Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Maryhaven Nursing and Rehabilitation Center
(CCN: 14-5741),

Petitioner,

v.

Centers for Medicare and Medicaid Services.
Docket No. C-12-125
Decision No. CR2798

Date: May 23, 2013

DECISION

Petitioner, Maryhaven Nursing and Rehabilitation Center, was not in substantial
compliance with program participation requirements due to a violation of 42 C.F.R.

§ 483.25(h)! that posed a risk for minimal harm as alleged by the complaint investigation
completed on August 17, 2011. The proposed enforcement remedy, a $10,000 per-
instance civil money penalty (PICMP), is reasonable. Petitioner is also ineligible to
conduct a nurse aide training and competency evaluation program (NATCEP) for two
years by operation of law.

' References are to the 2010 version of the Code of Federal Regulations (C.F.R.) in
effect at the time of the survey, unless otherwise indicated.
I. Background

Petitioner is located in Glenview, Illinois, and participates in Medicare as a skilled
nursing facility (SNF) and in the state Medicaid program as a nursing facility (NF). On
August 17, 2011, the Illinois Department of Public Health (state agency) completed a
complaint investigation at Petitioner’s facility and found that Petitioner was not in
substantial compliance with two program participation requirements. Joint Stipulation of
Facts (Jt. Stip.) § 31; Centers for Medicare and Medicaid Services (CMS) Exhibit (Ex.) 3.
CMS notified Petitioner by letter dated September 22, 2011, that CMS was imposing a
PICMP of $10,000 based only on Petitioner’s violation of 42 C.F.R. § 483.25(h).? CMS
Ex. | at 6. CMS also notified Petitioner that it was ineligible to conduct a NATCEP for
two years following the survey. CMS Ex. | at 7.

On October 5, 2011, Petitioner requested a hearing before an administrative law judge
(ALJ). The case was assigned to me for hearing and decision on October 13, 2011, and
an Acknowledgement and Prehearing Order was issued at my direction. Petitioner filed a
second request for hearing on November 18, 2011, which was docketed and consolidated
with Petitioner’s initial request for hearing. On July 12, 2012, I convened a hearing by
video teleconference in Washington, D.C. and Chicago, Illinois. A transcript (Tr.) of the
proceedings was prepared and is part of the record of this case. CMS offered CMS Exs.
1 through 18 that were admitted as evidence. Tr. 24. Petitioner offered Petitioner
exhibits (P. Exs.) 19 through 41; P. Exs. 21, 24, and 39 were withdrawn, and the
remaining exhibits were admitted as evidence. Tr. 26-28. CMS called Surveyor Jun
Daryl Esuerte, RN, as a witness. Petitioner called Anne Schnur, LPN, as a witness.
Following the hearing, the parties filed post-hearing briefs (CMS Br. and P. Br.) and
post-hearing reply briefs (CMS Reply and P. Reply).

> The September 22, 2011, CMS notice also advised Petitioner that a discretionary denial
of payment for new admissions (DPNA) was imposed effective September 13, 2011 and
that termination of Petitioner’s provider agreement would occur on January 15, 2012.
CMS Ex. | at 4-5. The CMS notice dated November 8, 2011, advised Petitioner that the
DPNA effective September 13, 2011 was rescinded and that the termination would not be
effectuated because Petitioner returned to substantial compliance on August 17, 2011.
CMS Ex. | at 1.
IL. Discussion
A. Issues

1. Whether there is a basis for the imposition of an
enforcement remedy; and

2. Whether the remedy imposed is reasonable.
B. Applicable Law

The statutory and regulatory requirements for participation of a SNF in Medicare are at
section 1819 of the Social Security Act (Act) and 42 C.F.R. pt. 483. Section 1819(h)(2)
of the Act authorizes the Secretary of Health and Human Services (Secretary) to impose
enforcement remedies against a SNF for failure to comply substantially with the federal
participation requirements established by sections 1819(b), (c), and (d) of the Act.? The
Act requires that the Secretary terminate the Medicare participation of any SNF that does
not return to substantial compliance with participation requirements within six months of
being found not to be in substantial compliance. Act § 1819(h)(2)(C). The Act also
requires that the Secretary deny payment of Medicare benefits for any beneficiary
admitted to a SNF, if the SNF fails to return to substantial compliance with program
participation requirements within three months of being found not to be in substantial
compliance — commonly referred to as the mandatory or statutory denial of payments for
new admissions (DPNA). Act § 1819(h)(2)(D). The Act grants the Secretary
discretionary authority to terminate a noncompliant SNF’s participation in Medicare,
even if there has been less than 180 days of noncompliance. The Act also grants the
Secretary authority to impose other enforcement remedies, including a discretionary
DPNA, CMPs, appointment of temporary management, and other remedies such as a
directed plan of correction. Act § 1819(h)(2)(B).

The Secretary has delegated to CMS and the states the authority to impose remedies
against a long-term care facility that is not complying substantially with federal
participation requirements. “Substantial compliance means a level of compliance with
the requirements of participation such that any identified deficiencies pose no greater risk
to resident health or safety than the potential for causing minimal harm.” 42 C.F.R.

> Participation of a NF in Medicaid is governed by section 1919 of the Act. Section
1919(h)(2) of the Act gives enforcement authority to the states to ensure that NFs comply
with their participation requirements established by sections 1919(b), (c), and (d) of the
Act.
§ 488.301 (emphasis in original). A deficiency is a violation of a participation
requirement established by sections 1819(b), (c), and (d) of the Act or the Secretary’s
regulations at 42 C.F.R. pt. 483, subpt. B. Noncompliance refers to any deficiency that
causes a facility not to be in substantial compliance. 42 C.F.R. § 488.301. State survey
agencies survey facilities that participate in Medicare on behalf of CMS to determine
whether the facilities are complying with federal participation requirements. 42 C.F.R.
§§ 488.10-.28, 488.300-.335. The regulations specify the enforcement remedies that
CMS may impose if a facility is not in substantial compliance with Medicare
requirements. 42 C.F.R. § 488.406.

CMS is authorized to impose a CMP for the number of days of noncompliance — a per
day CMP - or for each instance of noncompliance —a PICMP. 42 C.F.R. § 488.430.
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 CMPs, $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), (d)(2). “dmmediate jeopardy means a
situation in which the provider’s noncompliance with one or more requirements of
participation has caused, or is likely to cause, serious injury, harm, impairment, or death
to a resident.” 42 C.F.R. § 488.301 (emphasis in original). The lower range of CMPs,
$50 per day 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). The only
range for a PICMP is $1,000 to $10,000. 42 C.F.R. §§ 488.408, 488(a)(2).

Petitioner was notified in this case that it was ineligible to conduct a NATCEP for two
years. CMS Ex. | at 7. Pursuant to sections 1819(b)(5) and 1919(b)(5) of the Act, SNFs
and NFs may only use nurse aides who have completed a training and competency
evaluation program. Pursuant to sections 1819(f)(2) and 1919(f)(2) of the Act, the
Secretary was tasked to develop requirements for approval of NATCEPs and the process
for review of those programs. Sections 1819(e) and 1919(e) of the Act impose upon the
states the requirement to specify what NATCEPs they will approve that meet the
requirements that the Secretary established and a process for reviewing and re-approving
those programs using criteria the Secretary set. The Secretary promulgated regulations at
42 C.F.R. pt. 483, subpt. D. Pursuant to 42 C.F.R. § 483.151(b)(2) and (f), a state may
not approve and must withdraw any prior approval of a NATCEP offered by a skilled
nursing or nursing facility that has been: (1) subject to an extended or partial extended
survey under sections 1819(g)(2)(B)(i) or 1919(g)(2)(B)(i) of the Act; (2) assessed a
CMP of not less than $5,000; or (3) subject to termination of its participation agreement,
a DPNA, or the appointment of temporary management. Extended and partial extended
surveys are triggered by a finding of “substandard quality of care” during a standard or
abbreviated standard survey and involve evaluating additional participation requirements.
“Substandard quality of care” is identified by the situation where surveyors identify one

or more deficiencies related to participation requirements established by 42 C.F.R.

§ 483.13 (Resident Behavior and Facility Practices), § 483.15 (Quality of Life), or

§ 483.25 (Quality of Care) that are found to constitute either immediate jeopardy, a
pattern of or widespread actual harm that does not amount to immediate jeopardy, or a
widespread potential for more than minimal harm that does not amount to immediate
jeopardy and there is no actual harm. 42 C.F.R. § 488.301.

The Act and regulations make a hearing before an ALJ available to a long-term care
facility against which CMS has determined to impose an enforcement remedy. Act

§§ 1128A(c)(2), 1866(h); 42 C.F.R. §§ 488.408(g), 498.3(b)(13). The hearing before an
ALJ is a de novo proceeding. The Residence at Salem Woods, DAB No. 2052 (2006);
Cal Turner Extended Care, DAB No. 2030 (2006); Beechwood Sanitarium, DAB No.
1906 (2004); Emerald Oaks, DAB No. 1800, at 11 (2001); Anesthesiologists Affiliated,
DAB CR65 (1990), aff'd, 941 F.2d 678 (8th Cir. 1991). A facility has a right to appeal a
“certification of noncompliance leading to an enforcement remedy.” 42 C.F.R.

§ 488.408(g)(1), 488.330(e), 498.3. However, the choice of remedies, or the factors
CMS considered when choosing remedies, are not subject to review. 42 C.F.R.

§ 488.408(g)(2). A facility may only challenge the scope and severity level of
noncompliance determined by CMS, if a successful challenge would affect the range of
the CMP that may be imposed or impact the facility’s authority to conduct a NATCEP.
42 C.F.R. § 498.3(b)(14), (d)(10)(i). The CMS determination as to the level of
noncompliance, including the finding of immediate jeopardy, “must be upheld unless it is
clearly erroneous.” 42 C.F.R. § 498.60(c)(2); Woodstock Care Ctr., DAB No. 1726, at 9,
38 (2000), aff'd, 363 F.3d 583 (6th Cir. 2003). The Departmental Appeals Board (the
Board) has long held that the net effect of the regulations is that a provider has no right to
challenge the scope and severity level assigned to a noncompliance finding, except in the
situation where that finding was the basis for an immediate jeopardy determination. See,
e.g., Ridge Terrace, DAB No. 1834 (2002); Koester Pavilion, DAB No. 1750 (2000).
ALJ review of a CMP is subject to 42 C.F.R. § 488.438(e).

The hearing before an ALJ is a de novo proceeding, i.e., “a fresh look by a neutral
decision-maker at the legal and factual basis for the deficiency findings underlying the
remedies.” Life Care Center of Bardstown, DAB No. 2479 at 32 (2012) (citation
omitted). The standard of proof, or quantum of evidence required, is a preponderance of
the evidence. CMS has the burden of coming forward with the evidence and making a
prima facie showing of a basis for imposition of an enforcement remedy. Petitioner bears
the burden of persuasion to show by a preponderance of the evidence that it was in
substantial compliance with participation requirements or any affirmative defense.
Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004); Batavia Nursing &
Convalescent Ctr., DAB No. 1904 (2004), aff'd, 129 F. App’x 181 (6th Cir. 2005);
Emerald Oaks, DAB No. 1800; Cross Creek Health Care Ctr., DAB No. 1665 (1998);
Hillman Rehab. Ctr., DAB No. 1611 (1997)(remand), DAB No. 1663 (1998) (aft.
remand), aff'd, Hillman Rehab. Ctr. v. United States, No. 98-3789 (GEB), 1999 WL
34813783 (D.N.J. May 13, 1999).

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

My conclusions of law are set forth in bold text followed by my findings of fact and
analysis. The parties stipulated prior to hearing that the only deficiency at issue is the
alleged noncompliance cited as a violation of 42 C.F.R. § 483.25(h) (Tag F323) by the
complaint investigation that concluded on August 17, 2011, as that is the only alleged
noncompliance for which CMS proposes to impose an enforcement remedy. The only
enforcement remedy at issue is the proposed $10,000 PICMP. Petitioner’s eligibility to
conduct a NATCEP is also at issue.’ Jt. Stip.; Tr. 9. Whether the alleged noncompliance
posed immediate jeopardy is not subject to review except to the extent that it is necessary
to consider the severity of the alleged noncompliance when determining the reasonable
enforcement remedies to be imposed.

I have carefully considered all the evidence and the arguments of both parties, although
not all the evidence and arguments may be specifically discussed in this decision. I
discuss the credible evidence given the greatest weight in my decision-making.’ I also
discuss, as appropriate, the specific evidence I find not credible or that has little or no
probative value. The fact that evidence is not specifically discussed should not be
considered sufficient to rebut the presumption that I considered all the evidence and
assigned such weight or probative value to the credible evidence that I determined
appropriate within my discretion as an ALJ. There is no requirement for me to discuss
the weight given to every piece of evidence considered in this case, nor would it be
consistent with notions of judicial economy to do so.

* Petitioner stated at hearing that it was not conducting a NATCEP at the time of hearing
and that the loss of eligibility was not the basis for requesting a hearing. It appears that
the last NATCEP Petitioner conducted was in 1987. CMS Ex. 12 at 6; Tr. 10.
Nevertheless, the loss of eligibility is at issue to the extent future eligibility to conduct a
NATCEP may be affected by the resolution of this case.

> “Credible evidence” is evidence “worthy of belief.” Black's Law Dictionary 596 (8th
ed. 2004). The “weight of evidence” is the persuasiveness of some evidence compared to
other evidence. Jd. at 1625.
1. Petitioner violated 42 C.F.R. § 483.25(h) (Tag F323) on June 21,
2011.

2. Petitioner’s violation of 42 C.F.R. § 483.25(h) (Tag F323) posed a
risk for more than minimal harm.

3. There is a basis for the imposition of an enforcement remedy.
a. Facts

This case turns on facts related to the nature and amount of supervision required for
Resident 2 and Resident 3 to prevent accidents, and the nature and amount of supervision
that Petitioner provided. The incident on June 21, 2011 that triggered the deficiency
citation occurred more than a month prior to the complaint investigation which began on
July 28, continued on August 10, and was completed on August 17, 2011. Surveyor
Esuerte found that on June 21, 2011, Resident 2 wandered into Resident 3’s room; the
residents pushed each other; and Resident 2 fell resulting in a fracture of the right orbital
floor, subarachnoid hemorrhage, traumatic subdural hematoma, lacerated lip, and
multiple contusions. The surveyor found that Resident 2 had a history of wandering and
Resident 3 had a history of verbal and physical aggression with residents who wandered
into her room. The surveyor alleges that Petitioner was deficient because staff failed to
provide adequate supervision for both residents and failed to supervise Resident 3 after
the accident. CMS Ex. 3 at 4-5. Surveyor Esuerte did not witness the incident and his
factual findings were based on his review of resident records, staff interviews, and his
observations of the facility. Tr. 34-40. I am not bound by Surveyor Esuerte’s factual
findings and put them aside and review the contemporaneous documentary evidence de
novo. I conclude that in this case the most credible information regarding the assessed
needs of the residents is found in the clinic records for Resident 2 and Resident 3.

Resident 2 and Resident 3 lived in “The Glen,” Petitioner’s dementia unit. The Glen is
an L-shaped unit with restricted access. Jt. Stip. 7, 14. The nurses’ station is located
at the center of the unit, from which two wings extend at a 90-degree angle with resident
rooms in each wing. The “day area” (also referred to as the “large dining room”) is an
open area across the hall from the nurses’ station. The “small dining room” is a walled-
off room adjacent to the nurses’ station. CMS Ex. 11 at 30. The Glen was designed to
house 32 residents in 19 rooms, but there were only 30 residents living in The Glen on
June 21, 2011. Tr. 231-32.

The parties agree that at about 6:40 a.m. on June 21, 2011, Resident 2 was found on the
floor in Resident 3’s room with a moderate amount of blood on the floor. Resident 3
reported that Resident 2 pushed her and she pushed back. Petitioner’s report on the
accident states that the incident was Resident 3’s reaction to another resident invading her
space. The parties also agree that Resident 2 suffered a subarachnoid hemorrhage, a
traumatic subdural hematoma, multiple contusions, and a closed fracture of the orbital
floor. Jt. Stip. fj 21-26; P. Ex. 33; CMS Ex. 8 at 23-25; CMS Ex. 11 at 1-2. It is not
disputed that Resident 2 and Resident 3 were not subject to any direct supervision at
approximately 6:40 a.m. on June 21, 2011, when the accident occurred. In fact, the
parties have stipulated that none of Petitioner’s staff saw Resident 2 enter Resident 3’s
room, and I infer that no staff member saw the accident occur. Jt. Stip. § 20, 24.

Resident 2 had a history of wandering behavior, and at times was unable “to find own
room, locate other areas of the facility, [or] identify key people ....” Jt. Stip. 4 9.
Resident 2 was assessed as suffering from dementia with anxiety and agitation; she took
psychoactive medication; she had an impaired sense of balance and an unsteady gait; due
to her cognitive impairment she had a poor ability to learn safety measures; and she had a
istory of falls, including one that resulted in a left shoulder fracture. Jt. Stip. ] 6; CMS
Ex. 7 at 5-9. Her care plan to address her risk for falls required that she be monitored
frequently as she could not use her call light; and an intervention added on June 14, 2010,
and apparently not deleted or changed, required that she be kept within view of staff
while awake. P. Ex. 20 at 1-2; CMS Ex. 7 at 7-8. Petitioner placed in evidence two
different care plans that addressed Resident 2’s wandering. Resident 2’s wandering care
plan effective October 5, 2010, includes an undated, hand-written entry that requires staff
check the resident’s location every shift but no requirement that her location be checked
every 30 minutes. P. Ex. 20 at 4; CMS Ex. 7 at 6. Resident 2’s wandering care plan
effective October 6, 2010, required that staff check Resident 2’s whereabouts every 30
minutes on each shift. P. Ex. 19 at 3; Jt. Stip. ¥ 12.

The parties stipulated that Resident 3 suffered from dementia with behavioral
disturbance, agitation, progressive memory problems, and confusion and forgetfulness.
The parties also stipulated that the resident’s social services evaluations dated March
2010, March 2011, and May 2011, all stated that Resident 3 became angry and physically
aggressive with anyone who invaded her space and warned that staff must continue to
monitor the resident and other residents for intrusions upon Resident 3’s personal space.
Resident 3 was prescribed Risperdal®, an antipsychotic. Jt. Stip. §§ 13-16, 18-19; CMS
Ex. 8 at 4-6; CMS Ex. 13 at 44-49.

Resident 3 was admitted to Petitioner on July 2, 2009, with diagnosis of vascular
dementia for which she was prescribed Risperdal®, 0.5 milligram (mg) as needed. P.
Exs. 22-23. Anne Schnur, LPN, Director of The Glen, incorrectly testified that Resident
3 had not been prescribed Risperal® as of April 23, 2010, when, in fact, the resident was
on that medication at the time of her admission to Petitioner in July 2009. Tr. 204; P.
Exs. 23 at 5-6, 25, 39. A nurse’s note dated November 30, 2009, records that Resident 3
pushed another resident out of her room. CMS Ex. 8 at 7. A nurse’s note dated February
11, 2010 states that Resident 3 pushed another resident out of her room. CMS Ex. 8 at 7.
On February 19, 2010, Resident 3 pulled on the collar of another resident and warned her
not to enter her room. CMS Ex. 8, at 8. Resident 3 became very angry and verbally

abusive when she was admonished not to touch other residents. On March 18, 2010,
Resident 3 became angry and agitated when another resident was found in her room. The
resident reported that Resident 3 pushed her to the floor. CMS Ex. 8 at 8. A monthly
nursing summary dated April 23, 2010, states that Resident 3 had one episode of physical
abuse, but no details are stated so it is not known whether this abuse involved another
resident. P. Ex. 32 at 2; CMS Ex. 8 at 27.

On May 7, 2010, Resident 3 was sent to the hospital for a psychiatric evaluation due to an
incident that involved Resident 3 touching another resident when ejecting the other
resident from her room. Resident 3 was reported to be angry and upset. At the time, she
was prescribed 0.25 mg of Risperidone (generic Risperdal®) twice daily as needed.

After her return from the hospital, Resident 3 was reported to scream and yell at anyone
who came her way. Her physician changed her order for Risperdal® from 0.5 mg as
needed to 0.25 mg every 12 hours and ordered Ativan, an anti-anxiety drug, 0.5 mg twice
a day as needed. P. Ex. 25 at 1-4, 6; P. Ex. 27; CMS Ex. 8 at 14-17. Progress notes show
that Resident 3 was considered stable through August 30, 2010, and her Ativan was
discontinued on August 2, 2010. P. Ex. 28. A monthly nursing summary dated
December 23, 2010, states that the resident was easily upset. P. Ex. 29. A nurse’s note
dated December 31, 2010, states that Resident 3 held another resident’s arm and told her
to move but did not push. P. Ex. 30; CMS Ex. 8 at 18; Tr. 206-07. Resident 3’s care
plan in effect prior to the June 21, 2011 incident lists the incident on May 7, 2010 and
also lists an incident on March 18, 2010. The care plan does not appear to have been
updated based on the December 31, 2010 incident.

Resident 3’s care plan required several interventions to address her anxiety and agitation,
including her medications. According to Petitioner, Resident 3 was placed in a private
room at the end of one of The Glen’s halls to reduce the risk that other residents would
enter Resident 3’s room. CMS Ex. 11 at 30; Tr. 188; P. Br. 7. However, despite the
social services’ recommendations that the resident required supervision, Resident 3’s care
plan did not require supervision or observation of her interactions with other residents. P.
Exs. 26, 31; Jt. Stip. ff 18-19; CMS Ex. 8 at 4-6.

The Medical Examiner for Cook County, Illinois determined that Resident 2 died on July
14, 2011, from the head injury she suffered in Resident 3’s room on June 21, 2011. CMS
Ex. 10.

b. Analysis

The general quality of care regulation, 42 C.F.R. § 483.25, requires that a facility ensure
each resident receives necessary care and services to attain or maintain the resident’s
highest practicable physical, mental, and psychosocial well-being, in accordance with the
10

resident’s comprehensive assessment and plan of care. The quality of care regulations
impose specific obligations upon a facility related to accident hazards and accidents. The
applicable regulatory provision states:

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

42 C.F.R. § 483.25(h). CMS instructs its surveyors that the intent of 42 C.F.R.

§ 483.25(h)(1) and (2) is “to ensure the facility provides an environment that is free from
accident hazards over which the facility has control and provides supervision and
assistive devices to each resident to prevent avoidable accidents.” The facility is
expected to: identify, evaluate, and analyze hazards and risks; implement interventions to
reduce hazards and risks; and monitor the effectiveness of interventions and modify them
when necessary. State Operations Manual (SOM), CMS Pub. 100-07, app. PP, Guidance
to Surveyors Long Term Care Facilities, F323 (Rev. 27; eff. Aug. 17, 2007).°

The Board has provided interpretative guidance for adjudicating alleged violations of 42
C.F.R. § 483.25(h)(1):

The standard in section 483.25(h)(1) itself -- that a facility
“ensure that the environment is as free of accident hazards as
possible” in order to meet the quality of care goal in section
483.25 -- places a continuum of affirmative duties on a facility.
A facility must determine whether any condition exists in the
environment that could endanger a resident’s safety. If so, the
facility must remove that condition if possible, and, when not
possible, it must take action to protect residents from the
danger posed by that condition. [Footnote omitted.] If a
facility has identified and planned for a hazard and then failed

° The SOM does not have the force and effect of law. However, the provisions of the
Act and regulations interpreted by the SOM clearly do have such force and effect. Ind.
Dept. of Pub. Welfare v. Sullivan, 934 F.2d 853 (7th Cir. 1991); Northwest Tissue Ctr. v.
Shalala, | F.3d 522 (7th Cir. 1993). Thus, while the Secretary may not seek to enforce
the provisions of the SOM, she may seek to enforce the provisions of the Act or
regulations as interpreted by the SOM.
11

to follow its own plan, that may be sufficient to show a lack of
compliance with [the] regulatory requirement. In other cases,
an ALJ may need to consider the actions the facility took to
identify, remove, or protect residents from the hazard. Where
a facility alleges (or shows) that it did not know that a
hazard existed, the facility cannot prevail if it could have
reasonably foreseen that an endangering condition existed
either generally or for a particular resident or residents.

Maine Veterans’ Home — Scarborough, DAB No. 1975, at 6-7 (2005) (emphasis added).

The Board has also explained the requirements of 42 C.F.R. § 483.25(h)(2) in numerous
decisions. Golden Living Ctr. — Riverchase, DAB No. 2314, at 6-7 (2010); Eastwood
Convalescent Ctr., DAB No. 2088 (2007); Century Care of Crystal Coast, DAB No.
2076 (2007), aff'd, 281 F. App’x 180 (4th Cir. 2008); Liberty Commons Nursing and
Rehab. - Alamance, DAB No. 2070 (2007); Golden Age Skilled Nursing & Rehab. Ctr.,
DAB No. 2026 (2006); Estes Nursing Facility Civic Ctr., DAB No. 2000 (2005);
Northeastern Ohio Alzheimer’s Research Ctr., DAB No. 1935 (2004); Woodstock Care
Ctr., DAB No. 1726 (2000), aff’d, Woodstock Care Ctr. v. Thompson, 363 F.3d 583 (6th
Cir. 2003). The regulation does not make a facility strictly liable for accidents that occur,
but it does require 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 mitigates
foreseeable risks of harm from accidents. Woodstock Care Ctr. v. Thompson, 363 F.3d at
589 (noting a SNF must take “all reasonable precautions against residents’ accidents”).

A facility is permitted the flexibility to choose the methods of supervision it uses to
prevent accidents, but the chosen methods must be adequate under the circumstances.
Whether supervision is “adequate” depends in part upon the ability of the resident to
protect himself or herself from harm. Jd. Based on the regulation and the cases in this
area, CMS meets its burden to show a prima facie case if the evidence demonstrates that
the facility failed to provide adequate supervision and assistance devices to prevent
accidents, given what was reasonably foreseeable. Alden Town Manor Rehab. & HCC,
DAB No. 2054, at 5-6, 7-12 (2006). An “accident” is an unexpected, unintended event
that can cause a resident bodily injury, excluding adverse outcomes associated as a direct
consequence of treatment or care (e.g., drug side effects or reactions). SOM, app. PP,
Tag F323; Woodstock Care Ctr., DAB No. 1726, at 4.

The regulation gives Petitioner notice of the criteria or elements it must meet to comply
with the program participation requirement established by the regulation. 5 U.S.C.

§§ 551(4), 552(a)(1). Therefore, in order to make a prima facie showing of
noncompliance, CMS must show that: (1) Petitioner violated the regulation by not
complying with one or more of the requirements or elements of the regulation, which is a
deficiency; and (2) the deficiency amounted to “noncompliance,” i.e., that Petitioner was
not in substantial compliance because the deficiency posed a risk for more than minimal
12

harm.” In this case, the elements of the CMS prima facie case established by 42 C.F.R.
§ 483.25(h) are: (1) an accident hazard existed within the resident’s environment; (2)
Petitioner failed to eliminate or mitigate the accident hazard to the extent possible; and
(3) Petitioner failed to ensure a resident received supervision and assistive devices

7 In the final Hillman decision after remand, the Board explained:

The ALJ should be able to determine the existence of a prima facie case at
the close of HCFA’s presentation. Hence, as we pointed out in our first
decision, HCFA would lose even if the provider offered no evidence at all,
if HCFA did not come forward with evidence sufficient to support a
conclusion in its favor in presenting its prima facie case. Thus, we held that
HCFA must make its case "at the outset."

Once HCFA has established a prima facie case, the provider may then offer
evidence in rebuttal, both by attacking the factual underpinnings on which
HCFA relied and by offering evidence in support of its own affirmative
arguments. An effective rebuttal of HCFA’s prima facie case would mean
that at the close of the evidence the provider had shown that the facts on
which its case depended (that is, for which it had the burden of proof) were
supported by a preponderance of the evidence.

2 OR

The major purpose of requiring HCFA to establish a prima facie case is to
assure that the action taken by HCFA has a legally sufficient foundation, if
the facts are determined to be as alleged by HCFA (since it would be unfair
and inefficient to require a provider to defend against a case that, even if
proven, would not suffice to support the action taken). In addition, we
concluded that fairness requires HCFA to set out evidence of the factual
basis for its action in order that the provider not have to offer a shot-gun
defense without adequate notice to respond to the case against it. These
purposes are accomplished once HCFA has presented a case sufficient, if
not effectively rebutted, to sustain its action. At that point, HCFA has
established a prima facie case and, to prevail, the provider must proceed to
prove its case by the preponderance of the evidence on the record as a
whole.

Hillman, DAB No. 1663 (internal citations omitted). HCFA was the predecessor to
CMS.
13

necessary to prevent accidents. For noncompliance,* CMS must also establish that the
violation of 42 C.F.R. § 483.25(h) poses a risk for more than minimal harm. The
regulations do not require that CMS show that an accident was foreseeable or that an
accident occurred. The regulation establishes impossibility as a possible defense, i.e.,
Petitioner did all that was reasonably possible to mitigate or eliminate the risk but an
accident occurred despite the steps taken. Board decisions also recognize a possible
defense by providing that a facility is only responsible to eliminate or mitigate reasonably
foreseeable risks for accidental injury. Maine Veterans’ Home — Scarborough, DAB No.
1975, at 6-7.

CMS has presented sufficient evidence as to each element of its prima facie case to
establish noncompliance, absent effective rebuttal. The CMS evidence shows that
Resident 3 posed a risk for an unexpected, unintended event that could cause a resident
bodily injury, i.e., an accident. The parties stipulated that Resident 3 suffered from
dementia with behavioral problems. The parties also stipulated that social services
evaluated her in March 2010, March 2011, and again in May 2011 as at risk to become
angry and physically aggressive with anyone who invaded her personal space. Social
services also recommended that Resident 3 and other residents be monitored to prevent
intrusions upon Resident 3’s personal space. Jt. Stip. §§ 13-16, 18-19; CMS Ex. 8 at 4-6;
CMS Ex. 13 at 44-49. There is no dispute that on June 21, 2011, Resident 2 and Resident
3 were together in Resident 3’s room with no staff members present and the residents
were unmonitored or unsupervised, either by direct observation of staff or by some
monitoring device. Jt. Stip. {§j 20, 24. The parties stipulated that Resident 2 was found
on the floor of Resident 3’s room with actual injuries that amounted to more than
minimal harm. Jt. Stip. §§ 21-26; CMS Ex. 8 at 23-25; CMS Ex. 11 at 1-2. I conclude
that this evidence is sufficient to establish a prima facie case of noncompliance based on
violation of 42 C.F.R. § 483.25(h).’ CMS also argues at length that Petitioner did not
provide adequate supervision of Resident 3 immediately following the June 21, 2011

® Noncompliance is “any deficiency that causes a facility to not be in substantial
compliance,” which is “a level of compliance . . . such that any indentified deficiencies
pose no greater risk to resident health or safety than the potential for causing minimal
harm.” 42 C.F.R. § 488.301.

° While the “accident” itself in this case is not a basis for finding Petitioner was not in
substantial compliance, the occurrence of the accident identifies the accident hazard, and
the facts and circumstances of the accident are evidence reflecting upon the adequacy of
Petitioner’s supervision of the two residents. Lake Park Nursing & Rehab. Ctr., DAB
No. 2035, at 8 (2006) (citing St. Catherine’s Care Ctr. of Findlay, Inc., DAB No. 1964
(2005)).

14

incident. CMS Br. 11-17. However, because I find that Petitioner was not in substantial
compliance based on the events leading up to the incident, I need not and do not address
Petitioner’s conduct immediately following the accident.

Thus, review shifts to determining whether Petitioner either rebutted the CMS prima
facie case by showing that adequate supervision or other interventions were implemented
to mitigate or eliminate the risk for occurrence of the accident or any potential harm; that
it was impossible to eliminate or mitigate this accident risk; or that the accident risk
posed by Resident 3 was unforeseeable.

Petitioner argues that CMS failed to make its prima facie case. P. Br. at 1, 11. I have
already rejected this argument but consider whether or not Petitioner has rebutted any of
the elements of the CMS prima facie case. Based on the foregoing analysis, giving due
consideration to Petitioner’s arguments, I conclude that Petitioner did not rebut the CMS
prima facie case. Petitioner stipulated that Resident 3 posed a risk for physical
aggression to any resident who wandered into her room, and that social services assessed
that monitoring of the resident and other residents was required to avoid such incidents;
that Resident 2 and 3 were alone and unmonitored on June 21, 2011; and that Resident 2
suffered actual harm. Jt. Stip. ff 18-22. Therefore, Petitioner stipulated to the prima

facie case.

Petitioner argues that the surveyor imposed an incorrect standard related to supervision.
P. Br. at 12-13. The surveyors understanding, or lack thereof, of the supervision of
residents required by 42 C.F.R. § 483.25(h) is not at issue before me, except to the extent
that it may reflect upon the credibility of the surveyor’s opinions and testimony. I am not
bound by Surveyor Esuerte’s opinions and conclusions but weigh them as I would any
other evidence in the case. I am required to provide Petitioner a de novo review of the
evidence and the application of the law and policy to the facts I find. Rather than attempt
to weigh the various opinions and conclusions of Surveyor Esuerte, I have elected to
simply put them aside as I did with his findings fact.

Petitioner erroneously argues that the June 21, 2011 accident was not foreseeable. P. Br.
at 11-20; P. Reply at 2-12. The parties stipulated that Resident 3 suffered from dementia
with behavioral disturbance and agitation. The parties also stipulated that the resident’s
social services evaluations dated March 2010, March 2011, and May 2011, all stated that
Resident 3 became angry and physically aggressive with anyone who invaded her space.
The social services evaluation also assessed Resident 3 as being in need of supervision in
the form of monitoring by staff and warned that other residents should be monitored to
prevent intrusions upon Resident 3’s personal space. Jt. Stip. §§ 13, 18-19; CMS Ex. 8 at
4-6. Social services certainly foresaw the possibility that Resident 3 could become
personally aggressive and warned Petitioner of this possibility three times between March
2010 and May 2011. The evidence also shows that Resident 3 was physically aggressive
with residents on November 30, 2009, February 11, 2010, February 19, 2010, March 18,

15

2010, May 7, 2010, and December 31, 2010. CMS Ex. 8 at 7, 8, 14-18. Resident 3 was
discharged from Saint Frances Hospital and first admitted to Petitioner on about July 2,
2009. Her discharge orders required that she receive Risperidone, 0.5 mg, as needed for
agitation at least through August 30, 2009. P. Ex. 23 at 5-6, 39. Resident 3’s care plan
shows that she was to receive 0.5 mg of Risperdal® daily as needed for agitation
beginning July 21, 2009. P. Ex. 26 at 3. Petitioner has provided me no evidence that the
Risperidone was stopped between July 2009 and May 2010 and the care plan reflects no
change was made to her medication until May 7, 2010. P. Ex. 26 at 3. Following her
May 7, 2010, discharge from the hospital where she had undergone a psychiatric
evaluation following being physically aggressive with another resident who entered her
room, Resident 3’s discharge orders required Risperidone, 0.25 mg every 12 hours as
needed. P. Ex. 25 at 2; P. Ex. 27. However, three days later on May 20, 2010, Resident
3 was again agitated and yelling and screaming and the physician changed her
medications, discontinuing the 0.25 mg of Risperidone every 12 hours as needed and
ordering Resperidone, 0.25 mg every 12 hours and 0.5 mg of Ativan twice per day. P.
Ex. 27 at 2. The Ativan was discontinued on August 2, 2010. P. Ex. 28. The evidence
shows no incident of physical aggression until December 31, 2010 when, according to the
evidence before me, Resident 3 was still receiving Risperdal twice a day rather than just
as needed which was the order prior to May 20, 2010. The fact that Resident 3 was
physically aggressive on December 31, 2010, while receiving the regular dose of
Risperidone clearly put Petitioner on notice that the medication alone was not sufficient
to prevent the resident’s aggression. Social services clearly recognized the continuing
risk posed by Resident 3 and so advised Petitioner by its evaluation on May 23, 2011.
CMS Ex. 8 at 6; P. Ex. 31 at 3. Petitioner acknowledges and does not dispute the May
23, 2011 social services assessment. P. Br. at 8. I find that all the social services
assessments are credible and worthy of weight.'° The copy of Resident 3’s care plan
offered as evidence by Petitioner shows no changes to interventions following the
December 31, 2010 incident. The December 31 incident should have clearly put
Resident 3’s care-planning team and Petitioner on notice that the existing interventions,
including the Risperidone, were insufficient to eliminate or adequately mitigate the risk
for physical aggression by Resident 3. Petitioner should have some evidence that the
care-planning team considered the interventions in effect on December 31 and
determined to modify, substitute, or continue interventions in light of the December 31

'° The consistency of the phraseology of the three assessments may cause some initial
concern that a form or computer template was used that simply reproduced similar
language for all three assessments. However, upon closer examination it is apparent that
there are differences in the text that support a conclusion that the assessments are, in fact,
distinct. Petitioner does not object to the assessments and offered no evidence to show
that they are erroneous or otherwise not credible.
16

incident. Petitioner has not presented such evidence. The May 23, 2011 social services
assessment should have further emphasized for the care-planning team and Petitioner that
Resident 3 presented a risk for physical aggression against any resident that entered her
personal space. Accordingly, I conclude that after December 31, 2010, it was clearly
foreseeable that any resident that entered Resident 3’s room was at risk for harm due to
physical aggression by Resident 3, despite care-planned interventions. Contrary to the
suggestion of Petitioner (P. Reply at 3), it is not necessary that a specific accident or
specific type of harm be foreseeable. Rather, the care planning team had more than
sufficient notice as of December 31, 2010, of the risk for possible physical aggression by
Resident 3 against another resident. Petitioner is obliged by the regulation to identify
accident hazards that pose a risk for harm to its residents and then take action to mitigate
or eliminate the accident hazard. It was clearly foreseeable after December 31, 2010, that
Resident 3 could cause harm to any resident that entered her room and that was sufficient
to trigger Petitioner’s duty to act under 42 C.F.R. § 483.25(h) and implement new
interventions or revise existing interventions to protect its residents from the risk.

Petitioner argues it proved it was in substantial compliance and its interventions were
reasonable given the foreseeable risk. P. Br. at 11-20; P. Reply at 2-12. Petitioner’s
argument is not supported by the evidence. Social services assessed Resident 3 as posing
a risk for physical aggression against any resident that entered her personal space. Social
services assessed Resident 3 as requiring monitoring to mitigate or eliminate the risk for
physical aggression. The social services assessments occurred in March 2010, March
2011, and May 2011. Resident 3’s plan of care offered as evidence by Petitioner reflects
effective dates in July 2009 when Resident 3 was admitted to Petitioner. The copy of the
care plan shows that it was printed in July 2009 and includes hand-written entries dated
between October 8, 2009 and December 17, 2010. The care plan does not reflect that
Resident 3 was assessed as being potentially physically aggressive with other residents.
The care plan also does not list an intervention that required that staff supervise Resident
3 and monitor her interactions with other residents. The care plan also fails to indicate
that the possibility of physical aggression by Resident 3 was highest when another
resident entered her room and the care plan lists no interventions to address that risk. P.
Ex. 26.

Similarly, Petitioner has not shown that Resident 2’s care plan was followed. Resident
2’s care plan reflected that she was prone to wander and, with her unsteady gait and
impaired balance, she was assessed as at risk for injury due to accidental falls and she had
fallen in the past with resulting injury. Her care plan required that staff check her
location every 30 minutes on each shift. Jt. Stip. at 9, 12; P. Ex. 19 at 3; P. Ex. 20 at 4;
CMS Ex. 7 at 6. L agree with Petitioner that the Act and the regulations do not specify
that a facility provide one-to-one supervision or that a facility document the delivery of
supervision. P. Br. at 13-14. Indeed, it is well-accepted that the regulations do not tell
facilities how they must deliver care and services; rather, a facility is permitted discretion
to determine how to deliver care and services to best meet the needs of residents.

17

Woodstock Care Ctr., 363 F.3d at 589. However, when a facility fails to require staff to
locument how care and services were delivered, the facility is challenged in a case like
this to meet its burden to show that the care and services were actually delivered
consistent with the care planned needs of the resident. Resident 2 provides an excellent
example. Despite some inconsistencies in her care plan,'' it is clear from the care plan
that Resident 2 required regular supervision to mitigate or eliminate her risk for falls. On
June 21, 2011, Resident 2 fell in Resident 3’s room and suffered injuries. Petitioner’s
staff failed to document and Petitioner can now not prove that Resident 2 was receiving
the supervision that her care planning team ordered for her. LPN Schnur’s testimony that
staff watched residents on The Glen all the time but they do not document every
observation does not satisfy Petitioner’s burden. Even with maximum staff of six during
the morning, it may be inferred that not all 30 residents and 19 rooms can be visualized
all the time. For example, LPN Schnur agreed that it was not possible to see into resident
rooms particularly when staff was required to be in the dining room and the small dining
room could not be observed from the nurses’ station. P. Br. at 4; Tr. 188-90, 193-95,
233. Though I accept LPN Schnur’s assertion that there was not a time when she was on
duty that she did not see every resident at least every 30 minutes, she worked the day
shift and she did not testify that those in charge of other shifts were so conscientious. Tr.
194-95. I note that LPN Schnur testified that interventions for individual residents are
communicated to staff by care plans. As previously noted, Resident 2’s fall risk care plan
required that she be monitored frequently and that she be kept in view of staff while
awake. P. Ex. 20 at 1-2; CMS Ex. 7 at 7-8. One care plan for wandering dated October
5, 2010, required that her location be checked every shift by staff but another care plan
dated October 6, 2010 required that her location be checked every 30 minutes. P. Ex. 20
at 4; CMS Ex. 7 at 6; P. Ex. 19 at 3. The inconsistency of these interventions makes it
difficult for staff, who rely upon care plans for guidance, to know what supervision is
actually required; shows that the interventions are not reasonable to achieve their
purpose; and strongly suggests that the care planning team failed in its duties — though a
care planning deficiency was not cited.

Petitioner expresses concern about Surveyor Esuerte’s reliance upon his interview of
Anetka Mroz, a Rehabilitation Staff Member at Petitioner’s facility. I find that Ms.
Mroz’s hearsay statements to Surveyor Esuerte do not bear sufficient indicia of reliability
to merit any weight. Surveyor Esuerte testified that he did not ask Ms. Mroz whether she
personally witnessed the alleged incidents of aggression she told him about; he did not
ask her exactly when the alleged incidents of aggression occurred; he admitted that he
reviewed the facility records and found no record of the alleged incidents of aggression

'' T recognize that Petitioner was not cited for a deficiency related to care planning or
failure to document.
18

and he simply concluded that Petitioner failed to document the incidents but did not cite
Petitioner for either failure to investigate or failure to document the incidents; and he
admitted that he did not ask Ms. Mroz whether or not she reported the incidents of
aggression to nursing staff or management and, if not, why not. Ms. Mroz was not under
oath when she made her statement to Surveyor Esuerte, and he did not reduce her
statement to writing and request that she verify its accuracy and attest to the statement.’
Accordingly, I conclude that the reported statements of Ms. Mroz lack sufficient indicia
of reliability to merit any weight in reaching this decision and they are not considered for
any purpose.'*

Petitioner argues that if I conclude that Petitioner was not in substantial compliance with
program participation requirements, the deficiency did not pose immediate jeopardy. P.
Br. at 11. Whether or not the declaration of immediate jeopardy was clearly erroneous is
not an issue in this case as neither the PICMP nor the loss of NATCEP authority would
be affected by a decision that the declaration of immediate jeopardy was clearly
erroneous. 42 C.F.R. § 498.3(b)(14), (d)(10)(i); Fort Madison Health Ctr., DAB No.
2403, at 12-13 (2011) (recognizing that substantive review of an immediate jeopardy
determination is not available if CMS proposes only a PICMP).

Accordingly, I conclude that CMS has made a prima facie showing of a violation of 42
C.F.R. § 483.25(h) that posed a risk for more than minimal harm. Petitioner has failed to
rebut the prima facie showing or to establish an affirmative defense by a preponderance
of the evidence.

2 Survey protocols do not require that surveyors obtain sworn or affirmed statements
from individuals they interview in pursuit of their investigations. I do not mean to
suggest that Surveyor Esuerte committed any error by failing to obtain a sworn or
affirmed written statement from Ms. Mroz. However, in determining the weight to be
accorded to out-of-court statements offered as substantive evidence, the fact that the
statement was not written by the declarant, or at least adopted by the declarant, and sworn
or affirmed, is appropriately considered as a factor affecting the reliability of the
statements and the reliability of the recollection of the statement in this proceeding.

'S Petitioner claims that CMS surprised Petitioner at hearing by introducing the Mroz
statement for the first time. P. Br. 18. Petitioner implies bad faith, stating “[n]either
CMS nor the surveyor ever disclosed this alleged statement anytime before the hearing
and it was never otherwise documented in any material that was produced prior to
hearing.” P. Reply Br. 5. In fact, CMS relied on the Mroz statement in its prehearing
brief. CMS Prehr’g Br. 11. The record, therefore, shows that CMS did not knowingly
conceal this statement or “surprise” Petitioner at hearing.
19

4. The proposed enforcement remedy of a $10,000 PICMP is
reasonable.

5. Petitioner’s ineligibility to conduct a NATCEP is mandatory.

I have concluded that Petitioner was not in substantial compliance with program
participation requirements due to a violation of 42 C.F.R. § 483.25(h) that posed a risk
for more than minimal harm on June 21, 2011. Ifa facility is not in substantial
compliance with program requirements, CMS has the authority to impose one or more of
the enforcement remedies listed in 42 C.F.R. § 488.406, including a CMP. CMS may
impose a per-day CMP for the number of days that the facility is not in compliance or a
PICMP for each instance that a facility is not in substantial compliance, regardless of
whether the deficiencies pose immediate jeopardy. 42 C.F.R. § 488.430(a). Here, CMS
proposes to impose a PICMP of $10,000 for the instance of noncompliance on June 21,
2011. Petitioner’s noncompliance provides a basis for the imposition of an enforcement
remedy. The CMP that CMS proposes is the maximum permissible in the range of
authorized PICMPs. 42 C.F.R. §§ 488.408, 488.438.

When I conclude, as I have in this case, that there is a basis for the imposition of an
enforcement remedy and the remedy proposed is a CMP, my authority to review the
reasonableness of the CMP is limited by 42 C.F.R. § 488.438(e). The limitations include:
(1) I may not set the CMP at zero or reduce it to zero; (2) I may not review the exercise
of discretion by CMS in selecting to impose a CMP; and (3) I may only consider the
factors specified by 42 C.F.R. § 488.438(f) when determining the reasonableness of the
CMP amount. In determining whether the amount of a CMP is reasonable, the following
factors specified at 42 C.F.R. § 488.438(f) must be considered: (1) the facility’s history
of noncompliance, including repeated deficiencies; (2) the facility’s financial condition;
(3) the seriousness of the deficiencies as set forth at 42 C.F.R. § 488.404(b), the same
factors CMS and/or the state were to consider when setting the CMP amount; and (4) the
facility’s degree of culpability, including but not limited to the facility’s neglect,
indifference, or disregard for resident care, comfort, and safety and the absence of
culpability is not a mitigating factor. The factors that CMS and the state were required to
consider when setting the CMP amount and that I am required to consider when assessing
the reasonableness of the amount are set forth in 42 C.F.R. § 488.404(b): (1) whether the
deficiencies caused no actual harm but had the potential for minimal harm, no actual
harm with the potential for more than minimal harm, but not immediate jeopardy, actual
harm that is not immediate jeopardy, or immediate jeopardy to resident health and safety;
and (2) whether the deficiencies are isolated, constitute a pattern, or are widespread. My
review of the reasonableness of the CMP is de novo and based upon the evidence in the
record before me. I am not bound to defer to the CMS determination of the reasonable
amount of the CMP to impose but my authority is limited by regulation as already
explained. I am to determine whether the amount of any CMP proposed is within
20

reasonable bounds considering the purpose of the Act and regulations. Emerald Oaks,
DAB No. 1800, at 10; CarePlex of Silver Spring, DAB No. 1683, at 14-16 (1999);
Capitol Hill Cmty. Rehab. & Specialty Care Ctr., DAB No. 1629 (1997).

CMS presented evidence that Petitioner was previously found not in substantial
compliance due to a violation of 42 C.F.R. § 483.25(h) (Tag F323) but with no actual
harm or immediate jeopardy, during a survey in July 2010. The CMS evidence also
shows that noncompliance was found during surveys in July 2009 and July 2008, due to
violations of different regulations but none with actual harm or immediate jeopardy.
CMS Ex. 17. Petitioner did not offer evidence reflecting upon its financial condition or
its ability to pay the proposed PICMP. CMS submitted a Financial and Statistical Report
(Cost Report) for Long-Term Care Facilities for fiscal year 2010 that Petitioner submitted
to the State of Illinois Department of Healthcare and Family Services. CMS Ex. 16. The
document submitted by CMS indicates that in 2010, a $10,000 PICMP was not likely to
force Petitioner into bankruptcy. But the document tells me nothing about Petitioner’s
ability to pay in 2011 or now and the document has little or no relevance. Because
Petitioner has not alleged an inability to pay, I conclude there is no issue in that regard.

Petitioner argues that it was not culpable for errors and omissions related to the accident
on June 21, 2011, although it does so in the context of arguing any noncompliance was
not immediate jeopardy. P. Br. 21-22. Petitioner also argues that the circumstances
giving rise to its noncompliance were “isolated” and “unique,” P. Br. 21, which I
construe to be an argument that the “seriousness of the deficiencies” was not such as to
warrant the maximum permissible PICMP. The regulation defines, “culpability” as
“neglect, indifference, or disregard for resident care, comfort, and safety.” 42 C.F.R.

§ 488.438(f)(4). Petitioner is culpable for not planning for and providing adequate
supervision to both residents. Petitioner is particularly culpable in the case of Resident 3
because it was clear in December 2010 that the resident’s care plan was insufficient to
mitigate or eliminate the risk that she would become physically aggressive and social
services highlighted the risk in its March and May 2011 reports, but Resident 3’s care
plan reflects no changes. I conclude that Petitioner’s inaction reflects a high level of
neglect, indifference or disregard for its resident’s safety.

It is not disputed that Resident 2 died as a result of the injuries sustained when she fell in
Resident 3’s room. CMS Ex. 10 at 6. When a facility’s deficient conduct results in a
resident’s death, the seriousness of its noncompliance is arguably severe. Here,
Petitioner did not provide adequate supervision to prevent the accident that resulted in a
resident’s death.

Considering the facility’s history of noncompliance, the level of culpability, and the death
of Resident 2 as a result of Petitioner’s noncompliance, imposition of the highest
permissible PICMP is not unreasonable, particularly given that that amount is only
$10,000. While the surveyor determined that the incident was isolated as indicated by the
21

scope and severity of “J,” the noncompliance caused the most severe harm possible and
warrants the most severe PICMP possible. Accordingly, the $10,000 proposed PICMP is
reasonable.

Petitioner was notified in this case that it was ineligible to be approved to conduct a
NATCEP for two years. CMS Ex. | at 4-5. I have concluded that a CMP of more than
$5,000 is reasonable. Thus, Petitioner is ineligible to conduct a NATCEP for two years
by operation of matter of law. 42 C.F.R. § 483.151(b)(2) and (f).

III. Conclusion

For the foregoing reasons, I conclude that Petitioner was not in substantial compliance
with program participation requirements on June 21, 2011; that a $10,000 PICMP is
reasonable; and that Petitioner was ineligible to be approved to conduct a NATCEP for
two years.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
LCD Complaint: Continuous Glucose Monitoring System

Docket No. C-13-403
Decision No. CR2797
Date: May 23, 2013

DECISION DISMISSING LCD COMPLAINT

The complaint of a Medicare beneficiary (Complainant) dated January 7, 2013,
challenging a Local Coverage Determination (LCD) titled Continuous Glucose
Monitoring System is dismissed as unacceptable pursuant to 42 C.F.R. § 426.410(c)(2).'
The purported aggrieved party is entitled to request further review by the Appellate
Division of the Departmental Appeals Board (the Board) as explained hereafter.

I. Background

On January 7, 2013, Complainant filed a letter in which he requested Medicare coverage
for continuous glucose monitoring and supplies. The case was assigned to me on
February 13, 2013. I construed the letter to be a complaint challenging a LCD titled
Continuous Glucose Monitoring System.

I advised Complainant by letter dated March 21, 2013, that I had evaluated his complaint
pursuant to 42 C.F.R. § 426.410 and concluded that it was unacceptable. Therefore, I
granted Complainant until May 1, 2013, to file an acceptable amended complaint. As of
the date of this decision, the Complainant has filed no response and no amended
complaint.

' The names of Medicare beneficiaries are not listed in published decisions to protect
their privacy. 68 Fed. Reg. 63,691, 63,709 (Nov. 7, 2003).
II. Discussion
A. Applicable Law

Section 1862 of the Social Security Act (the Act) (42 U.S.C. § 1395y), which is
applicable to both Medicare Part A and Part B, provides that no payment may be made
for items or services “which . . . are not reasonable and necessary for the diagnosis or
treatment of illnesses or injury or to improve the function of a malformed body member .
...” The Secretary of the Department of Health and Human Services (the Secretary) has
provided by regulation that any services not reasonable and necessary for one of the
purposes listed in the regulations are excluded from coverage under Medicare. 42 C.F.R.
§ 411.15(k). The Medicare Benefit Policy Manual, CMS pub. 100-02, ch.16, §§ 10 and
20, provides that no payment may be made for items and services that are not reasonable
and necessary for the diagnosis or treatment of illness or injury or to improve the
functioning of a malformed body member.

The Centers for Medicare and Medicaid Services (CMS) administers the Medicare
program (Act §§ 1102, 1871, 1874) and contracts with carriers and intermediaries
(Medicare contractors) to act on its behalf in determining and making payments to
providers and suppliers of Medicare items and services. Act §§ 1816, 1842. The Act
provides for both National Coverage Determinations (NCD) and LCDs. Act

§ 1869(f)(1)(B) and (2)(B) (42 U.S.C. §1395ff(£)(1)(B) and (2)(B)). An LCD, as defined
by the Act, is “a determination by a fiscal intermediary or a carrier . . . respecting whether
or not a particular item or service is covered” within the area covered by the contractor.
Act § 1869(f)(2)(B) (42 U.S.C. § 1395ff(£)(2)(B)); 42 C.F.R. § 400.202. In the absence
of a NCD or a LCD, individual claims determinations are made based upon an individual
beneficiary’s particular factual situation. 68 Fed. Reg. 63,691, 63,693 (2003) citing
Heckler v. Ringer, 466 U.S. 602, 617 (1984) (recognizing that the Secretary has
discretion to either establish a generally applicable rule or to allow individual
adjudication); 42 C.F.R. §§ 426.420(a), (b), (e)(1), 426.460(b)(1), 426.488(b).

An aggrieved Medicare beneficiary who has been denied coverage for an item or service
based on a LCD may challenge that LCD before an administrative law judge (ALJ). The
aggrieved party initiates the review by filing a written complaint that meets the criteria
specified in the governing regulations. 42 C.F.R. §§ 426.400; 426.410(b)(2). If an ALJ
determines that the complaint is unacceptable, the ALJ must provide the aggrieved party
one opportunity to amend the unacceptable complaint. 42 C.F.R. § 426.410(c)(2). Ifthe
aggrieved party fails to submit an acceptable amended complaint within a reasonable
timeframe as determined by the ALJ, the ALJ must issue a decision dismissing the
unacceptable complaint. 42 C.F.R. § 426.410(c)(2). If a complaint is determined
unacceptable after one amendment, the beneficiary is precluded from filing again for six
months after being informed that it is unacceptable. 42 C.F.R.

§ 426.410(c)(3).

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

1. Complainant failed to file an amended complaint within the allotted
timeframe and dismissal is required by 42 C.F.R. § 426.410(c)(2).

In my letter to Complainant dated March 21, 2013, I advised him that although he
submitted physicians’ statements that continuous glucose monitoring may benefit him, he
failed to submit documents showing that a Medicare contractor denied coverage or would
deny coverage for the necessary equipment based on a LCD within the 120 days
preceding his LCD complaint. Therefore, it is not possible to determine whether or not
Complainant is actually an aggrieved party within the meaning of 42 C.F.R. § 426.110
and eligible to file a LCD complaint. I advised Complainant that his complaint was
unacceptable because he had not identified or provided a copy of any LCD or NCD that
was cited by a Medicare contractor as a basis for denying his claim for Medicare
payment. I also advised him that he failed to submit any clinical or scientific evidence
that supports his position that a determination not to provide coverage for continuous
glucose monitoring is unreasonable, other than his physicians’ statements. 42 C.F.R.

§ 426.400(c)(6).

I gave Complainant a reasonable time until May 1, 2013 to amend his complaint. I
advised Complainant that his amended complaint must satisfy all the requirements for an
acceptable complaint specified at 42 C.F.R. § 426.400. I advised him that if the amended
complaint did not contain all the required information, I would dismiss his case.

No amended complaint has been received and dismissal is mandated by 42 C.F.R.
§ 426.410(c)(2).

2. Appeal rights. 42 C.F.R. §§ 426.462, 426.465.
Pursuant to 42 C.F.R. § 426.465(a), an aggrieved party may request review by the Board.
Except upon a showing of good cause, a request for review by the Board must be filed
within 30 days of the date of this decision (42 C.F.R. § 426.465(e)) and must comply
with the requirements of 42 C.F.R. § 426.465(f).

II. Conclusion

For the foregoing reasons, the complaint is dismissed.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Al-Awan, Inc.
d/b/a Marriottsville Exxon,

Respondent.

Docket No. C-13-610
FDA Docket No. FDA-2013-H-0376

Decision No. CR2794

Date: May 22, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (“CTP”) filed an Administrative Complaint
(“Complaint”) against Respondent, Al-Awan, Inc. d/b/a Marriottsville Exxon,
alleging facts and legal authority sufficient to justify the imposition of a civil
money penalty of $500. Respondent did not timely answer the Complaint, nor did
Respondent request an extension of time within which to file an answer.
Therefore, I enter a default judgment against Respondent and order that
Respondent pay a civil money penalty in the amount of $500.

CTP began this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (“FDA”) Division of
Dockets Management. The Complaint alleges that Respondent’s staff unlawfully
sold tobacco products to a minor or minors and that Respondent’s staff failed to
verify the age of tobacco purchasers, by means of photographic identification
containing the bearer’s date of birth, thereby violating the Federal Food, Drug, and
Cosmetic Act (“Act”) and its implementing regulations found at 21 C.F.R. Part
1140. CTP seeks a civil money penalty of $500.

On April 4, 2013, CTP served the Complaint on Respondent by United Parcel
Service , pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent
should pay the penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that, if it failed to take one of
these actions within 30 days, the Administrative Law Judge could, pursuant to 21
C.F.R. § 17.11, issue an initial decision ordering Respondent to pay the full
amount of the proposed penalty. Respondent did not take any of the required
actions within the time provided by regulation.

I am required to issue a default judgment if the Complaint is sufficient to justify a
penalty, and the Respondent fails to answer timely or to request an extension. 21
C.F.R. § 17.11(a). For that reason, I must decide whether a default judgment is
appropriate here, and I conclude that it is merited based on the allegations of the
Complaint and Respondent’s failure to answer them.

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

e Respondent owns Marriottsville Exxon, an establishment that sells tobacco
products and is located at 9835 Liberty Road, Randallstown, Maryland
21133.

e On January 31, 2012, an FDA-commissioned inspector observed violations
while inspecting Respondent’s establishment. Specifically, Respondent
violated 21 C.F.R. § 1140.14(a) when Respondent’s staff sold cigarettes or
smokeless tobacco to a person younger than 18 years of age and violated 21
C.F.R. § 1140.14 (b)(1) when Respondent’s staff did not verify the minor’s
identification, by means of photographic identification containing the
bearer’s date of birth, before this sale.

e On March 1, 2012, CTP issued a Warning Letter to Respondent detailing
the inspector’s observations from January 31, 2012. In addition to
describing the violations, the letter advised Respondent that the FDA may
initiate a civil money penalty action or take other regulatory action against
Respondent if Respondent failed to correct the violations. The letter also
stated that Respondent is responsible for complying with the law.
e The FDA did not receive a response to the Warning Letter, but United
Parcel Service records show that “SODERA” received the Warning Letter
on March 2, 2012.

e On May 29, 2012, FDA-commissioned inspectors documented additional
violations during a subsequent inspection of Respondent’s establishment.
Specifically, Respondent’s staff sold a package of “Newport Box”
cigarettes to a person younger than 18 years of age at approximately 4:07
p.m. ET. Additionally, Respondent’s staff did not verify the minor’s age by
checking the minor’s photographic identification before this sale.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any
person younger than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer
must verify, by means of photo identification containing the bearer’s date of birth,
that no person purchasing cigarettes or smokeless tobacco is younger than 18 years
of age.

Here, Respondent’s staff sold cigarettes or smokeless tobacco to a minor or minors
on January 31, 2012, and May 29, 2012. In addition, Respondent’s staff did not
verify the photographic identification of the tobacco purchasers prior to these
transactions as required by the regulations. Respondent’s actions and omissions
on two occasions at the same retail outlet constitute violations of law for which a
civil money penalty is merited. Accordingly, I find that a civil money penalty of
$500 is permissible under 21 C.F.R. § 17.2 and order that one be imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Juan DeLeon, Jr.
(OI File No. H-6-10-40587-9),

Petitioner,
v.
The Inspector General.
Docket No. C-12-1261
Decision No. CR2793
Date: May 22, 2013
DECISION

Petitioner, Juan DeLeon, Jr., appeals the determination of the Inspector General (1.G.) for
the U.S. Department of Health and Human Services to exclude Petitioner from
participating in Medicare, Medicaid, and all federal health care programs pursuant to
section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)) for a
period of 20 years. For the reasons explained below, I find that there is a basis for the
1.G. to exclude Petitioner and that an exclusion period of 20 years is reasonable based on
three aggravating factors and one mitigating factor.

I. Background and Procedural History

The following facts are undisputed. Petitioner owned and managed United DME, Inc., a
durable medical equipment supplier that sold power wheelchairs, diabetic supplies, and
incontinence supplies. On September 29, 2011, Petitioner was convicted of conspiracy to
commit health care fraud, health care fraud, and aggravated identity theft for offenses
committed from July 2008 through April 2010. Petitioner was sentenced to serve ten
years incarceration and ordered to pay $750,000 in restitution to federal and state health
care programs. In a letter dated July 31, 2012, the LG. notified Petitioner that he was
being excluded from participating in Medicare, Medicaid, and all federal health care
programs effective August 20, 2012. The LG. based the exclusion on Petitioner’s
aforementioned conviction in the United States District Court, Southern District of Texas,
of a criminal offense related to the delivery of an item or service under Medicare or a
state health care program, including the performance of management or administrative
services relating to the delivery of items or services, under any such program. I.G.
Exhibit (Ex.) 1. The I.G. excluded Petitioner for 25 years, 20 years above the statutory
minimum exclusion period for mandatory exclusions, based on the presence of three
aggravating factors: (1) the acts resulting in his conviction caused, or were intended to
cause, a financial loss to a Government program of $5,000 or more; (2) the acts resulting
in his conviction were committed over a period of one year or more; and (3) the court’s
sentence of Petitioner included incarceration. I.G. Ex. 1.

Petitioner, appearing pro se, filed a timely request for a hearing before an administrative
law judge (ALJ). The Civil Remedies Division received the request on September 10,
2012, and assigned the case to me for possible hearing and written decision. I convened a
prehearing conference by telephone on November 5, 2012, the substance of which I
summarized in my Order and Schedule for Filing Briefs and Documentary Evidence
issued on November 6, 2012. Then, on December 5, 2012, the I.G. notified Petitioner
that “‘[o]n the basis of new information about your substantial cooperation, we are
reducing the period of your exclusion to 20 years.” I.G. Ex. 2. The I.G. explained that
“[t]his revision does not alter or modify in any way the conditions of your exclusion as
explained in the July 31, 2012 letter to you.” LG. Ex. 2.

Petitioner subsequently requested the production of documents from the LG. pursuant to
42 C.F.R § 1005.7(a), and the I.G. filed objections to Petitioner’s discovery requests.
Petitioner then filed a letter, which I construed as a motion for an order compelling
discovery pursuant to 42 C.F.R. § 1005.7(e)(1). On January 29, 2013, the L.G. filed a
motion for summary judgment and a brief in support (I.G. Br.) and five proposed exhibits
(LG. Exs. 1-5). After reviewing the I.G.’s objections, arguments, and exhibits, I
convened a telephone conference on February 13, 2013 to discuss the relevancy of
Petitioner’s discovery requests and the I.G.’s objections to them. On February 20, 2013,
I issued an Order Denying Petitioner’s Motion to Compel Discovery and Amending
Schedule for Filing Briefs and Documentary Evidence, after concluding that Petitioner
had not met his burden of showing that discovery should be allowed with regard to his
specific document requests. In that Order, I amended the deadlines for the filing of briefs
and documentary evidence and explained that Petitioner could make any arguments and
offer his own evidence regarding the extent of his cooperation with federal authorities or
any other relevant factor affecting his exclusion period.

Petitioner filed an informal brief (P. Br.) and with five proposed exhibits (P. Exs. 1-5) on
March 11, 2013. The L.G. filed a reply brief (I.G. Reply) on March 26, 2013. There were
no formal objections to any of the exhibits. I therefore admit into evidence I.G. Exs. 1-5
and P. Exs. 1-5. The I.G. has filed a motion for summary judgment and believes the case
can be decided on the written record. Petitioner indicated in his brief that an in-person
hearing was necessary to decide his case. However, Petitioner stated that the testimony
he wished to offer at an in-person hearing is “about procedure to correct billing errors”
and the witnesses whose testimony he wants to offer are himself and the I.G. P. Br. at 4.
Petitioner states that the oral testimony of these witnesses relates to his arguments
regarding “correction of billing errors and given history” and “procedure to correct
billing errors and intent of the law.” P. Br. at 4. When asked to explain why the
proposed testimony does not duplicate something already stated in an exhibit, Petitioner
states that “[t]he basis of the conviction is simply black and white. While the intent to
defraud is a factor in the law which was not given at trial.” P. Br. at 4. Thus, it appears
that the testimony Petitioner wishes to present at a hearing serves only to attack the
merits of his conviction for healthcare fraud in federal court. Under the relevant
regulations, Petitioner’s underlying conviction is not reviewable or subject to collateral
attack before me. 42 C.F.R. § 1001.2007(d). Considering the testimony Petitioner
wishes to present can only be viewed as a collateral attack on substantive or procedural
grounds on his underlying conviction, and therefore is not relevant to the issues before
me, an in-person hearing is not necessary. Accordingly, I base this decision on the
written record of the documentary evidence that the parties submitted.

IL. Discussion
A. Applicable Law

The Act requires that the Secretary of the U.S. Department of Health and Human
Services (Secretary) exclude from participation in all federal health care programs any
“individual or entity that has been convicted of a criminal offense related to the delivery
of an item or service under [Medicare] or under any State health care program.” Act

§ 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); see also 42 C.F.R. § 1001.101(a).

An exclusion made pursuant to section 1128(a)(1) is mandatory. The I.G. must impose
such a mandatory exclusion for a minimum period of five years. Act § 1128(c)(3)(B)
(42 U.S.C. § 1320a-7(c)(3)(B)); see 42 C.F.R. § 1001.102(a). The LG. may increase an
exclusion period based on the presence of certain aggravating factors that the Secretary
has established by regulation. 42 C.F.R. § 1001.102(b). Here, the I.G. relied on three
aggravating factors to enhance the period of Petitioner’s exclusion beyond the minimum
mandatory period:

(1) The acts resulting in the conviction, or similar acts, that caused, or were
intended to cause, a financial loss to a Government program or to one or
more entities of $5,000 or more. (The entire amount of financial loss to
such programs or entities, including any amounts resulting from similar
acts not adjudicated, will be considered regardless of whether full or partial
restitution has been made);
(2) The acts that resulted in the conviction, or similar acts, were committed
over a period of one year or more;

* * *

(5) The sentence imposed by the court included incarceration[.]
42 C.F.R. § 1001.102(b)(1), (2), (5); see I.G. Ex. 1, at 1-2.

Where, as here, the I.G. determines that one or more aggravating factors may support
increasing an exclusion period beyond the five-year minimum, the I.G. may then consider
certain enumerated mitigating factors “as a basis for reducing the period of exclusion to
no less than 5 years.” 42 C.F.R. § 1001.102(c). Petitioner has argued, and the LG. has
conceded, that the following mitigating factor is present in this case:

(3) The individual’s or entity’s cooperation with Federal or State officials
resulted in —

(i) Others being convicted or excluded from Medicare, Medicaid
and all other Federal health care programs,

(ii) Additional cases being investigated or reports being issued by
the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses, or

(iii) The imposition against anyone of a civil money penalty or
assessment under part 1003 of this chapter.

42 CFR. § 1001.102(c)(3).

Rights to an ALJ hearing and judicial review of the final action of the Secretary are
provided by section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)). An ALJ reviews the
length of an exclusion de novo to determine whether it falls within a reasonable range
considering any aggravating and mitigating factors. Sushil Aniruddh Sheth, M.D., DAB
No. 2491, at 5 (2012) (citing Joseph M. Rukse, Jr., R.Ph., DAB No. 1851, at 10-11
(2002)).

B. Issues
This case presents two issues:

1. Whether there is a basis for the I.G. to exclude Petitioner from participation
in Medicare, Medicaid, and all federal health care programs; and
2. Whether the length of the exclusion is unreasonable.
C. Findings of Fact and Conclusions of Law

1. There is a basis for the I.G. to exclude Petitioner pursuant to
section 1128(a)(1) of the Act.

The essential elements necessary to support an exclusion based on section 1128(a)(1) of
the Act are: (1) the individual to be excluded must have been convicted of a criminal
offense, whether felony or misdemeanor; and (2) the criminal offense is related to the
delivery of an item or service under Medicare or any state health care program.

a. Petitioner does not contest that he was convicted of a criminal
offense within the meaning of section 1128(a)(1) of the Act.

An individual is “convicted” of a criminal offense when: (1) a judgment of conviction
has been entered by a federal, state, or local court whether or not an appeal is pending or
the record has been expunged; (2) there has been a finding of guilt in a federal, state, or
local court; (3) a plea of guilty or no contest has been accepted in a federal, state, or local
court; or (4) an accused individual enters a first offender program, deferred adjudication
program, or other arrangement where a judgment of conviction has been withheld. Act

§ 1128(i) (42 U.S.C. § 1320a-7(i)); see also 42 C.F.R. § 1001.2.

Petitioner does not dispute that, on September 29, 2011, he was found guilty, after a plea
of not guilty and a full trial, of one count of conspiracy to commit healthcare fraud, three
counts of healthcare fraud, and one count of aggravated identity theft. 1.G. Ex. 4. The
court sentenced Petitioner to be imprisoned for ten years followed by a three-year term of
supervised release, to pay an assessment of $500, and to pay restitution of $750,000
($375,000 of this amount to Medicare). I.G. Ex. 4. These events qualify as a conviction
under the Act. Act §§ 1128(i)(1), (i)(2).

b. Petitioner does not dispute that his offense was related to the
delivery of an item or service under Medicare.

Petitioner also does not dispute that his conviction was related to the delivery of an item
or service under Medicare. Petitioner’s conviction was based on his submission of false
and fraudulent claims for services to Medicare and Medicaid. I.G. Ex. 3, at 5-10. It is
evident that a “nexus” exists between his criminal acts and the purported delivery of an
item or service under Medicare. See, e.g., Berton Siegel, D.O., DAB No. 1467 (1994).
The fact that the court ordered Petitioner to pay restitution to Medicare in the amount of
$375,000 confirms that his offense was program-related.
c. Lam unable to consider collateral attacks on Petitioner’s underlying
conviction.

Petitioner maintains his innocence and states that he disagrees that he was convicted of a
criminal offense “given that the offense is a daily occurrence that is correctable and is
done so regularly.” P. Br. at 2. Petitioner claims that he “did not do the billing at all and
any errors were corrected as soon as noted.” P. Br. at 2. Petitioner claims that he has
presented documentation showing “that examples used to convict were never brought to
my attention purposefully” and “false statements made by the agent which can be verified
by FBI reports.” P. Br at 2. Petitioner also argues he has not received copies of certain
documents he has requested from the I.G., which could undermine the basis for his
conviction. P. Br. at 2-4.

However, Petitioner’s arguments all attack the validity of his conviction, and Petitioner
does not dispute that he was in fact convicted. Under the regulations, Petitioner’s
underlying conviction is not reviewable or subject to collateral attack before me, whether
on substantive or procedural grounds. 42 C.F.R. § 1001.2007(d). The Board has
repeatedly affirmed this categorical preclusion. See, e.g., Lyle Kai, R.Ph., DAB No.
1979, at 8 (2005) (“Excluding individuals based on criminal convictions ‘provides
protection for federally funded programs and their beneficiaries and recipients, without
expending program resources to duplicate existing criminal processes.’” (internal citation
omitted)). Thus, I do not consider Petitioner’s arguments attacking his predicate
conviction.

d. Petitioner must be excluded for a minimum of five years.

The LG., acting on behalf of the Secretary, must exclude an individual or entity convicted
of an offense related to the delivery of a health care item or service under Medicare or a
state health care program. Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); 42 C.F.R.

§ 1001.101(a). An exclusion made pursuant to section 1128(a)(1) of the Act must be for
a minimum period of five years. Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)); 42
C.F.R. § 1001.102(a). As explained above, Petitioner does not dispute that he was
convicted of offenses, conspiracy to commit health care fraud, health care fraud, and
aggravated identity theft, which are related to the delivery of a health care services under
the Medicare program. Accordingly, there is a basis for the I.G. to exclude Petitioner and
that exclusionary period must be a minimum of five years.

2. The exclusion of Petitioner for 20 years is within a reasonable
range.

To determine whether an exclusion period is within a reasonable range, an ALJ must
weigh any aggravating and mitigating factors in the case, and evaluate the quality of the
circumstances surrounding the factors. Vinod Chandrashekhar Patwardhan, M.D., DAB
No. 2454, at 6 (2012) (citing Jeremy Robinson, DAB No. 1905, at 11 (2004)). The
regulations provide several factors that the I.G. may consider as aggravating and a basis
for lengthening an exclusion period. 42 C.F.R. § 1001.102(b). In this case, the I.G.
established the presence of three aggravating factors by a preponderance of the evidence.
If an aggravating factor justifies an increase to the length of an exclusion, the I.G. may
then consider various mitigating factors as a basis to reduce the exclusion period to no
less than five years. 42 C.F.R. § 1001.102(c). I have determined that the severity of the
three aggravating factors supports an increase in the length of Petitioner’s exclusion
period beyond the five-year minimum. One mitigating factor is also present in this case,
which the IG considered and reasonably used as a basis to decrease the penalty. These
factors are addressed below.

a. The acts resulting in Petitioner’s conviction caused, or were
intended to cause, a loss to a government program or to one or more
entities of $5,000 or more.

The I.G. may increase the length of an exclusion if the acts resulting in the underlying
conviction caused, or were intended to cause, a loss to a government program or to one or
more entities of $5,000 or more. 42 C.F.R. § 1001.102(b)(1). The District Court ordered
Petitioner to pay $750,000 in restitution to Medicare and the Texas Health and Human
Services Commission as a result of the loss to the government that Petitioner’s offenses
caused. I.G. Ex. 4, at 4. This government loss is substantially higher (approximately 150
times) than the minimum loss needed to trigger this particular aggravating factor. Thus,
the I.G. has demonstrated sufficiently that the acts resulting in Petitioner’s conviction
resulted in a loss to a government program of $5,000 or more.

Governmental loss is an “exceptional aggravating factor” when, as here, the loss is “very
substantially greater than the statutory minimum.” Robinson, DAB No. 1905, at 11. On
its own, the governmental loss here, 150 times greater the minimum needed to support an
increase to the exclusion period, must be afforded such substantial weight as to support a
significant increase to the reasonable range of exclusion periods that the IG. may impose.
The reasonable range of exclusion periods must reflect the substantial government loss as
well as the need to protect government programs from untrustworthy individuals. See
Donald A. Burstein, Ph.D., DAB No. 1865, at 12 (2003). The 20-year exclusion period
imposed here is within a reasonable range because it is large enough to reflect the scope
of government loss and ensure that government programs are protected for a significant
period from an individual proven to be untrustworthy when participating in such
programs. See Michael D. Miran, et al., DAB No. 2469, at 5-6 (2012) (upholding 13-
year exclusion based on $257,946 loss to government program and one additiona
aggravating factor); Robinson, DAB No. 1905, at 12 (upholding a 15-year exclusion
based on a $205,000 loss to government program and two additional aggravating factors).

b. The acts resulting in Petitioner’s conviction were committed over
a period of one year or more.

The I.G. may increase the length of an exclusion if the acts resulting in the underlying
conviction occurred over a period of one year or more. 42 C.F.R. § 1001.102(b)(2). The
District Court found Petitioner guilty of each count in the Indictment, which stated the
length of the conspiracy to commit health care fraud as July 2008 through April 2010
(approximately one year and nine months). I.G. Ex 3, at 5. Therefore, Petitioner’s
involvement in the scheme was for more than one year, which is enough evidence to
establish the presence of this aggravating factor.

The purpose of this aggravating factor “is to distinguish between petitioners whose lapse
in integrity is short-lived from those who evidence a lack of such integrity over a longer
period... .” Burstein, DAB No. 1865, at 8. The length of the fraudulent billing scheme
in this case and Petitioner’s prolonged involvement in that scheme, demonstrates
Petitioner’s lack of integrity was more than just “short-lived.” Previously, the Board has
accorded enough weight to sustain a 15-year exclusion to the fact that underlying
criminal conduct was committed for “slightly more” than one year. Burstein, DAB No.
1865, at 12. Here, as in Burstein, the length of Petitioner’s conduct shows prolonged lack
of integrity that supports the increase from the five-year minimum exclusion period to
twenty years.

c. The court’s sentence of Petitioner included incarceration.
The I.G. may increase the length of an exclusion if the court’s sentence includes a period
of incarceration. 42 C.F.R. § 1001.102(b)(5). Here, the District Court for the Southern
District of Texas sentenced Petitioner to 10 years in prison based on his conviction
relating to health care fraud. LLG. Ex. 4, at 2. Petitioner is currently incarcerated under
the District Court’s sentence. Thus, the I.G. has established the presence of this
aggravating factor.

A prison sentence of 10 years for a financial crime demonstrates the severity of the
fraudulent billing scheme in which Petitioner was involved. The Board has determined
that a nine-month period of incarceration was “relatively substantial,” and supported an
eight-year exclusion period. Jason Hollady, M.D., DAB No. 1855, at 12 (2002). Here,
the length of incarceration was more than thirteen times that imposed in Hollady.
Accordingly, this aggravating factor bears substantial weight, and supports an increase
well beyond the five-year minimum exclusion period to twenty years.

d. Petitioner’s cooperation with Federal or State officials resulted in
another being convicted.

Here, there is a mitigating factor because the excluded individual’s “cooperation with
Federal or State officials resulted in . . . [o]thers being convicted or excluded from
Medicare, Medicaid, and all other Federal health care programs... .” 42 C.F.R..

§ 1001.102(c)(3)(i). To establish this mitigating factor, Petitioner must show that he
cooperated with federal or state officials and that his cooperation resulted in others being
convicted, additional cases investigated, or the imposition of a civil monetary penalty.
See Stacey R. Gale, DAB No. 1941, at 12 (2004). Moreover, the Board has stated that
only significant cooperation should be considered mitigating. Jd. Petitioner argues that
six durable medical equipment suppliers in Texas were prosecuted “by no coincidence
given my extensive cooperation with the authorities.” P. Br at 3.

The L.G. disputes the extent of Petitioner’s cooperation and contends that Petitioner has
provided no evidence to support his statement. I.G. Reply at 5. Nonetheless, the I.G.
concedes that Petitioner did provide some cooperation in this case. 1G. Br. at 12. The
1.G.’s second amended notice of exclusion acknowledged that Petitioner cooperated with
federal or state authorities and that Petitioner’s participation in consensual monitoring
later resulted in another individual’s conviction. I.G. Ex. 2; I.G. Ex. 5, at 2-3.
Accordingly, the I.G. reduced its original proposed exclusionary period by five years.
LG. Ex. 2.

e. Petitioner’s cooperation does not justify further reduction of the
exclusionary period.

There is no “rigid formula” for the I.G. or an ALJ to determine an exact exclusion period
when weighing and evaluating aggravating and mitigating factors. Patwardhan, DAB
No. 2454, at 6. Rather, the ALJ must review the factors de novo to determine whether
the exclusion imposed is within a “reasonable range” of exclusion periods. Ruske, DAB
No. 1851, at 11 (citing Gary Alan Katz, R.Ph., DAB No. 1842, at 8 n.4 (2002)). A
“reasonable range” is “a range of exclusion periods that is more limited than the full
range authorized by the statute and that is tied to the circumstances of the individual
cases.” Robinson, DAB No. 1905, at 5 (quoting Ruske, DAB No. 1851, at 11).

It is undisputed that Petitioner has cooperated with authorities and that Petitioner’s
participation in consensual monitoring later resulted in another individual’s conviction.
1G. Br. at 12; LG. Ex. 2; 1.G. Ex. 5 at 2-3. Petitioner argues that his cooperation was
more extensive and should reduce the period of exclusion to less than 20 years. See P.
Br. at 3. Petitioner contends his cooperation led to the prosecution of six durable medical
equipment companies in the Rio Grande Valley. P. Br. at 3. However, the evidence
Petitioner offers does not support this assertion. More importantly, Petitioner does not
present any evidence or argument which supports Petitioner’s position that the I.G. did
10

not appropriately factor Petitioner’s cooperation with federal or state authorities when
determining Petitioner’s period of exclusion.

The I.G.’s second amended notice of exclusion acknowledged Petitioner’s substantial
cooperation and reduced Petitioner’s period of exclusion from 25 to 20 years. I.G. Ex. 2.
Nothing in 42 C.F.R. § 1001.102 or the Act assigns the specific weight to be given to
aggravating or mitigating evidence. Additionally, the regulations vest discretion in the
1.G. to determine the length of exclusion as long as it is within a reasonable range. I do
not have the authority to alter the length of the exclusion, as long as the time chosen is
based on demonstrated criteria and within a reasonable range. Robinson, DAB No. 1905,
at 3; Barry D. Garfinkel, M.D., DAB No. 1572, at 11 (1996).

The weight of the evidence in this case supports a long period of exclusion. Moreover,
the I.G. has reduced Petitioner’s exclusion by five years due to the mitigating factor of
his cooperation with law enforcement authorities. Petitioner’s cooperation with the
government may recoup a small amount of the trustworthiness he lost by participating in
the billing scheme. See Craig Richard Wilder, DAB No. 2416, at 13 (2011) (“In
evaluating the trustworthiness of Petitioner, it is reasonable to infer that Petitioner’s
extraordinary cooperation demonstrates that he is not so untrustworthy ... .”). However,
it would be shortsighted to overlook that Petitioner’s cooperation came after the
fraudulent billing scheme had been stopped and the government incurred a massive loss.
I find that this mitigating factor has been accorded enough weight to eliminate
substantially longer periods of exclusion from the overall reasonable range of exclusion
periods. The LG. was not obligated to further reduce Petitioner’s period of exclusion to
less than 20 years due to this mitigating factor as Petitioner’s cooperation was
appropriately factored into its amended determination.

II. Conclusion

For the foregoing reasons, the I.G. has a basis to exclude Petitioner from participating in
Medicare, Medicaid, and all federal health care programs. After considering all three
aggravating factors and the mitigating factor, an exclusion of 20 years is within a
reasonable range. Therefore, I sustain the I.G.’s exclusion of Petitioner for 20 years,
effective August 20, 2012.

/s/
Joseph Grow
Administrative Law Judge