntarily surrendered his medical license while a formal complaint was pending
against him before the Louisiana State Board of Medical Examiners. I.G. Ex. 8.

No mitigating factors. The regulations consider mitigating just three factors: 1) a
petitioner was convicted of three or fewer misdemeanor offenses and the resulting
financial loss to the program was less than $1,500; 2) the record in the criminal
proceedings demonstrates that a petitioner had a mental, physical, or emotional condition
that reduced his culpability; and 3) a petitioner’s cooperation with federal or state
officials resulted in others being convicted or excluded, or additional cases being
investigated, or a civil money penalty being imposed. 42 C.F.R. § 1001.102(c).
Characterizing the mitigating factor as “in the nature of an affirmative defense,” the
Board has ruled that Petitioner has the burden of proving any mitigating factor by a
preponderance of the evidence. Barry D. Garfinkel, M.D., DAB No. 1572 at 8 (1996).

Obviously, because Petitioner’s felony conviction involved program financial losses
many times greater than $1,500, the first factor does not apply here. Nor does Petitioner
claim any mental, physical, or emotional condition that reduced his culpability. He does
not claim to have cooperated with law enforcement.

Thus, no mitigating factor offsets the significant aggravating factors present in this case.

Based on the aggravating factors and the absence of mitigating factors, then, I must
determine whether the exclusion period imposed by the I.G. falls within a reasonable
range. So long as that period falls within a reasonable range, my role is not to second-
guess the I.G.’s judgment. Jeremy Robinson, DAB No. 1905 at 5 (2004) (Administrative
law judge review must reflect the deference accorded to the LG. by the Secretary). A
“reasonable range’ refers to a range of exclusion periods that is more limited than the
full range authorized by the statute [i.e. from a minimum of five years minimum to a
maximum of permanent] and that is tied to the circumstances of the individual case.”
Joseph M. Rukse, Jr., R.Ph., DAB No. 1851 at 11 (2002), citing Gary Alan Katz, R.Ph.,
DAB No. 1842 at 8 n.4 (2002).

I understand Petitioner’s complaint that, as a practical matter, the I.G. has effectively
excluded him permanently from program participation. P. Br. at 4. However, the Board
has consistently ruled that an exclusion of finite duration is not the functional equivalent
of a permanent exclusion, and I may not consider mitigating such factors as the
individual’s age, finances, or employment prospects and their impact on the excluded
individual’s chances of returning to program participation. Jeremy Robinson, DAB No.
1905 (2004); Donald A. Burstein, Ph.D, DAB No. 1865 at 13 (2003); Joann Fletcher
Cash, DAB No. 1725 at 23 (2000).
Moreover, given the nature of the aggravating factors here, a permanent exclusion would
not have been out of line. Petitioner caused enormous financial losses to the Medicare
program; his criminal conduct lasted six times longer than the threshold for aggravation;
he was sentenced to more than seven years in prison; and he was subject to two adverse
actions by different state boards.

Finally, the I.G. may reasonably determine that longer periods of exclusion are necessary,
not only to protect federal funds, but “to [staunch] increasing amount of health care
fraud.” Robinson, DAB No. 1905 at 6 n.8. As I have noted elsewhere, the statistics on
Medicare fraud are sobering:

The National Health Care Anti-Fraud Association, an
organization composed of both public and private health
insurers and regulators, conservatively estimates that 3% of
all health care spending in the United States is lost due to
fraud. If such an estimate is accurate, health care fraud cost
our economy a staggering $68 billion in 2007, the most recent
year for which figures are available.

Christopher George Collins, DAB CR2515 at 6 (2012). Lengthy periods of exclusion are
an appropriate means by which the I.G. can attempt to protect the integrity of the
Medicare program from the worst offenders, and the evidence here establishes that
Petitioner Imran is among the worst offenders.

Conclusion

I recognize that 48 years is a substantial period of exclusion and should be limited to
those posing a grave threat to program integrity. Petitioner Imran poses such a threat. He
was a cunning and successful fraudster who cost the Medicare program massive amounts
of money over a long period of time. Based on all of the circumstances discussed above,
I find that a 48-year exclusion falls within a reasonable range.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.
E-Z Food Mart Inc.,
Respondent.

Docket No. C-15-2451
FDA No. FDA-2015-H-1631

Decision No. CR4464

Date: November 25, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated a $5,000 civil money penalty (CMP)
action against Respondent for unlawfully selling tobacco products to minors, and failing
to verify, by means of photo identification containing a date of birth, that the purchasers
were 18 years of age or older, on three separate occasions, in violation of the Federal
Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing
regulations, 21 C.F.R. pt. 1140. During the hearing process, Respondent failed to comply
with a judicial direction regarding CTP’s discovery request. I therefore strike
Respondent’s answer and issue this decision of default judgment.

I. Procedural History

Respondent timely answered CTP’s complaint opposing the CMP and requested a
hearing. I issued an Acknowledgement and Prehearing Order (APHO) that set deadlines
for parties’ submissions, including the July 27, 2015 deadline to request that the opposing
party provide copies of documents relevant to this case. Additionally, the APHO stated
that a party receiving such a request must provide the requested documents no later than
30 days after the request.

CTP served Respondent with its request for documents on July 23, 2015. On September
1, 2015, CTP filed a motion to compel discovery indicating that Respondent did not
respond to its request for production of documents. See 21 C.F.R. § 17.23(a). On
September 1, 2015, CTP also filed a motion to extend the deadlines. Pursuant to my
direction, a September 3, 2015 letter allowed Respondent until September 17, 2015 to file
an objection to CTP’s motion to compel discovery. That letter also extended the parties’
pre-hearing exchange deadlines.

On September 18, 2015, I issued an Order that granted CTP’s motion to compel
discovery. I noted that Respondent had not filed a response to CTP’s motion to compel
discovery. In that Order, I stated that Respondent shall comply with CTP’s request for
production of documents by October 2, 2015. I further stated that:

Failure to do so may result in sanctions, including the issuance of an Initial
Decision and Default Judgment finding Respondent liable for the violations
listed in the Complaint and imposing a civil money penalty. CTP shall file
a status report by October 7, 2015, informing me whether or not
Respondent has provided the documents requested and whether it is seeking
sanctions against Respondent.

Emphasis removed.

On October 7, 2015, CTP filed an updated status report advising me that Respondent had
not complied with my September 18, 2015 Order. On October 7, 2015, CTP also filed a
motion to impose sanctions that asked me to strike the Respondent’s answer and issue a
default judgment in this case. In an October 14, 2015 Order, I stayed all existing
deadlines in this case until I issued a ruling on CTP’s motion to impose sanctions.

Il. Striking Respondent’s Answer

Respondent failed to file a response to CTP’s motion to compel discovery, and to comply
with the September 18, 2015 Order compelling discovery responses to be provided by
October 2, 2015. Respondent did not comply with CTP’s discovery requests.
Respondent has not made any contact with this Court since June 18, 2015, the date
Respondent timely filed its answer. Respondent’s failure to effectively prosecute and
defend actions taken over the course of the proceedings have interfered with the orderly
and speedy processing of this case, further warranting imposition of sanctions. See

21 C.F.R. § 17.35(a) (1)(2) and (3).
Due to Respondent’s noncompliance with the September 18, 2015 Order, I am striking
Respondent’s Answer, issuing this default decision, and assuming the facts alleged in
CTP’s complaint to be true. See 21 C.F.R. § 17.35(c) (3), 17.11(a). The harshness of the
sanctions I impose upon either party must relate to the nature and severity of the
misconduct or failure to comply, and I find the failure to comply here sufficiently
egregious to warrant striking the answer and issuing a decision without further
proceedings. See 21 C.F.R. § 17.35(b). Respondent failed to comply with the September
18, 2015 Order, nor did it provide any adequate justification for not doing so.

III. Default Decision

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

For purposes of this decision, I assume the facts alleged in the Complaint are true and
conclude that default judgment is merited based on the allegations of the Complaint and
the sanctions imposed on Respondent for failure to comply with my orders. 21 C.F.R.
§ 17.11. Specifically:

e Respondent owns E-Z Food Mart Inc., an establishment that sells tobacco products
and is located at 951 East Market Street, Jeffersonville, Indiana 47130. Complaint
g3.

e¢ CTP previously initiated a civil money penalty action, CRD Docket Number
C-14-1649, FDA Docket Number FDA-2014-H-1143, against Respondent for
three violations of 21 C.F.R. pt. 1140 within a 24-month period." Specifically,
those violations included two violations on May 5, 2013, when Respondent sold
tobacco products to a minor and failed to verify, by means of photographic
identification, that the tobacco purchaser was 18 years of age or older;” and two
violations on February 12, 2014, when Respondent sold tobacco products to a
minor, and failed to verify, by means of photographic identification, that the
tobacco purchaser was 18 years of age or older. Complaint § 10; August 6, 2014
Complaint § 10.

e The previous civil money penalty action concluded when Traci McCain,
Respondent’s authorized representative, settled the action with CTP on
Respondent’s behalf. Ms. McCain signed an Acknowledgment Form, dated

In this prior complaint, Respondent’s name was “E Z Food Mart, Inc. / Traci McCain
d/b/a E Z Food Mart.”
2 CTP counted the two violations on May 5, 2013, as one violation.
October 20, 2014, in which she “admitt[ed] that the violations . . . occurred,
waiv[ed] her ability to contest the violations in the future, and stat[ed] that she
understood that the violations may be counted in determining the total number of
violations for purposes of future enforcement actions.” The Administrative Law
Judge closed the case on October 30, 2014. Complaint § 11.

e During a subsequent inspection of Respondent’s establishment conducted on
January 6, 2015, at approximately 4:50 PM, FDA-commissioned inspectors
documented that “a person younger than 18 years of age was able to purchase a
package of Grizzly Long Cut Premium Wintergreen smokeless tobacco . . . [.]”
Complaint § 1. The inspectors also documented that “the minor’s identification
was not verified before the sale . . . [.]” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 CFR. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1; see 21 U.S.C.

§ 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). The regulations prohibit the
sale of tobacco products to any person younger than 18 years of age. 21 C.F.R.

§ 1140.14(a). The regulations also require retailers to verify, by means of photo
identification containing a purchaser’s date of birth, that no tobacco purchasers are
younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
tobacco to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on May 5,
2013, February 12, 2014, and January 6, 2015. On those same dates, Respondent also
violated the requirement that retailers verify, by means of photo identification containing
a purchaser’s date of birth, that no tobacco purchasers are younger than 18 years of age.
21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s actions constitute violations of law
that merit a civil money penalty.

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

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Ronald Schubert, M.D.,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-2685
Decision No. CR4463

Date: November 25, 2015

DECISION

The Centers for Medicare & Medicaid Services (CMS), through an administrative
contractor, revoked the Medicare billing privileges of Ronald Schubert, M.D., because
the Washington State Health Care Authority terminated Dr. Schubert’s Medicaid
provider agreement. Petitioner requested a hearing to dispute the effective date of the
revocation. Because CMS properly set the effective date for revocation 30 days after it
issued the revocation notice, I affirm CMS’s determination.

I. Background and Procedural History

Dr. Schubert is a physician licensed to practice medicine in Washington State. See CMS
Exhibit (Ex.) 6. In an August 13, 2014 initial determination, CMS’s administrative
contractor revoked Petitioner’s Medicare billing privileges, effective September 12, 2014,
for the following reason:

42 CFR § 424.535(a)(12)-Medicaid Billing Privileges Revoked
By letter dated July 18”, 2011, Ronald Schubert was
informed that he was terminated from the Washington
Medicaid program. Washington Medicaid confirmed that
Ronald Schubert’s appeal rights have been exhausted with
respect to this termination.

CMS Ex. | at 1 (emphasis in original). CMS’s administrative contractor barred
Dr. Schubert from re-enrolling in the Medicare program for two years. CMS Ex. | at 2.

Dr. Schubert timely requested reconsideration of the revocation determination. CMS
Exs. 3,4. On March 26, 2015, the CMS contractor upheld its initial determination. CMS
Ex. 2.

Petitioner timely requested a hearing. On June 19, 2015, I issued an Acknowledgment
and Pre-Hearing Order (Order) establishing deadlines for the submission of prehearing
exchanges. In accordance with the Order, CMS filed its prehearing exchange, which
included a motion for summary judgment and brief, and seven exhibits (CMS Exs. 1-7).
Dr. Schubert filed a brief (Schubert Br.) in opposition to summary judgment. CMS then
filed a reply brief.

II. Decision on the Record

I admit all of CMS’s proposed exhibits into the record because Dr. Schubert did not
object to any of them. See Order 47. Further, neither party submitted written direct
testimony for any witnesses. Therefore, there are no witnesses to be cross-examined and
I issue this decision based on the written record. Order §{ 8-11; Civil Remedies Division
Procedures §§ 16(b), 19(b), (d).

III. Issue

Whether CMS properly revoked Dr. Schubert’s Medicare billing privileges and
established September 12, 2014, as the effective date for revocation.

IV. Jurisdiction

I have jurisdiction to decide this issue. See 42 C.F.R. §§ 498.3(b)(17), 498.5(1)(2); see
also 42 U.S.C. § 1395ce(j)(8).

V. Findings of Fact, Conclusions of Law, and Analysis’

Petitioner is a physician and, therefore, a supplier for purposes of the Medicare program.
See 42 U.S.C. § 1395x(d); 42 C.F.R. §§ 400.202 (definition of Supplier), 410.20(b)(1).

' My findings of fact and conclusions of law are set forth in italics and bold font.
CMS may revoke a supplier’s Medicare billing privileges for any of the reasons stated in
42 C.F.R. § 424.535. When CMS revokes a supplier’s Medicare billing privileges, CMS
establishes a re-enrollment bar that lasts from one to three years. 42 C.F.R. § 424.535(c).
Generally, a revocation becomes effective 30 days after CMS mails the initial
determination revoking Medicare billing privileges. 42 C.F.R. § 424.535(g).

I. CMS had a legitimate basis under 42 C.F.R. § 424.535(a)(12) to
revoke Dr. Schubert’s Medicare billing privileges because the
Washington State Health Care Authority terminated Dr. Schubert’s
participation agreement in its Medicaid program and Dr. Schubert
does not have an appeal of that termination pending.

On July 18, 2011, the Washington State Health Care Authority informed Dr. Schubert
that it was terminating his Medicaid provider agreement immediately to ensure the health
and safety of Medicaid beneficiaries. The specific basis for the termination related to a
Washington State Department of Health decision to restrict Dr. Schubert’s medical
license. The July 18, 2011 notice indicated that Dr. Schubert could appeal the
termination of his Medicaid provider agreement. CMS Ex. 6. Dr. Schubert did not
appeal the termination. Schubert Br. at 3; CMS Ex. 7.

CMS revoked Dr. Schubert’s Medicare billing privileges under 42 C.F.R.
§ 424.535(a)(12), which states that CMS may revoke a supplier’s billing privileges if:

(i) Medicaid billing privileges are terminated or revoked by a
State Medicaid Agency.

(ii) Medicare may not terminate unless and until a provider or supplier has
exhausted all applicable appeal rights.

Based on the evidence of record and the fact that Dr. Schubert has not disputed CMS’s
basis for revocation, I conclude that CMS legitimately revoked Dr. Schubert’s Medicare
billing privileges because Dr. Schubert’s Medicaid billing privileges were terminated by
the Washington State Health Care Authority and Dr. Schubert did not exercise his right to
appeal the termination. Schubert Br. at 3; CMS Ex. 3 at 1; CMS Ex. 4 at 2; CMS Ex. 5 at
4; CMS Ex. 6; CMS Ex. 7.

2. CMS properly established September 12, 2014, as the effective date for
the revocation of Dr. Schubert’s Medicare billing privileges.

The CMS contractor issued its determination to revoke Dr. Schubert’s Medicare billing
privileges on August 13, 2014, and stated in that determination that the revocation was
effective on September 12, 2014. CMS Ex. | at 1. Under the regulations, a “[r]evocation
becomes effective 30 days after CMS or the CMS contractor mails notice of its
determination to the . . . supplier” unless an exception applies. 42 C.F.R. § 424.535(g).
The effective date of Dr. Schubert’s revocation, September 12, 2014, is 30 days after the
date CMS’s administrative contractor issued its August 13, 2014 initial determination.
Therefore, CMS properly assigned the effective date of revocation.

Dr. Schubert asserts that he was terminated from the Medicaid program in July 2011 and
that the two-year re-enrollment bar for the Medicare program ought to have ended in
2013. Dr. Schubert’s basis for this argument is that the regulations state that “[w]hen a

. .. supplier’s billing privilege is revoked, any provider agreement in effect at the time of
revocation is terminated effective with the date of revocation.” 42 C.F.R. § 424.535(b).
Schubert Br. at 2. However, Dr. Schubert’s argument presupposes that the Medicare and
Medicaid programs are the same, which they are not. To the extent that there is any
ambiguity in section 424.535(b), it is clear that section 424.535, taken as a whole, only
relates to CMS’s authority to revoke Medicare billing privileges. Therefore, there is no
basis to consider the Washington State termination of Dr. Schubert’s Medicaid provider
agreement as an act that could trigger the termination of Dr. Schubert’s Medicare
provider agreement under section 424.535(b).

Further, Dr. Schubert avers that the regulations provide that the effective date of a
revocation is the date of the federal exclusion or debarment upon which the revocation is
based. 42 C.F.R. § 424.535(g). Therefore, Dr. Schubert believes that the revocation of
his Medicare billing privileges ought to be effective from July 18, 2011, the date his
Medicaid termination became effective. Schubert Br. at 3-4. However, the regulations
do not support Dr. Schubert’s argument that the effective date of his revocation should be
the date of the termination of his Medicaid provider agreement in Washington State. It is
true that when a revocation of Medicare billing privileges is based on a federal exclusion
or debarment, the revocation is effective on the date of the exclusion or debarment,

42 C.F.R. § 424.535(g); however, the Washington State termination of Dr. Schubert’s
Medicaid provider agreement was not a federal exclusion or debarment. Rather, the
provision Dr. Schubert cites applies to revocations imposed under 42 C.F.R.

§ 424.535(a)(2) (provider or supplier conduct). By contrast, the revocation in this case
was based on 42 C.F.R. § 424.535(a)(12) (Medicaid termination).

VI. Conclusion

I affirm CMS’s determination to revoke Petitioner’s Medicare billing privileges effective
September 12, 2014.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Mary Jean Negri, R.N., D.C.,
(OI File No. H-14-4-2988-9),

Petitioner,
v.

The Inspector General.
Respondent
Docket No. C-15-3126
Decision No. CR4443

Date: November 18, 2015

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Mary
Jean Negri, R.N., D.C., from participating in Medicare, State Medicaid programs, and all
other federally funded health care programs for a period of at least three years.

I. Background

The L.G. filed a brief and supporting exhibits that are identified as IG. Ex. 1 — 1.G. Ex. 4.
Petitioner filed a brief and supporting exhibits that are identified as P. Ex. 1— P. Ex. 6,
P. Ex. 7a, P. Ex. 7b, and P. Ex. 8. The LG. filed a reply brief.

Counsel for Petitioner requested that I hear in-person the testimony of three individuals -
Petitioner, Erin Hargis, Esq., and Jessica Hargis, Esq. - whose affidavits consist of P. Ex.
1—P. Ex. 3. P. Br. at 8-9. I find no reason for convening an in-person hearing. The LG.
has not requested to cross-examine any of these individuals. Moreover, as I discuss
below, I find these individuals’ testimony to be irrelevant.

I receive into evidence the parties’ exhibits. The fact that I receive these exhibits does
not necessarily signify that I find them to be relevant or persuasive evidence. Hearings in
these cases are not bound by the Federal Rules of Evidence and I often accept parties’
exhibits that may not, in the final analysis, contain relevant evidence.

IL. Issues, Findings of Fact and Conclusions of Law
A. Issues

The issues are whether: Petitioner was convicted of an offense as is described at section
1128(b)(2) of the Social Security Act (Act); an exclusion of at least three years is
reasonable.

B. Findings of Fact and Conclusions of Law
Section 1128(b)(2) authorizes the I.G. to exclude any individual who is:

convicted, under Federal or State law, in connection with the interference
with or obstruction of any investigation into any criminal offense described
in [section 1128(b)(1) or section 1128(a) of the Act].

The evidence establishes unequivocally that Petitioner was convicted of such a crime. It
shows that on September 29, 2014, the United States District Court for the District of
New Jersey accepted Petitioner’s guilty plea to a single count of obstructing a criminal
investigation of a health care fraud offense. I.G. Ex. | at 1.

The facts underlying Petitioner’s conviction are as follows. Petitioner was the owner of a
chiropractic clinic, Lafayette Hilltop. Petitioner was being investigated for possible
criminal health care fraud consisting of possibly filing false claims for services not
actually rendered by her clinic. I.G. Ex. 3; I.G. Ex. 4 at 4-6. Petitioner destroyed certain
of her clinic’s books in an effort to obstruct the investigation. Id.

The suspected fraud that was the focus of the investigation was fraud committed against
health care insurers. Thus, it was possible fraud committed in connection with the
delivery of health care items or services. Had that fraud been established, Petitioner
might be found culpable of the types of health care fraud described at section 1128(a)(3)
of the Act. The focus of the investigation coupled with Petitioner’s intentional
destruction of her books is sufficient to establish that Petitioner’s conviction was for an
128(b)(2) offense.

The regulation governing exclusions pursuant to section 1128(b)(2) states that an
exclusion pursuant to that section ordinarily shall be for a term of at least three years.
42 C.F.R. § 1001.301(b)(1). That term may be lengthened or decreased if there are
aggravating or mitigating factors present, as specified at 42 C.F.R. § 1001.301(b)(2) and
(3). The regulation specifies that only the specifically described mitigating factors may
justify reducing the exclusion period to less than a minimum of three years.

The I.G. excluded Petitioner for a period of at least three years based on the conclusion
that there were neither aggravating nor mitigating factors present in Petitioner’s case.
Petitioner now argues that two mitigating factors are present and that evidence relating to
these factors justifies reducing the length of the exclusion. She asserts that she suffered
from a mental condition that reduced her culpability. Additionally, she contends that she
provides unique and valuable services that make her irreplaceable to members of her
community.

I find these arguments to be without merit. Petitioner has made no showing that either of
the two asserted mitigating factors is present in her case. Consequently, I find that the
1.G.’s exclusion determination — which is for the period prescribed by regulation — is
reasonable.

The first mitigating factor that Petitioner claims applies to her case is at 42 C.F.R.
§ 1001.301(b)(3)(i):

The record of the court proceeding, including sentencing documents,
demonstrates that the court determined that the individual had a mental,
emotional, or a physical condition, before or during the commission of the
offense, that reduced the individual’s culpability.

In order to qualify for a mitigating factor under this section an excluded individual must
prove not only that he or she suffers from some mental, emotional, or physical condition,
but, additionally, that the sentencing court made a finding that the excluded individual’s
culpability was reduced by that condition. Petitioner has offered evidence to show that
she suffers from emotional and psychiatric problems. However, she has not offered any
evidence to prove that the sentencing judge in her case made a finding that Petitioner’s
culpability for her crime was reduced in any way by her problems. I have reviewed the
transcript of Petitioner’s sentencing hearing. P. Ex. 8. In that hearing the judge noted
that Petitioner’s destruction of her business records may have been as a consequence of
her anger but he did not find that this in any respect reduced her culpability. He
sentenced Petitioner to probation in lieu of prison, but this decision reflected his findings
that Petitioner’s crime was in some measure offset by her good standing in her
community. He made no finding that her culpability was reduced by her mental
condition. Jd. at 1-36.

I have also reviewed the affidavits that Petitioner supplied from several individuals,
including herself, and a report from a psychiatrist. P. Ex. 1 — P. Ex. 5. These exhibits
contain some evidence concerning Petitioner’s mental state. They do not, however, show
that the sentencing judge took that evidence into consideration when he issued his
sentence or made any findings based on them. Consequently, they do not contain
evidence of mitigation.

The second mitigating factor that Petitioner claims applies to her case is at 42 C.F.R.
§ 1001.301(b)(3)(iii):

Alternative sources of the type of health care items or services furnished by
the individual or entity are not available.

Petitioner contends that she provides chiropractic services of unique quality that are
esteemed by her patients. She has offered letters from several individuals that attest to
the quality of the care that she provides. This evidence is not mitigating. The purpose of
this mitigating factor is to address situations where there are no other available providers
except for the excluded one. What Petitioner has failed to establish — and what she must
establish in order to qualify as mitigating —is that there exist no other providers of care in
her community who can provide services equivalent to those that she provides. She has
offered no evidence that meets this test. She has not shown, for example, that there are
no other qualified chiropractors practicing within a reasonable distance of her practice.
Nor has she shown that patients will be unable to find alternative sources of care if she is
excluded.

/s/
Steven T. Kessel
Administrative Law Judge