Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Golden Living Center - Foley,
(CCN: 01-5032),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-11-467
Decision No. CR2625

Date: September 27, 2012

DECISION

Petitioner, Golden Living Center — Foley, challenges the determination of the Centers for
Medicare and Medicaid Services (CMS) that it was not in substantial compliance with
program participation requirements. Petitioner also challenges CMS’s imposition of a
civil money penalty (CMP) of $4050 per day for the period January 30, 2011, through
March 4, 2011, and a CMP of $100 per day beginning March 5, 2011, through April 3,
2011. For the reasons discussed below, I sustain CMS’s imposition of the CMPs.

I. Background

Petitioner is a long-term care facility located in Foley, Alabama. Petitioner participates
in the Medicare and Medicaid programs. The State of Alabama Department of Public
Health (state agency) completed a recertification and complaint survey of Petitioner’s
facility on March 5, 2011. The state agency determined that Petitioner was noncompliant
with participation standards beginning January 30, 2011. The surveyors also determined
noncompliance at a level of immediate jeopardy and substandard quality of care. The
survey team informed the facility of the noncompliance at an immediate jeopardy level of
“J” surrounding a January 30, 2011, incident involving the care of Resident 22 (R22).
The immediate jeopardy was relieved on March 5, 2011, when the scope and severity was
lowered to a “D” level, to allow the facility time to monitor and revise its corrective
actions as needed to establish substantial compliance. CMS Ex. 1, at 1; P. Ex. 1, at 1.

The deficiencies in this case arise from Petitioner’s care of Resident 22 (R22). Although
the parties characterize them differently, the following facts are not in dispute:

R22 was a long-term resident of Petitioner’s facility. At the time of the accident she was
71 years old and her diagnoses included obesity, dementia, status-post stroke,
schizophrenia, hypertension, hypothyroidism, and contractures. R22 was non-verbal,
bed- and wheelchair-bound, and required extensive assistance with all activities of daily
living, including transfers. CMS Ex. 7, at 6-7, 19; CMS Ex. 8, at 1, 34; P. Ex. 4, at 1;

P. Exs. 5-8; P. Ex. 9, at 5, 13-16.

On January 30, 2011 a Certified Nursing Assistant (CNA) staff member at the facility
was attempting to transfer R22 by using a “Sara” lift device, which requires the resident
to stand on a platform. The CNA attempted to do this by herself, and had no assistance.
During this process, R22 slipped off of her bed and fell. Then the CNA lifted her in a
sitting position back into bed with the Sara lift.

The nursing staff did not assess R22 for injuries after the fall. Petitioner did not notify
R22’s doctor or family. There are no nursing notes at all for four days following the
incident. About five days after her fall, it was eventually discovered that R22 had
sustained an impacted fracture of her left femur. The following morning, about nine
hours after the radiologist informed the facility of the femur fracture, Petitioner’s staff
contacted R22’s physician with the radiology results. R22 was transferred to the
emergency department for further evaluation and treatment.'

Based on these events, CMS found Petitioner not in substantial compliance with
participation requirements and imposed a $4050 per day CMP from January 30, 2011,
through March 4, 2011. CMS also imposed a $100 per day CMP beginning March 5,
2011, until Petitioner returned to substantial compliance and a denial of payment for new
admissions (DPNA) beginning April 2, 2011. CMS Ex. 2. On April 4, 2011, the state
agency conducted a revisit survey, finding that Petitioner remained out of compliance.

' R22 died on March 2, 2011, and although CMS hints that the fall and its sequelae
contributed to the cause of death, it is impossible to make that connection on this
evidence. But the connection is not necessary to support my findings of noncompliance
or the appropriateness of the penalties imposed. The fact R22 died, and the cause of her
death (i.e., whether it was related to her fall or to her femur fracture), does not affect the
posture of this case. This case concerns the care provided to R22 by Petitioner beginning
January 30, 2011 and the actions taken by Petitioner afterwards.
Based on this resurvey, CMS continued the $100 per day CMP and the already-imposed
April 2, 2011, DPNA until the facility returned to substantial compliance. CMS Ex. 17.
Petitioner, however, waived its right to challenge the imposition of the remedies imposed
based on the resurvey (the $100 per day CMP and DPNA, beginning the date of the
resurvey on April 4, 2012). CMS Ex. 17, at 5. CMS found that Petitioner had returned to
substantial compliance on April 22, 2011. P. Ex. 2.

Petitioner requested a hearing by letter dated May 17, 2011.7 Given Petitioner’s waiver,
the remaining remedies at issue include a $4050 per day CMP from January 30, 2011,
through March 4, 2011, and a $100 per day CMP from March 5, 2011, through April 3,
2011.7

[held a hearing in this case in Mobile, Alabama on February 6, 7, and 8, 2012. A 701-
page transcript (Tr.) was prepared. Testifying on behalf of CMS were Ellen James,
LCSW, MPA, (Surveyor James), Arlinda Vada Cejas, RN, (Surveyor Cejas), and
Charlyne White, RN (Surveyor White), surveyors with the state agency. Testifying on
behalf of Petitioner were Cynthia Jordan, RN, Petitioner’s Assistant Director of Nursing
(ADON Jordan), Laura Ford, Nurse Practitioner, Petitioner’s Director of Nursing (DON
Ford), and Thomas “Tommy” Herndon, LNHA, Petitioner’s Nursing Home
Administrator (Administrator Herndon). I admitted CMS Exhibits (CMS Exs.) 1 — 9 and
11 — 19 and Petitioner’s Exhibits (P. Exs.) 1 — 23. (CMS Ex. 10 was withdrawn. During
earing Petitioner objected to CMS Exs. 5 and 6 for the first time, but the objections were
overruled. CMS also proffered CMS Exs. 18 and 19 during the hearing for the first time,
but these exhibits were not relevant. P. Exs. 22 and 23 were also offered for the first time
at hearing, without objection.) Both parties filed post-hearing briefs (CMS Br. and

P. Br.) and post-hearing reply briefs (CMS Reply and P. Reply).*

> In its hearing request, Petitioner makes due process arguments I am without authority
to hear. Petitioner’s hearing request at 5-6. The arguments are preserved for appeal.

> Petitioner states that it “did not admit any new Medicare/Medicaid beneficiaries during
the DPNA period, so... the DPNA .. . is [not] at issue here.” P. Br. at 9. Petitioner also
did not specifically challenge the two-year prohibition on its ability to offer a nurse aide
training and competency evaluation program (NATCEP). Accordingly, the prohibition is
also not at issue here.

+ At the close of the CMS case-in-chief, Petitioner moved for summary disposition
arguing that CMS failed to establish a prima facie case that Petitioner was not in
substantial compliance and a separate motion for summary disposition arguing that CMS
did not establish a prima facie case for the duration of the non-compliance. Tr. at 360-
365. I denied Petitioner’s motions. Tr. at 371-372.
IL. Issues

1. Whether Petitioner was in substantial compliance with participation
requirements in the Medicare and Medicaid programs;

2. Whether CMS’ determination of immediate jeopardy was clearly erroneous;
and,

3. Whether the remedies imposed are reasonable.
II. Controlling Law

Sections 1819 and 1919 of the Social Security Act (Act) and the regulations at 42 C.F.R.
Part 483 govern Petitioner’s participation in Medicare and Medicaid. Sections 1819 and
1919 of the Act provide the Secretary of Health and Human Services (Secretary) with
authority to impose remedies, including CMPs, against long-term care facilities for
failure to comply with participation requirements.

Regulations define the term “substantial compliance” to mean:

[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 CFR. § 488.301.

The Secretary has delegated to CMS and the states the authority to impose remedies
against long-term care facilities not complying substantially with federal participation
requirements. The applicable regulations at 42 C.F.R. Part 488 provide that state survey
agencies, on behalf of CMS, may survey facilities participating in Medicare and
Medicaid to ascertain whether the facilities are complying with participation
requirements. 42 C.F.R. §§ 488.10-488.28. The regulations contain special survey
conditions for long-term care facilities. 42 C.F.R. §§ 488.300-488.335. Under Part 488,
a state or CMS may impose a CMP against a long-term care facility if a state survey
agency ascertains that the facility is not complying substantially with participation
requirements. 42 C.F.R. §§ 488.406, 488.408, and 488.430. The CMP may begin to
accrue as early as the date that the facility was first substantially out of compliance or
may continue to accrue until the date the facility achieves substantial compliance, or until
CMS terminates the facility’s provider agreement. 42 C.F.R. § 488.440.

The regulations specify that if a CMP is imposed against a facility based on an instance
of non-compliance, the CMP will be in the range of $1000 to $10,000 per instance.
42 C.F.R. § 488.438(a)(2). When a CMP is imposed against a facility on a per-day basis,
it must fall into one of two broad ranges of penalties. 42 C.F.R. §§ 488.408, 488.438.
The upper range of CMP, from $3050 per day to $10,000 per day, is reserved for
deficiencies that constitute 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). The lower
range of CMP, from $50 per day to $3000 per day, is reserved for deficiencies that do not
constitute 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). “Immediate jeopardy” is defined as:

[A] situation in which the provider’s noncompliance with one or more
requirements of participation has caused, or is likely to cause, serious
injury, harm, impairment, or death to a resident.

42 C.F.R. § 488.301.

Sections 1819(f)(2)(B) and 1919(f)(2)(B) of the Act prohibit approval of a NATCEP if
within the last two years the facility has been subject to, among other things, an extended
or partial extended survey; imposition of a CMP of not less than $5,000; or imposition of
a denial of payment for new admissions.

A facility may challenge the scope and severity that CMS cites only if a successful
challenge would affect the range of CMP amounts that CMS imposed or would affect the
facility’s NATCEP. 42 C.F.R. § 498.3(b)(14), (d)(10)(i). CMS’s determination as to the
scope and severity of non-compliance “must be upheld unless it is clearly erroneous.”

42 C.F.R. § 498.60(c)(2). This includes CMS’s finding of immediate jeopardy.
Woodstock Care Center, DAB No. 1726, at 9 (2000), aff'd, Woodstock Care Center v.
U.S. Department of Health and Human Services, 363 F.3d 583 (6th Cir. 2003).

The Departmental Appeals Board (Board) has long held that the net effect of these
regulations is that a provider has no right to challenge the scope and severity assigned to
a noncompliance finding except in the situation where that finding is the basis for an
immediate jeopardy determination. See, e.g., Ridge Terrace, DAB No. 1834 (2002);
Koester Pavilion, DAB No. 1750 (2000).

A facility must prove by the preponderance of the evidence that it is in substantial
compliance. Batavia Nursing and Convalescent Center, DAB No. 1904 (2004), aff'd,
Batavia Nursing and Convalescent Center v. Thompson, 129 F. App’x 181 (6" Cir.
2005). To put the facility to its proof, CMS must initially present a prima facie case of
noncompliance with Medicare participation requirements, providing evidence on any
factual issue that the facility disputes that is “[s]ufficient to establish a fact or raise a
presumption unless disproved or rebutted.” Alden Town Manor Rehabilitation and
Health Care Center, DAB No. 2054, at 4 (2006). Once CMS has made such a showing
as to any disputed facts, the burden of proof shifts to the facility to show at the hearing

that it is more likely than not that the facility was in substantial compliance. Alden Town
Manor, DAB No. 2054, at 4-5; see generally Evergreene Nursing Care Center, DAB No.
2069 at 7-8 (2007)(discussing the “well-established framework for allocating the burden
of proof on the issue of whether [a] SNF was out of substantial compliance”). Golden
Living Center — Riverchase, DAB No. 2314, at 8 (2010).

IV. Discussion
I make numbered findings of fact and conclusions of law (Findings) to support my
decision. I set them forth below as separate headings, in bold and italic type, and discuss

each in detail.°

1. Petitioner failed to substantially comply with the accidents/hazards and
supervision requirement at 42 C.F.R. § 483.25(h) (Tag F-323).°

Section 483.25(h) references accidents’ and states:

> T have reviewed the entire record, including all the exhibits and testimony. Because the
Federal Rules of Evidence do not control the admission of evidence in proceedings of this
kind (see 42 C.F.R. § 498.61), I may admit evidence and determine later, upon a review
of the record as a whole, what weight, if any, I should accord that evidence or testimony.
To the extent that any contention, evidence, or testimony is not explicitly addressed or
mentioned, it is not because I have not considered the contentions. Rather, it is because I
find that the contentions are not supported by the weight of the evidence or by credible
evidence or testimony.

® The case was originally cited as a violation of section 483.25(h) as F-323, the “accident
hazard” regulation. CMS later added section 483.25 as F-309, “failure to provide
necessary services to maintain highest practical well-being,” and section 483.10(b)(ii) as
F-157, “failure to notify physician and family of change in condition.” The addition of
F-157 and F-309 seems to have been announced to Petitioner on August 29, 2011 (see
CMS’s Pre-Hearing Memorandum, at 13). Petitioner has never objected to this
procedure. Petitioner has had the opportunity to address each of the deficiencies. I will
address all three deficiencies, and note that the F-309 citation is based on exactly the
same facts as F-323, and the F-157 citation follows on the facility’s failure promptly to
tell R22’s doctor and responsible party about the fall and findings thereafter.

7 The Board references the Medicare State Operations Manual (SOM) in defining an
accident as:

“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 Appendix PP,
(h) Accidents. 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.

In Meridian Nursing Center, DAB No. 2265, at 3 (2009), the Board described the
requirements of this subsection, stating:

Section 483.25(h)(1) requires that a facility address foreseeable risks of
harm from accidents “by identifying and removing hazards, where possible,
or where the hazard is unavoidable because of other resident needs,
managing the hazard by reducing the risk of accident to the extent
possible.” Maine Veterans’ Home — Scarborough, DAB No. 1975, at 10
(2005). Section 483.25(h)(2) requires that a facility take “‘all reasonable
steps to ensure that a resident receives supervision and assistance devices
that meet his or her assessed needs and mitigate foreseeable risks of harm
from accidents.” Briarwood Nursing Center, DAB No. 2115, at 11 (2007),
citing Woodstock Care Center v. Thompson, DAB No. 1726 (2000) (facility
must take “all reasonable precautions against residents’ accidents”), aff'd,
Woodstock Care Center v. Thompson, 363 F.3d 583 (6" Cir. 2003).

The Board has also held that facilities “have the ‘flexibility to choose the methods of
supervision’ to prevent accidents so long as the methods chosen are adequate in light of
the resident’s needs and ability to protect himself or herself from a risk.” Briarwood
Nursing Center, DAB No. 2115, at 5, citing Liberty Commons Nursing and Rehab —
Alamance, DAB No. 2070, at 3 (2007).

The Board stated in Briarwood Nursing Home, DAB No. 2115, that:

[T]he “mere fact that an accident occurred does not, in itself, prove that the
supervision or devices provided must have been inadequate to prevent it.”
Josephine Sunset Home, DAB No. 1908, at 13 (2004). On the other hand,
it is not a prerequisite to finding noncompliance under section 483.25(h)(2)
that any actual accident have occurred or be caused by the inadequate
supervision to find noncompliance. Woodstock at 17. The occurrence of an
accident is relevant to the extent the surrounding circumstances shed light

Guidance to Surveyors, Part 2, SOP 483.25 Quality of Care (Rev. 274, June
1995 (SOM Guidance).

Woodstock Care Center, DAB No. 1726, at 4.
on the nature of the supervision being provided and its adequacy for the
resident’s condition. St. Catherine’s Care Center of Findlay, Inc., DAB
No. 1964, at 12 (2005) (accident circumstances may support an inference
that the facility’s supervision of a resident was inadequate). The focus is on
whether the facility took all reasonable steps to ensure that a resident
receives supervision and assistance devices that met his or her assessed
needs and mitigate foreseeable risk of harm from accidents. Woodstock
Care Center v. Thompson, 363 F.3d at 590 (facility must take “all
reasonable precautions against residents’ accidents”).

The regulation speaks in terms of ensuring that what is “practicable”
and “possible” to do is done. What is thus required of facilities is
not prescience but reason and professional judgment in assessing
what can be done to make residents (given their special needs) safe,
through removing accident hazards, providing appropriate devices,
and ensuring adequate supervision.

Josephine Sunset Home, at 14-15.
Briarwood Nursing Center, DAB No. 2115, at 11-12.

The Board has also held that the regulations permit facilities some flexibility in choosing
the methods they use to prevent accidents, so long as the chosen methods constitute an
adequate level of supervision. Windsor Health Care Center, DAB No. 1902 (2003), aff'd
Windsor Health Center v. Leavitt, 2005 WL 858069 (6th Cir. April 13, 2005). A facility
must anticipate what accidents might befall a resident and take steps — such as increased
supervision or the use of assistance devices, for example — to prevent them. Aase
Haugen Homes, DAB No. 2013 (2006).

There are two different kinds of lifts which Petitioner’s facility employed, the Sara lift
and the Marissa lift (also called a Hoyer lift). Tr. 381-382. The record indicates that a
“Marissa” lift was safer and more appropriate for R22. The Sara lift is used to transfer
patients in a standing position whereas the Marissa lift is used to transfer patients in a
seated, slightly reclined position. CMS Ex. 11, at 10, 21-24; CMS Ex. 12, at 14. The
Sara lift has hand bars that the resident holds on to and requires the resident to be able to
stabilize himself or herself in either a sitting or a standing position. Tr. 54,285. The
Sara lift is for “limited-assist, weight bearing individuals” who can grasp a handlebar and
are able to follow simple directions. P. Ex. 19, at 1; P. Ex. 20, at 17; Tr. 285; P. Br. at 10.
It should not be used for residents who are not able to bear weight. CMS Ex. 12. The
Marisa lift provides greater support for such residents. Depending on the circumstances,
the lifts can be used with one or two persons and have additional supportive straps or
accessories increase safety based on the particular patients needs. Each lift has its
benefits and drawbacks but either way, residents who need support in transfers should be
assessed for the most appropriate lift and reassessed as needed.

Petitioner failed to ensure that staff used the appropriate lift for R22.

CMS argues that the staff should have been using the more supportive Marissa (or Hoyer)
lift for R22, or should at least have conducted an assessment of R22 to determine the
most appropriate lift. Petitioner, on the other hand, argues that there is no evidence that
R22 would not have sustained a fall if the staff had used the more restrictive Marissa (or
Hoyer) lift.

I find that Petitioner failed to ensure that staff used the appropriate lift for R22. Facility
records including lift assessments, nursing notes, care plan, physician notes, as well as
testimony vary as to whether the Sara or Marissa lift was the most appropriate lift for
R22. Petitioner’s care plan for R22 indicated that she should be transferred with a
mechanical lift because of her cognitive and physical functional deficits, but did not
indicate which lift Petitioner should use. P. Ex. 12, at 32. Petitioner’s records are
inconsistent as to whether R22 could bear weight or follow simple instructions. The lift
assessments conducted yielded varying and at times inconsistent results. For example,
the January 7, 2009 lift assessment stated that R22 was unable to bear weight on either
leg, unable to follow simple instructions, and unable to assist in any movement. CMS
Ex. 8, at 6. However, just two months later a March 18, 2009 lift assessment indicated
that R22 could bear weight on both legs and follow simple instructions. CMS Ex. 8, at 9.
At the end of August 2009, the nursing notes state that R22 had a “decline of condition.”
P. Ex. 14, at 6. However, there is no documentation of the nature of the decline and no
concurrent lift assessment. The facility did not conduct another lift assessment for R22
until well over a year later, but the nursing notes in November 2009 and January 2010
indicate that the facility switched back to using the Marissa lift again to transfer R22.

P. Ex. 14, at 7, 10. An October 6, 2010, assessment stated that R22 was unable to bear
weight, indicating that a Marissa lift was appropriate. P. Ex. 7, at 4. However, only
twelve days later, on October 18, 2010, a lift assessment stated that R22 could bear
weight on at least one leg and that staff should use the Sara lift for transfers. CMS Ex. 8,
at 7. Strikingly, there is nothing in the record to support that R22’s condition improved
or even fluctuated. There is no documentation that the lift assessment differential was
even recognized. P. Ex. 8, at 7; P. Ex. 14, at 22-25; Tr. at 411-415. A December 13,
2010 lift assessment again indicated a Sara lift should be utilized. CMS Ex. 8, at 7.
However, just a few weeks before R22’s fall, an occupational therapist assessed R22 as
so significantly lacking in “sitting balance” that R22 required support to keep her from
falling out of her wheelchair. Certainly, R22’s inability to support herself while seated in
a wheelchair should have raised serious concerns about whether a Sara lift could safely
be utilized. P. Ex. 10, at 8.

10

Petitioner also argues that the facility decided not to use the Marissa (or Hoyer) lift
because R22 was fearful of the sling in that lift. Tr. at 397-399, 410-414; P. Br. at 13.
There is no compelling evidence in the record, however, to support Petitioner’s assertion
that its decision was based on the resident’s fear or preference. If R22’s fear of the
Marissa lift was the basis for Petitioner’s staff to use the Sara lift, it seems reasonable to
expect that rationale to be well-documented in the Resident’s medical record, especially
because the Marissa lift was more appropriate on most occasions. However, even if I
accept Petitioner’s assertion as true, that does not absolve or release Petitioner from the
requirement that it provide R22 adequate supervision. If, under the circumstances, the
facility substituted one device for another, the facility is obligated to institute additional
interventions to compensate for the diminished effectiveness of the alternative device, or
to tailor the alternative method better to the resident’s specific needs. In this case, a
second nursing assistant and leg straps would have been the minimum interventions
provided to aid in assuring R22’s safety. All reasonable steps should have been put into
place to ensure that R22 received supervision and assistance devices that met her
assessed needs and mitigated foreseeable risks of harm from accidents.

Petitioner failed to timely reassess R22 for lifts

There is additional evidence that before the accident, some of Petitioner’s staff expressed
concerns about the use of the Sara lift with R22. Tr. at 137, 169; CMS Ex. 9, at 55, 59,
73-75. Nursing staff had noticed that R22 had begun to decline about three weeks prior
to R22’s accident. R22 was no longer able to follow directions, balance herself, and
would stiffen during transfers. Tr. at 137, 169; CMS Ex. 9, at 55, 59, 73-75. Despite
caregiver concerns, their superiors failed to act immediately or reassess R22 until well
after the accident and R22 returned from the hospital. CMS Ex. 9, at 55, 59.

Petitioner failed to ensure the appropriate number of staff were utilized for transfers

Even if the Sara lift was appropriately utilized for R22’s transfers at the time of the
accident, it is abundantly evident that additional safeguards should have been, but were
not, in place. R22’s medical records, including her Minimum Data Set, nursing notes,
occupational therapy evaluation, and other assessments, along with caregiver interviews
and witness testimony, make it clear that R22 was not stable during surface to surface
transfers and was only able to stabilize with human assistance. P. Ex. 9, at 3-14, 19; P.
Ex. 10, at 8. CNA Dominico Floyd, LPN Cynthia Dorris, LPN Susan Campbell, LPN
Mildred Carroll, and Nurse Cyndee Hamilton, all informed surveyors that R22 required
two people during transfers, because she was stiff or would stiffen-up, was hard to
handle, and difficult to move. CMS Ex. 9, at 5, 7, 33-36, 49, 51.

Additionally, the record shows that if a resident lacks “sitting balance” a second staff
person should be used to support the resident. P. Ex. 20, at 8, 11; P. Ex. 21, at 7 (Stating
11

in the introductory section of the Sara Lift 3000 Operations Manual, that all “instructions
effectively when lifting a patient from a wheelchair or sitting position on a bed, although
a second attendant should support the patient if the patient lacks sitting balance,” and
later in that Exhibit, at page15, is this note: “! Caution: If the patient lacks sitting balance
and has been returned to sit on the side of the bed a second attendant may be needed to
support the patient while the sling is being removed.” The record shows that R22 did not
have sitting balance or trunk stability. P. Ex. 10, at 8. In fact, shortly before the January
30, 2011 accident, R22 was referred for an occupational therapy evaluation. On January
6, 2011, the occupational therapist diagnosed R22 as demonstrating “abnormal posture,”
with right trunk lateral flexion. P. Ex. 10, at 8. The therapist observed that while seated
in her wheelchair, R22 “demonstrate[d] lateral leaning to [the right] side” and
recommended to order and fit R22 with a “positioning device in order to reduce risk for
falls,” and educate nursing staff. P. Ex. 10, at 9. The occupational therapist further
recommended therapy for neuromuscular re-education and wheelchair management
among other skills as a focus for therapy provided two times a week for three weeks. P.
Ex. 10, at 8. The evaluation was signed by the occupational therapist on January 6, 2011
and contains R22’s physician’s undated signature. P. Ex. 10, at 8. Despite that clear
evidence that R22 did not posses trunk stability, on January 30, 2011, R22 was left
without a second staff member to provide direct support while the CNA left R22 to
operate the device. The presence of a second CNA or other caregiver was undoubtedly
required to provide even minimum support for obvious foreseeable risks to R22.

Petitioner failed to ensure that staff used leg straps

Another tool that Petitioner could have used, but failed to use, to reduce the risks to R22
were leg straps. Again, CNA Floyd, CNA Coutu, LPN Stivers, LPN Carroll, and Nurse
Hamilton, all informed surveyors that the leg straps were important to use in order to help
keep R22 safe during transfers. CMS Ex. 9, at 33-36, 49, 51, 53, 57, 59-60, 73, 75. The
manufacturer’s training check list also advises that leg support straps should be fastened
“if added security is desired or needed.” P. Ex. 19, at 1. Yet on January 30, 2011, R22’s
caregiver did not use this additional safety mechanism. In support of its position,
Petitioner simply stated that the leg straps were not mandatory to use with the Sara lift,
and opined without more that the leg straps could have made her injuries worse. P. Br.

® After two occupational therapy treatments, the therapist discharged R22 from therapy
on January 24, 2011, noting that R22’s positioning devices for her wheelchair had
arrived, were applied, and the nursing staff had been educated on wheelchair positioning.
The note is focused on the successful addition of the positioning device as providing
proper postural alignment for R22 while she was seated in her wheelchair. The summary
makes no mention of improved trunk stability, strengthening, or sitting balance, nor does
it otherwise indicate that any was achieved. See P. Ex. 10, at 9.

12

at 18 n.9. I find the evidence once again shows that the facility failed to take another
reasonable step to ensure R22’s safety.

Petitioner failed to reassess R22 for lifts after the January 30, 2011 accident

The record is clear that on January 30, 2011, Petitioner’s staff should have exercised
greater care in transferring R22 through using a Marissa lift rather than a Sara lift, or a
Sara lift with an additional staff person and the use of leg straps, despite the obvious
foreseeability of the risks specific to R22. Petitioner’s staff chose to use the less-safe
method of transferring R22, leaving the unstable and rigid Resident (who needed special
positioning devices to prevent her falling out of her wheelchair) unattended at the side of
er bed. After R22’s foreseeable fall on January 30, 2011, Petitioner’s staff once again
failed to ensure R22’s safety when they did not promptly reassess R22 for appropriate
transfer mechanisms.

Petitioner did not reassess R22 after she fell on January 30, 2011, or over a period of the
next several days even though multiple staff members observed swelling and bruising
around R22’s knee and inner thigh. P. Ex. 15. By failing to do so, Petitioner’s staff
continued to transfer R22 using the Sara lift, and required R22 to put pressure on her
fractured leg. Only after R22’s fractured hip was diagnosed and she was readmitted to
Petitioner’s facility on February 12, 2011 did the facility conduct a mobility or lift
assessment. CMS Ex. 8, at 53. However, even this lift assessment was not completed
and remains even now unsigned. The form directions indicate that R22 is not a candidate
for the Sara lift, but it is unclear as to whether the Marisa lift could be an alternative.
Rather, the form directions indicate that R22 is unable to be in a semi-reclined position
and directs to “consult care plan team.” CMS Ex. 8, at 53. There are no additional
notations that one would normally expect, which is particularly surprising given these
specific circumstances. CMS Ex. 8, at 53. Petitioner has not supplied a lift assessment or
other documentation on the issue by the care plan team other than a notation on the
immediate plan of care. The immediate plan of care indicates to use the Marissa lift for
transfers with a licensed nurse to support R22’s left leg. CMS Ex. 8, at 29, 58. There are
no accompanying notes or assessments that clarify how this decision was reached or how
R22 could safely be transferred using the Marissa if she is not able to be in a semi-
reclined position, or whether the facility utilized a special purpose sling for R22’s
Marissa transfers. CMS Ex. 8; CMS Ex. 11, at 18-23; P. Ex. 10; P. Ex. 13-14.

Petitioner supplied evidence as to what techniques or processes the CNA employed
during the transfer; however, there is no evidence that the CNA employed techniques or
processes that were reasonable in light of the resident's assessed needs. It is not disputed
that R22 was an obese and “stiff” resident with a very unstable trunk, who was at high
risk for falls and required a mechanical lift for transfers. However, Petitioner argues that
the techniques or processes employed on January 30, 2011 and thereafter were reasonable
in light of R22’s needs. I believe that the evidence shows otherwise. It is clear that by
13

using the less-supportive Sara lift, without a second staff member to aid in R22’s safety,
and also without the additional support of the leg straps to reduce the risk of an accident,
Petitioner failed to ensure that R22’s environment remained as free of accidents and
hazards as possible and failed to employ supervision that was reasonable in light of R22’s
needs, in violation of 42 C.F.R. § 483.25(h).

CMS has established that Petitioner violated the accidents/hazards regulation in five
specific areas: (1) Petitioner failed to ensure that staff used the appropriate lift for R22,
(2) Petitioner failed timely to reassess R22 for lifts, (3) Petitioner failed to ensure the
appropriate number of staff were utilized for transfers, (4) Petitioner failed to ensure that
staff used leg straps, (5) Petitioner failed to reassess R22 for lifts after the January 30
2011 accident. CMS Ex. 9, at 5, 7, 10, 13, 15, 17, 33-36, 49, 51, 53, 55, 57, 59-60, 73-
75; CMS Ex. 11; CMS Ex. 12; Tr. at 54, 168, 183, 187-189, 278-281, 283-285, 291-293,
309, 382.

2. Petitioner failed to comply substantially with the requirement to consult
immediately with the resident’s physician and notify the resident’s interested
family member as required by 42 C.F.R. § 483.10(b)(11) (Tag F-157).

The facility must protect and promote the rights of each resident. In this regard, the
facility must immediately inform the resident, consult the resident’s physician, and (if
known) notify the resident’s legal representative or interested family member when there
is an accident involving a resident that results in injury and has the potential for requiring
physician intervention; there is a significant change in the resident’s physical, mental or
psychosocial status (i.e., a deterioration in health, mental or psychosocial status in either
life-threatening conditions or clinical complications); or a need to alter treatment
significantly (i.e., a need to discontinue an existing form of treatment due to adverse
consequences or to commence a new form of treatment). 42 C.F.R. § 483.10(b)(11).

In this case, Petitioner failed to consult with R22’s physician or notify R22’s family
immediately after R22 fell, after R22 developed bruising and swelling, and again after the
facility received R22’s x-ray results indicating that she had sustained multiple fractures.

In Georgian Court Nursing Center, DAB No. 1866 (2003), the Board upheld the ALJ’s
finding of noncompliance when the nursing aide knew that he had tried an improper one-
person transfer of the resident, when substantial evidence supported the ALJ’s finding
that the aide had injured the resident in the attempted transfer, and when the resident,
who was paralyzed on her left side, complained to the charge nurse that her upper left
arm hurt and that the aide had hurt her arm. The charge nurse did not investigate the
resident’s allegation about the improper transfer or inform the resident’s physician or
family about the injury until the following morning, when the resident’s shoulder was
bruised and swollen. The Board stated that there was no dispute that the potential for an

14

injury as serious as a broken arm necessitated treatment by a physician. Georgian Court
Nursing Center, DAB No. 1866.

Here, the nursing staff first erred in not immediately notifying R22’s doctor and family
member of the fall. Petitioner’s argument that R22 was not displaying any changes in
signs or symptoms in condition and no notification was required is unconvincing. The
regulation plainly requires notice if the Resident was in an accident that might need her
physician’s care. Clearly a fall involving a resident as vulnerable to injury as R22 may
ave needed physician care and the facility was required to notify the physician promptly.
Moreover, Petitioner’s nursing staff knew or should have known about Petitioner’s
January 30 fall. Thereafter, they failed to conduct a proper assessment of R22 or consult
with her doctor for treatment orders. Petitioner’s suggestion that R22’s fracture could
ave been a spontaneous fracture due to her severe osteoporosis and unrelated to her fall
appears disingenuous. If R22 did in fact have bones so brittle that her fractures “could
ave been caused by a sneeze,” then it follows that the fall would clearly cause severe
trauma to R22 including multiple fractures, such as those sustained. See P. Ex. 15, at 3.
It is not a defense that her osteoporosis was yet to be diagnosed because standards of
practice dictate that nearly any nursing facility resident would be in serious danger of
sustaining a fracture from any kind of a fall. Petitioner’s staff knew that R22’s doctor
and family should have been immediately contacted after her fall on January 30, 2011.

P. Ex. 15, at 3; P. Ex. 16, at 5; Tr. at 424-425, 429, 491, 565.

Petitioner next failed to consult immediately with R22’s doctor and family when the staff
noticed R22’s bruising and swelling. CMS Ex. 9, at 65-66, 71, 73, 75; Tr. at 590. In fact,
even Petitioner’s DON testified that when the nursing staff first became aware of R22’s
bruise, they should have notified both her physician and her responsible party. Tr. at 590.
Petitioner argues that nursing staff assessed R22’s bruising and swelling and determined
that it was the result of R22’s arthritis or ongoing edema, and therefore notification was
not necessary. However, there is no corresponding documentation or even nursing note
of either Nurse Kattleman’s or Nurse Hamilton’s assessment. Even if the nursing staff
attributed R22’s “swollen and warm to touch” leg with “old bruising noted below and
lateral to [R22’s] left knee,” to an arthritis flare-up, the standard of nursing care is to
report such findings to the appropriate parties. P. Ex. 15, at 2, 6-8; Tr. at 275, 280-281.
On the other hand, had Petitioner’s nursing staff been aware of R22’s fall, it seems
reasonable to expect that they would have better understood the significance of the
swelling and bruising. Once again, however, it is basic nursing practice and reasonable
for the nursing staff to be aware of R22’s fall and Petitioner’s failure to understand the
magnitude of such symptoms only add to Petitioner’s culpability.

Finally, Petitioner violated the notification requirement once again when it failed to

immediately notify R22’s doctor and family of her x-ray results showing R22 suffered an
impacted supracondylar fracture of the femur. Instead, the facility failed R22 again when
it waited for about nine hours before acting to contact the doctor and family. Petitioner’s
15

records indicate that the charge nurse “had several things going on” Thursday evening
and “didn’t call the [doctor or responsible party] with the x-ray results until early [the
next] morning.” P. Ex. 15, at 7. Petitioner attempts to minimize this infraction and again
attempts to argue that it was a nursing decision to refrain from notifying the physician
and family.

As asserted by Petitioner, the preamble to the final rule states: “We recognize that
judgment must be used in determining whether a change in the resident’s condition is
significant enough to warrant notification, and accept the comment that only those
injuries which have the potential for needing physician intervention must be reported to
the physician.” 56 Fed. Reg. 48,826, 48,833 (Sept. 26, 1991). However, Petitioner
attempts to hide behind what it calls its staff’s “nursing judgment” in deciding not to
contact R22’s physician at 10 p.m. because the physician may have been sleeping. The
sleeping patterns of R22’s physician is not professional nursing judgment. Moreover,
Petitioner’s related argument that nothing could be done to treat R22 at the hospital
anyway is likewise unavailing. This analysis is supported by the Board’s finding in NHC
Healthcare Athens, DAB No. 2258, at 6-7 (2009). Similarly, when Petitioner’s staff
contacted R22’s physician the following day, her physician did order the transfer of R22
to the hospital. In NHC Healthcare Athens, the physician’s assertion that she would not
ave ordered an intervention on the evening of June 5 (five days after the Resident fell
and the evening she began showing signs of pain) did not excuse the nursing home’s
failure to notify her, since the requirement that the facility contact (and consult with) the
physician is not contingent on how the physician might respond, but on the existence of
facts requiring notification. Here, it is clear that the fact that R22 had indeed suffered a
serious fracture of her left femur likewise required immediate physician consultation.
See Georgian Court Nursing Center, DAB No. 1866.

Finally, the facility recognized that it failed to immediately notify R22’s physician and
family. Though its internal investigation, Petitioner determined that both general and
one-on-one training was necessary for its licensed nursing staff on the topic of physician
and responsible-party timely notification. P. Ex. 15, at 2; see P. Ex. 16; P. Br. at 24-25;
Tr. at 652-653. This training provided the notification guidelines and a form to aid in
effective communication between licensed staff and resident physicians. P. Ex. 16, at 11,
13. This form requires the nurses to conduct an assessment prior to contacting the
physician and reminders to document specific details in the nursing notes. It also
includes a section to document when the family was notified. P. Ex. 16, at 13. This
training was completed on February 18, 2011. Because Petitioner recognized this
deficiency on its own, and took proactive steps to remedy, this violation appears to have
subsided by February 18. Unfortunately, however, as discussed later, Petitioner was not
able effectively to correct the other two deficiencies until late April.

16

3. Petitioner failed to comply substantially with the quality of care regulation at 42
C.F.R. § 483.25 (Tag F-309).

42 C.F.R. § 483.25 requires that:

Each resident must receive and the facility must provide the necessary care
and services to attain or maintain the highest practicable physical, mental,
and psychosocial well-being, in accordance with the comprehensive
assessment and plan of care.

Although “practicable” is not defined in the regulations, in Ridge Terrace, DAB No.
1834, the Board explained that “practicable” in section 483.25 refers to the resident’s
condition, not to the care and services that the facility must provide.’ In Crestview Parke
Care Center v. Thompson, 373 F.3d 743 (6" Cir. 2004), the court concluded that the
general quality of care regulation is not a “strict liability” regulation. The court
explained that the word “practicable” suggests that a “‘reasonableness’ standard inheres
in the regulation” and that it would be possible for a facility to show “a justifiable reason
for the violation of § 483.25.”

The preamble to the final rule implementing this provision (see, e.g., 54 Fed. Reg. 5316,
5332) states that the wording reflects an approach that emphasizes resident care
outcomes, rather than procedural and structural requirements.

We recognize that a facility cannot ensure that the treatment and services
will result in a positive outcome since outcomes can depend on many
factors, including a resident's cooperation (i.e., the right to refuse
treatment), and disease processes. However, we believe it is reasonable to
require the facility to ensure that ‘treatment and services’ are provided,
since the basic purpose for residents being in the facility is for ‘treatment
and services’ and that is why the Medicare or Medicaid program makes
payment on the residents' behalf.

Fed. Reg. 5316, 5332. Furthermore, the facility could “direct surveyor attention to any
evidence (the resident [sic] or the resident’s clinical record) in order to show that a
negative resident care outcome was unavoidable.” Jd. at 5332.

° The Board noted in Woodstock, DAB No. 1726, that “while the concept of
practicability is relevant in examining what duty a long-term care facility has to prevent
accidents, the regulation requires that the facility ‘ensure’ that each resident receive
adequate supervision.” Jd. at 25.
17

Here, it is clear that Petitioner failed to provide R22 with the necessary care and services
to maintain her highest practicable well-being.

After R22’s fall, nursing should have assessed R22 before the staff moved her. It is basic
standard of practice for a nurse to immediately assess a resident after a fall, before the
resident is moved. Tr. at 190, 192, 294, 425, 429. Moreover, it is against Petitioner’s
own policy to move a resident after a fall, even if the resident has not fallen directly onto
the floor. CMS Ex. 9, at 37; P. Ex. 16, at 6-10. It is not disputed that a licensed nurse did
not assess R22 after she fell. P. Br. at 18. The CNA should have called for a licensed
nurse before she moved the Resident. The licensed nurse could have conducted a head-
to-toe assessment of R22 to determine if there were any injuries, and to assure that R22’s
health was not further compromised or her injuries exacerbated. CMS Ex. 9, at 56, 59,
74, 75; Tr. at 189-190, 196-197, 427-428. This nursing assessment would have included
checking for any raised areas of the body, abnormal rotation, abrasions, or bruising. Also
important for R22 would be assessing her for pain — particularly because R22 was
nonverbal. In that circumstance the licensed nurse would look not only at R22’s facial
expressions, but would be alert for any possible grimacing, pulling away, and would have
checked R22’s vital signs including blood pressure and pulse. Tr. at 201, 425-427, 490.
Instead, the CNA “assessed [R22] enough to satisfy herself that the Resident had not
been injured... .” P. Br. at 18. A CNA is not qualified to conduct a nursing assessment
of the quality or nature that was required in this situation. What examination the CNA
performed at the time did not meet the standard of care. See P. Br. at 24.

When R22 fell, she landed on the lift footrest in a seated position. Rather than alerting a
licensed nurse to assess and protect R22 from further harm, the CNA lowered R22’s bed
and used the Sara lift, designed to be used with standing residents, to lift R22 back to her
bed. CMS Ex. 9, at 21-22, 81-83, 89. The CNA admittedly used this lift incorrectly
when she moved R22 from the lift platform and transferring R22 back to her bed. CMS
Ex. 9, at 89; CMS Exs. 11-12; P. Br. at 17-18.

After wrongly and single-handedly transferring R22 back to her bed, rather than
obtaining the assistance of a licensed nurse, the CNA obtained the help of a second CNA.
Together, the two CNA’s used the Sara lift again, requiring R22 to stand, to transfer R22
to her wheelchair. P. Br. at 18; P. Ex. 15, at 2, 4, 9-10; CMS Ex. 9, at 89.

After a resident suffers a fall, it is standard practice for the nursing staff to monitor that
resident closely for signs or symptoms of injury and for pain. Tr. at 200, 299, 491. This
careful monitoring should be documented in the resident’s medical record. Tr. at 429-
430. I find absolutely no credible evidence that Petitioner’s staff conducted such
monitoring of R22 during that critical period following her fall. There is not a single
nursing note regarding R22 for January 30, January 31, February 1, or February 2. CMS
Ex. 8, at 16-17. There are absolutely no nursing notes, assessments, nurse/physician
communication reports, physician progress notes or orders, or other written evidence that
18

R22 was monitored at all, let alone closely. CMS Ex. 8; P. Exs. 13-14. I find that
Petitioner’s failure to closely monitor R22 after her fall was another violation of this
regulatory standard.

Despite being aware of R22’s bruising and swelling of her leg, Petitioner continued to
transfer R22 using the Sara lift, requiring R22 to stand on her inflamed leg during
transfers. Petitioner failed to evaluate R22 for lifts after becoming aware of her injury
and inflammation. Continuing to transfer R22 in such a manner created a serious risk of
additional injury and was certainly below the professional standards of care. CMS Ex. 9,
at 56, 59, 74-75; Tr. at 189-190, 196-197, 224, 427-428, 504-505.

Petitioner’s nursing staff should have investigated R22’s bruises and swelling. Further,
either the staff knew of R22’s recent fall and conducted inadequate assessments or the
assessments that were conducted were indeed flawed because the nursing staff was not
aware of R22’s recent fall. The CNA involved in the January 30 incident states that she
reported it to Nurse Stivers. However, the record is unclear as to whether or not the CNA
truly reported the fall. If the CNA did notify the LPN, then the LPN did nothing in
response. The record is replete with evidence that thereafter several of Petitioner’s CNAs
brought R22’s bruising and swelling to the attention of their superiors. In fact it is
Petitioner’s own investigation summary that shows that on February 2, CNA Davis
reported the swelling to the nurse on duty. That nurse states that she examined R22’s
knee and found it “swollen and warm to touch with old bruising noted below and lateral
to [R22’s] left knee.” P. Ex. 15 at 2. The nurse attributed her findings to R22’s “history
of arthritis.” P. Ex. 15, at 2. Although it is unclear how the nurse arrived at her
conclusion, her findings are even more confusing because she failed to document her
assessment. Presumably, CNA Davis’s concerns were not alleviated, because she again
reported her concerns to the evening nurse. The second nurse did not notice any bruising
and unfortunately concluded that R22’s “knee was swollen consistent [with] her arthritis .
...” P. Ex. 15, at 2. Again, the evening nurse failed to document or make any notes
regarding her assessment, findings and conclusion. The following morning, two more
CNAs reported their concern regarding R22’s bruising to the charge nurse, Nurse
Campbell. Nurse Campbell did not assess R22’s bruising, but simply reported the
bruising to the oncoming p.m. nurse, Nurse Dorris. Again, the p.m. nurse failed to
promptly or effectively assess R22. It was not until the following morning, February 3,
2011 that Nurse Dorris assessed R22. She found bruising but did not document or act on
her findings, and only reported back to Nurse Campbell with her observations. Finally,
Nurse Campbell reported her concern to the ADON who advised her to contact the
responsible party.

The DON finally contacted R22’s doctor the afternoon of February 3, 2011. The doctor
ordered an x-ray of R22’s left femur and knee. CMS Ex. 8, at 11, 17. The results were
faxed to Petitioner at 9:57 p.m. that evening. The report indicated that R22 had an

“impacted supracondylar fracture of the femur.” CMS Ex. 8, at 5. However, Petitioner
19

waited about nine hours before acting at all. Petitioner did not immediately contact
R22’s physician, address pain issues, or otherwise tend to R22’s condition. It was not
until about 6:38 the following morning that the staff contacted R22’s doctor with the
results. CMS Ex. 8, at 17. R22’s doctor ordered that the facility transfer R22 to the
emergency room for evaluation and treatment. CMS Ex. 8, at 17. As previously stated,
Petitioner attempts to argue that this was somehow a valid nursing judgment not to
contact R22’s physician, because the staff would not want to wake the doctor. Despite
that patently-absurd argument, Petitioner’s investigation reported the charge nurse
stating: “On Thursday night, I had several things going on and didn’t call the [doctor or
responsible party] wit [the] x-ray results until early [the next] morning.” P. Ex. 15, at 7.
According to the surveyor’s interview of that nurse, the “several things going on”
entailed being busy working on a school assignment. Tr. at 155.

The record is replete with evidence that Petitioner failed to provide R22 with the
necessary care and services to maintain her highest practicable well-being.

4. CMS’s determination that the facility’s noncompliance posed immediate
jeopardy to resident health and safety is not clearly erroneous.

Immediate jeopardy exists if a facility’s noncompliance has caused, or is likely to cause,
“serious injury, harm, impairment, or death to a resident.” 42 C.F.R. § 488.301. CMS’s
determination as to the level of a facility’s noncompliance (which includes an immediate
jeopardy finding) must be upheld unless it is “clearly erroneous.” 42 C.F.R. § 498.60(c).
The Board has observed repeatedly that the “clearly erroneous” standard imposes on
facilities a heavy burden to show no immediate jeopardy and has sustained
determinations of immediate jeopardy where CMS presented evidence “from which
‘[o]ne could reasonably conclude’ that immediate jeopardy exists.” Barbourville Nursing
Home, DAB No. 1962, at 11 (2005); Florence Park Care Center, DAB No. 1931, at 27-
28 (2004), citing Koester Pavilion, DAB No. 1750.

The “clearly erroneous” standard, the Board has explained, is highly deferential and
places a heavy burden on the facility to upset CMS's finding regarding the level of
noncompliance. See, e.g., Claiborne-Hughes Health Center, DAB No. 2179, at 20,
(2008), aff'd, Claiborne-Hughes Health Center v. Sebelius, 609 F.3d 839 (6th Cir. 2010),
quoting Liberty Commons Nursing & Rehab Center, DAB No. 2031 at 18 (2006), aff'd,
Liberty Commons Nursing & Rehab Center—Johnston v. Leavitt, 241 F. App’x 76 (4th
Cir. 2007). When CMS issued the nursing facility survey, certification and enforcement
regulations, it acknowledged that “distinctions between different levels of noncompliance
. .. do not represent mathematical judgments for which there are clear or objectively
measured boundaries.” 59 Fed. Reg. 56,116, 56,179 (1994). “This inherent imprecision
is precisely why CMS’s immediate jeopardy determination, a matter of professional
judgment and expertise, is entitled to deference.” Daughters of Miriam Center, DAB No.
2067, at 15 (2007).
20

I find that because the staff incorrectly transferred R22 she suffered a fall that resulted in
her femur fracture. That is actual serious harm. The facility then failed to take any
action in response, and did not even assess or treat the injury compounding the
seriousness of the harm to R22 and risking others similarly situation. Even if the fall did
not cause R22’s fracture, it certainly had the likelihood to cause serious injury, and the
staff did nothing about it. Furthermore, once Petitioner’s staff was informed of R22’s
femur fracture, they did absolutely nothing about it for about nine hours. Once the
facility contacted R22’s physician, he ordered her transferred to the emergency
department, indicating that this fracture was a serious medical injury. The fact that they
did not report this emergency for about nine hours constitutes a situation of immediate
jeopardy to R22’s health and safety.

5. Petitioner’s noncompliance at a level of immediate jeopardy extended from
January 30 through March 4, 2011, and substantial noncompliance that was not
immediate jeopardy from March 5, through April 3, 2011.

Once the period of noncompliance is shown to have opened, it becomes Petitioner’s
obligation, under most circumstances, to show when it closed.

The Board in Cary Health and Rehabilitation Center, DAB No. 1771 (2001) explained
that noncompliance is presumed to continue until the facility demonstrates that it has
achieved substantial compliance. In Taos Living Center, DAB No. 2293, (2009)
however, the Board clarified that it has never held that the presumption of continued
noncompliance is unrebuttable (or that findings of continuing noncompliance are an
exception to the regulatory provision of hearing rights on findings of noncompliance
resulting in enforcement actions). In Brian Center, DAB No. 2336, (2010) the Board
explained that the facility’s burden extends to overcoming CMS’s determination as to
when the immediate jeopardy was removed. CMS’s judgment that corrective measures
were insufficient to abate the immediate jeopardy prior to the date CMS determined “is,
in essence, a determination that the level of noncompliance continued to present
immediate jeopardy” to residents. Thus, a “determination by CMS that a SNF’s ongoing
compliance remains at the level of immediate jeopardy during a given period constitutes
a determination about the ‘level of noncompliance’ and, therefore, is subject to the
clearly erroneous standard... .” Id. at 7-8.

Petitioner argues that if there is any noncompliance, the period ended when the facility
completed its internal investigation and staff retraining the second week of February,
2011. P. Br. at 37. CMS argues that Petitioner continued to pose immediate jeopardy to
the residents until at least March 4, 2011. CMS Reply at 5- 9. I find that the CMS
finding of immediate jeopardy from January 30 through March 4, 2011 is not clearly
erroneous. The record shows that on March 5, 2011:
21

... after verifying in-services records and interviewing nursing staff, the
survey tem concluded the facility implemented corrective measures as
described in their Allegation of Credible Compliance provided to the
survey team on 03/05/2011 at 9:00 AM, to prevent any future reoccurrence.

CMS Ex. 1, at 30. The survey team removed the immediate jeopardy on March 5, 2011
and lowered the scope and severity to a level “D” to allow for revised corrective actions
as needed to establish substantial compliance with F-323. Jd. Importantly, the Allegation
of Credible Compliance included monitoring fall interventions and care provided
beginning on March 4, 2011 by the Executive Director, DON, or designee. CMS Ex. 1,
at 29-30. The senior staff would monitor to ensure implementation of the interventions
every shift for seven days then slowly taper down for about a four-month period. Jd. I
find it absolutely not clearly erroneous that CMS found this monitoring vital to the
alleviation of the immediate jeopardy finding.

The evidence further supports that Petitioner remained out of substantial compliance
from March 5 through at least April 3, 2011. When CMS conducted its revisit survey on
April 4, 2011, the surveyors observed a CNA transferring a resident while using the
incorrect lift and with an insufficient number of staff present to assist. CMS Reply at 5;
Tr. at 634-635. It is clear that Petitioner’s corrective actions were not sufficient to
establish substantial compliance with the same regulatory requirements previously cited.
I find that CMS was not clearly erroneous in finding that substantial compliance, not
amounting to immediate jeopardy, continued after the March 5 survey concluded.

6. The CMP imposed for the period of immediate jeopardy, $4,050 per day from
January 30 through March 4, 2011, and $100 per day for the period of
substantial noncompliance from March 5 through April 3, 2011, is reasonable.

To determine whether the CMP imposed is reasonable, I apply the factors listed in 42
C.F.R. § 488.438(f), which are: (1) the facility’s history of noncompliance; (2) the
facility’s financial condition; (3) factors specified in 42 C.F.R. § 488.404; and (4) the
facility’s degree of culpability, which includes neglect, indifference, or disregard for
resident care, comfort, or safety. The absence of culpability is not a mitigating
circumstance in reducing the amount of the penalty. The factors listed in 42 C.F.R.

§ 488.404 include: (1) the scope and severity of the deficiency; (2) the relationship of the
deficiency to other deficiencies resulting in noncompliance; and (3) the facility’s prior
history of noncompliance in general and specifically with reference to the cited
deficiencies.

In reaching a decision on the reasonableness of the CMP, I must consider whether the
evidence supports a finding that the amount of the CMP is at a level reasonably related to
an effort to produce corrective action by Petitioner with the kind of deficiency found, in
light of the above factors. I am neither bound to defer to CMS’s factual assertions, nor
22

free to make a wholly independent choice of remedies without regard for CMS’s
discretion. Barn Hill Care Center, DAB No. 1848, at 21 (2002).

In evaluating the regulatory factors, I find that Petitioner has not submitted evidence
regarding its financial condition. These deficiencies are serious and Petitioner is culpable
in that Petitioner’s actions had a serious negative effect on R22’s care, comfort, and
safety. Petitioner failed to provide R22 with the correct mode of transfer and with the
correct number of staff to assist, creating the unsafe situation where R22 fell and
fractured her femur. Petitioner’s substandard care continued from that moment forward,
where rather than attempting to mediate harm it not only failed to act but continued to put
R22 at risk and further exacerbate her injuries. Then, once R22’s serious injury was
overtly communicated to the facility, nursing staff did nothing with the information for
almost nine hours before contacting R22’s physician who immediately sent her to the
emergency room. Throughout this case, the circumstances surrounding the violations fall
on the range of neglect or indifference at the very least: the CNA who allowed R22 to
fall did not ask a second CNA for assistance because she was unable to locate another
assistant, the charge nurse who did not communicate the radiology results immediately
because she was busy with homework, and nearly identical violations witnessed during
the resurvey that were far more than simply the result of the CNA’s nervousness. The
CMP range for immediate-jeopardy level noncompliance is from $3,050 to $10,000 per
day. 42 C.F.R. § 488.438(a)(1)(i). The lower range of CMP, from $50 per day to $3000
per day, is reserved for deficiencies that do not constitute 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). Here CMS imposed a penalty of
$4,050 per day, during the immediate jeopardy findings and $100 per day, during the
period of substantial noncompliance- both are at the lower end of the allowable ranges.
Given that the noncompliance was very serious, and that those violations continued, the
$4,050 and $100 per day CMP’s are reasonable.

V. Conclusion

For the reasons discussed above, I find that Petitioner’s facility was not in substantial
compliance with Medicare participation requirements and that its noncompliance posed
immediate jeopardy to resident health and safety. I find that a $4,050 per day CMP, from
January 30 through March 4, 2011, and a $100 per day CMP, from March 5 through
April 3, 2011, is reasonable.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products
(FDA No. FDA-2012-H-0817),

Complainant
v.
Falin Zhang, d/b/a Happy House
Docket No. C-12-1058
Decision No. CR2623

Date: September 21, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving a complaint on
Respondent, Falin Zhang d/b/a Happy House, at 700 West Allegheny Ave., Philadelphia,
PA 19133, and by filing a copy of the complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management. The complaint alleges that
Happy House impermissibly sold tobacco products to a minor and failed to verify the age
of a person purchasing tobacco products, violating the Federal Food, Drug, and Cosmetic
Act (Act) and its implementing regulations, 21 C.F.R. Part 1140. CTP seeks to impose
against Respondent Happy House a $500 civil money penalty.

As provided for in 21 C.F.R. sections 17.5 and 17.7, on August 3, 2012, CTP served the
complaint on Respondent Happy House by United Parcel Service. 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 in 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 it to pay the full amount of the proposed penalty.
Respondent Happy House has not filed an answer within the time prescribed. Pursuant to

21 CFR. §

7.11, L assume that the facts al

statements) are true. Specifically:

e AtRe

the sal
age;

le of cigarettes or smokeless tol

leged in the complaint (but not its conclusory

spondent’s business establishment, 700 West Allegheny Avenue,
Philadelphia, PA, on August 23, 20

1, an FDA-commissioned inspector observed
bacco to a person younger than 18 years of

e At Respondent’s business establishment, 700 West Allegheny Avenue,

Philadelphia, PA, on August 23, 201
staff’s failure to verify prior to sale, by means of photo identification containing
the bearer’s birth date, the age of a person purchasing tobacco products;

e Ina warning letter dated November

1, an FDA-commissioned inspector observed

0, 2011, the CTP informed Respondent

Happy House of the inspector’s August 23, 2011 observations and that such
actions violate federal law, 21 C.F.R.
further warned that Respondent Happy House’s failure to correct its violation[s]

§§ 1140.14(a) and 1140.14(b). The letter

could result in a civil money penalty or other regulatory action;

e At approximately 3:42 p.m. on March 30, 2012, at Respondent’s business

establ:

ishment, 700 Wes

t Allegheny Avenue, Philadelphia, PA, an FDA-

commissioned inspector observed the sale of Newport Box cigarettes to a person
younger than 18 years of age;

e At approximately 3:42 p.m. on Marc’!
establishment, 700 West Allegheny Avenue, Philadelphia, PA, an FDA-
commissioned inspector observed staff’s failure to verify prior to sale, by means
of photo identification containing the bearer’s birth date, the age of a person
purchasing tobacco products.

h 30, 2012, at Respondent’s business

These facts establish Respondent Happy House’s liability 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. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. §1140.1(b).
Under 21 C.F.R. section 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. section 1140.14(b)(1), a
retailer must verify, by means of photo identification containing the bearer’s date of birth,
that no person purchasing the tobacco product is younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. section 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against Respondent
Falin Zhang d/b/a Happy House. Pursuant to 21 C.F.R. section 17.11(b), this order
becomes final and binding upon both parties within 30 days of the date of its issuance.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Nostrand Rx Corp.
(PTAN: 6477000001),

Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-524
Decision No. 2620

Date: September 21, 2012

DECISION

The National Supplier Clearinghouse (NSC), an administrative contractor acting on
behalf of the Centers for Medicare and Medicaid Services (CMS), revoked Petitioner’s
Medicare billing privileges. NSC determined that Petitioner violated Supplier Standard
22, 42 C.F.R. § 424.57(c)(22), when it billed the Medicare program for Durable Medical
Equipment (DME) even though Petitioner was not accredited as a supplier of durable
medical equipment, prosthetics, orthotics, and supplies (DMEPOS). Petitioner appealed.
For the reasons stated below, I affirm the determination to revoke Petitioner’s billing
privileges.

I. Case Background and Procedural History

Elan Katz, Petitioner’s owner, completed and signed a Form CMS-855S in May 2010,
seeking to enroll Petitioner as a supplier with the Medicare program with direct billing
privileges. CMS Ex. 13, at 20. The completed Form CMS-855S indicated that
Petitioner: was a “new enrollee”; was a Pharmacy; was not accredited to bill for DME;
would not supply DME, including blood glucose monitors and/or supplies; would start
conducting business on June 21, 2010; and would be doing business as Care RX
Pharmacy. ' CMS Ex. 13, at 3, 5, 7, 8, 11, 36. During the enrollment process, NSC
conducted a site visit of Petitioner on July 8, 2010. The inspector’s report indicates that
Petitioner was selling glucose test strips and that Petitioner’s manager/pharmacist stated
Petitioner would seek accreditation in the near future. CMS Ex. 13, at 49, 68, 70.
Subsequently, Petitioner received Medicare billing privileges.

On July 11, 2011, NSC conducted another site inspection of Petitioner. The inspector’s
report indicates that Petitioner had glucose monitors, and glucose strips and lancets in
stock. CMS Ex. 6, at 7, 18-21, 40, 43, 49, 51. By letter dated August 3, 2011, NSC
notified Petitioner that it violated Supplier Standard 22 because it had not been
accredited. CMS Ex. 7. This letter, sent via certified mail, return receipt requested,
notified Petitioner that it had 21 days to: submit an attestation that it was exempt from
the accreditation requirement; obtain accreditation; or submit a signed statement that
Petitioner would “no longer bill any items other than drugs to Medicare.” CMS Exs. 7, at
2; 7A; 19. NSC warned that a failure to comply might lead to the revocation of
Petitioner’s Medicare supplier number. CMS Ex. 7, at 3. NSC did not receive a response
from Petitioner. CMS Ex. 9, at 1.

In an October 21, 2011 letter, NSC notified Petitioner that it was revoking Petitioner’s

supplier number and billing privileges effective November 20, 2011, and imposing a one-
year bar on Petitioner’s reenrollment. CMS Ex. 9, at 1. The letter advised Petitioner that
it could file a corrective action plan (CAP) and request reconsideration. CMS Ex. 9, at 2.

On November 2, 2011, Petitioner submitted a CAP. P. Ex. C. On November 18, 2011,
NSC rejected Petitioner’s CAP. CMS Ex. 11. Petitioner then requested reconsideration.
P. Ex. E. In its March 21, 2012 determination on reconsideration, NSC concluded that
Petitioner did not comply with Supplier Standard 22 and that revocation of Petitioner’s
billing privileges was appropriate. CMS Ex. 1, at 2-3.

Petitioner timely filed a request for a hearing with the Departmental Appeals Board, Civil
Remedies Division. In response to my order requiring a more definite statement of its
reasons for requesting a hearing, Petitioner, through counsel, filed an amended request
for a hearing (RH). Following the issuance of my April 5, 2012 Acknowledgment and
Pre-hearing Order (Pre-hearing Order), CMS filed its pre-hearing brief (CMS Br.), along
with 18 proposed exhibits (CMS Exs. 1-18). Petitioner filed the following: a pre-hearing
brief (P. Br.); five proposed exhibits (P. Exs. A-E); and the affidavit of Petitioner’s
general manager, Max Berger. Petitioner did not mark Mr. Berger’s affidavit as an

' Prior to purchase by the current owner on June 20, 2010, a pharmacy existed at
Petitioner’s location named Care Pharmacy. P. Ex. C. Care Pharmacy’s accreditation as
a DMEPOS supplier was valid from September 14, 2009 through September 13, 2012.
P. Ex. B.
exhibit; therefore, I mark it as Petitioner’s Exhibit F. CMS later filed a motion to
supplement its exhibit list and provided two additional proposed exhibits (CMS Exs. 19-
20). Petitioner filed a reply brief (P. Reply Br.) and did not oppose the admission of
CMS Exs. 19 and 20. Because neither party has objected to any of the proposed exhibits,
I admit CMS Exhibits 1-20 and Petitioner’s Exhibits A-F into the record.

The Pre-hearing Order advised the parties that they must submit written direct testimony
for each proposed witness and that an in-person hearing would only be necessary if the
opposing party requested an opportunity to cross-examine a witness. Pre-hearing Order
99 7, 9; Vandalia Park, DAB No. 1940 (2004); Pacific Regency Arvin, DAB No. 1823, at
8 (2002) (holding that the use of written direct testimony for witnesses is permissible so
long as the opposing party has the opportunity to cross-examine those witnesses). CMS
did not offer any witnesses that Petitioner could request to cross-examine. Petitioner
offered the written direct testimony of Max Berger (P. Ex. F); however, CMS did not
request to cross-examine this witness.” See Pre-hearing Order 8. Consequently, I will
not hold an in-person hearing in this matter. See Kate E. Paylo, D.O., DAB CR2232, at 9
(2010). Accordingly, the record is closed and I will evaluate the submitted documentary
evidence and Mr. Berger’s written direct testimony. See Pre-hearing Order § 10.

IL. Discussion
A. Issues
The issues in this case are:
1. whether Petitioner was in compliance with 42 C.F.R. § 424.57(c)(22); and

2. if Petitioner was not in compliance with 42 C.F.R. § 424.57(c)(22), whether CMS
had the authority to revoke Petitioner’s billing privileges.

? Petitioner’s list of proposed witnesses identifies both Mr. Berger and Elan Katz.
However, Petitioner did not submit written direct testimony for Elan Katz as required by
paragraph 7 of the Pre-hearing Order. Further, Petitioner did not object to the written
direct testimony requirement in the Pre-hearing Order, nor did it request that I waive the
requirement. See Golden Living Center — Frankfort, DAB No. 2296, at 4 (2009) (noting
that the petitioner had not “made any request below to require particular witnesses to
present their direct testimony in person”); The Laurels at Forest Glenn, DAB No. 2182,
at 10 (2008) (noting that a party failed to object to the pre-hearing order’s direct
testimony requirement “at the time”).
B. Findings of Fact, Conclusions of Law, and Analysis’

In order to participate in the Medicare program as a supplier, individuals and entities
must meet certain criteria to enroll and receive billing privileges. 42 C.F.R. §§ 424.505,
424.510. Further, CMS may revoke those privileges if the supplier fails to comply with
regulatory requirements. 42 C.F.R. § 424.57(d) (2011). In this case, CMS determined
that Petitioner violated 42 C.F.R. § 424.57(c)(22), which provides that a supplier must:

be accredited by a CMS-approved accreditation organization in order to receive
and retain a supplier billing number. The accreditation must include the specific
products and services, for which the supplier is accredited in order to receive
payment for those specific products and services.

Therefore, in order for Petitioner to be in compliance with 42 C.F.R. § 424.57(c)(22), I
must determine whether Petitioner billed (i.e., sought to receive payment from) the
Medicare program for DME, and if so, whether Petitioner was accredited to bill the
Medicare program for that DME.

I. Petitioner billed the Medicare program for blood glucose monitors
without the proper accreditation.

NSC determined that Petitioner improperly billed the Medicare program for DME. CMS
Ex. 1. CMS provided as evidence for this conclusion the NSC’s inspection reports that
show Petitioner was selling glucose testing strips and monitors, and a summary of CMS’s
billing records that shows Petitioner billed the Medicare program for $6,335.50 for
glucose monitors and $4,440.51 for nebulizers and related drugs from August 2011
through October 2011. CMS Exs. 6, at 7, 18-21; 8; 13, at 49, 68.

Petitioner argues that CMS has not provided any evidence that it billed the Medicare
program for items requiring accreditation and that the claims that Petitioner billed for
nebulizer equipment is incorrect; Petitioner asserts it only billed for nebulizer drugs,
which do not require accreditation. P. Br. at 4-5; P. Exs. A, B, F at §§ 5-7, 14. Petitioner
also states that it could sell items requiring accreditation so long as Petitioner did not bill
Medicare for those items, apparently asserting that Petitioner did not bill Medicare for
those items. P. Br. at 5, 8.

In response, CMS argued that Petitioner’s general manager did not deny that Petitioner
sold glucose monitors, which CMS stated was clearly DME under 42 U.S.C. § 1395x(n).
CMS Motion to Supplement Exhibit List at 2 n.1. CMS did not respond to Petitioner’s
evidence that it only billed the Medicare program for nebulizer drugs, P. Ex. A, and

> My findings of fact and conclusions of law are set forth in italics and bold font.
CMS’s summary of billing indicates Petitioner may have billed for nebulizer drugs.
CMS Ex. 8.

I find that CMS has sufficient evidence to conclude that Petitioner billed the Medicare
program for glucose monitors, and that Petitioner failed to prove that it had not billed for
those items. It is well established that CMS only has the burden of production to show
non-compliance. Hillman Rehabilitation Center, DAB No. 1611 (1997) (“The burden
remains on the provider to show that it continues to qualify under the Act and the
regulations”), aff'd, Hillman Rehabilitation Center v. U.S. Dept. of Health and Human
Services, No. 98-3789 (GEB) (D.N.J. May 13, 1999). As explained in Hillman: “[The
petitioner] here is the proponent of an order certifying it as qualified to participate in the
program and to receive Medicare payment for services rendered, so it is fair to place the
burden on [the petitioner].” /d. This principal has been repeatedly reaffirmed for cases
adjudicated under 42 C.F.R. Part 498. See, e.g., Tri-County Extended Care Center, DAB
No. 2060 (2007); Sanctuary at Whispering Meadows, DAB No. 1925 (2004); Fairfax
Nursing Home, Inc., DAB No. 1794 (2001).

Although Petitioner has provided evidence to dispute that it billed for nebulizers,
Petitioner has not met its burden regarding CMS’s determination that it billed for glucose
monitors. To the contrary, Petitioner has admitted to selling and billing for DME. P. Ex.
C (stating in CAP that “[t]he only Durable Medical Equipment dispensed by our
pharmacy during this time was diabetic strips and diabetic monitors”); RH at 2-3 (“the
amount of billing for the products required accreditation was de minimus.”). Therefore, I
find that Petitioner billed the Medicare program for glucose monitors, items for which it
needed accreditation.

2. Petitioner has never been accredited to bill Medicare for blood glucose
monitors.

NSC revoked Petitioner’s Medicare billing privileges because Petitioner was billing for
items for which Petitioner needed accreditation. CMS Exs. 1, at 2; 6, at 7, 16-18, 20-21,
40, 43, 49, 51. The Social Security Act (Act) requires a DMEPOS supplier to be subject
to quality standards, “applied by recognized independent accreditation organizations,” in
order for the supplier to furnish any item for which Medicare will make payment and to
receive or retain a supplier number used to obtain reimbursement. 42 U.S.C.

§ 1395m(a)(20)(A). The definition of DME includes “blood-testing strips and blood
glucose monitors for individuals with diabetes without regard to whether the individual
has Type I or Type II diabetes.” 42 U.S.C. §§ 1395m(a)(13); 1395m(a)(20)(D);
1395x(n). Pharmacies furnishing DME needed to obtain accreditation by January 1,
2010, but were not required to submit evidence of accreditation until January 1, 2011.

42 U.S.C. §§ 1395m(a)(20)(F). Pharmacies furnishing DME could be exempted from the
accreditation requirement if they met all four of the following criteria: 1) the total billing
of the items or services for which accreditation was required was less than five percent of
the pharmacy’s total sales during the last three years; 2) the pharmacy was enrolled as a
DMEPOS supplier in the Medicare program for at least five years and has not been
subject to an adverse action in the past five years; 3) the pharmacy attests that it meets the
first two criteria; and 4) the pharmacy agrees to submit its tax records. 42 U.S.C.

§ 1395m(a)(20)(G)(ii)(T)-(IV).

In the present matter, Petitioner does not dispute that it has never been accredited and,
therefore, cannot bill Medicare for the sale of certain DME items. See P. Br. at 7-9.
Further, Petitioner has not shown, nor has it argued, that it is exempt from the
accreditation requirement. Indeed, Petitioner’s CMS-855S application (CMS Ex. 13)
dated May 27, 2010, shows that Petitioner was not enrolled as a DMEPOS supplier for at
least five years, as required for an exemption. 42 U.S.C. § 1395m(a)(20)(G)(ii)(ID.
Moreover, the Act places the burden of showing accreditation on the supplier: “the
Secretary shall require suppliers furnishing [DME] items and services . . . directly or as a
subcontractor for another entity, to have submitted to the Secretary evidence of
accreditation ....” 42 U.S.C. § 1395m(a)(20)(F)(i) (emphasis added). Petitioner has not
provided such proof.

Rather than assert it received accreditation, Petitioner argues that it believed that the
accreditation from the pharmacy it bought, Care Pharmacy, would automatically transfer
to Petitioner upon sale of the former to the latter. RH at 2; P. Exs. B; F at § 14.
Petitioner also argued that it did not indicate on the Form CMS-855S that it would sell
items requiring accreditation because the accreditation requirement did not apply to
Petitioner until January 1, 2011. P. Br. at 4-5.

The testimony of Petitioner’s general manager that Petitioner believed that the
accreditation from Care Pharmacy was transferred to Petitioner does not absolve it of
correctly obtaining accreditation. As argued by CMS, its stated policy is that
accreditation is not transferable to a new owner (CMS Exs. 16, at 3; 17, at 8), and
Petitioner provides no basis in law that accreditation is transferable.

Further, the evidence of record contradicts Petitioner’s claim that it truly believed that the
accreditation transferred. On its May 2010 Form CMS-855S, Petitioner stated that it was
not accredited. CMS Ex. 13, at 8. However, had Petitioner expected the accreditation to
transfer, Petitioner would not have simply provided a negative response. Further, NSC’s
first inspector recorded that Petitioner’s manager/pharmacist stated that the previous
pharmacy had been accredited but that Petitioner was “going to go through accreditation
again in the near future.” CMS Ex. 13, at 70. Because the previous pharmacy’s
accreditation was valid until 2012 (P. Ex. B), there would not have been any reason for
Petitioner to seek accreditation “in the near future” had Petitioner thought the previous
pharmacy’s accreditation transferred.

Perhaps as an explanation, Petitioner claims that it did not indicate on the May 2010
Form CMS-855S that it would sell items requiring accreditation because it was not
required to be accredited until January 2011. P. Br. at 4. However, this argument does
not explain why Petitioner would fail to assert it if the accreditation from Care Pharmacy
had transferred. Further, Petitioner is incorrect in stating that it did not need to be
accredited until January 1, 2011. Pharmacies were required to obtain accreditation by
January 2010; however, they did not need to provide proof of the accreditation until
January 2011. 42 U.S.C. § 1395m(a)(20)(F). Therefore, by the May 2010 enrollment
application, Petitioner should have been accredited to furnish DME and disclosed its
intention to sell DME on the Form CMS-855S.

3. Petitioner did not comply with DMEPOS Supplier Standard 22.

Because I find that Petitioner was not accredited to bill the Medicare program for DME
and Petitioner billed Medicare for DME, Petitioner violated 42 C.F.R. § 424.57(c)(22).

4. The regulations authorize CMS to revoke Petitioner’s billing
privileges and impose a one-year reenrollment bar.

Ifa supplier does not continue to meet the DMEPOS supplier standards, CMS will
revoke that supplier’s billing privileges. 42 C.F.R. § 424.57(d) (2011). In the present
matter, Petitioner’s failure to comply with 42 C.F.R. § 424.57(c)(22) is sufficient to
uphold the revocation of Petitioner’s billing privileges. See 1866I/CPayday.com, L.L.C.,
DAB No. 2289, at 13 (2009) (“[F]ailure to comply with even one supplier standard is a
sufficient basis for revoking a supplier’s billing privileges.”).

Petitioner suggests in its hearing request that I consider the de minimus nature of the
DME items for which Petitioner billed Medicare. RH at § 2. Petitioner also argued that a
one-year bar from reenrollment was unduly harsh.

Iam bound by the regulations and have no equitable authority to reverse a revocation or
reduce a reenrollment bar based on the magnitude of Petitioner’s noncompliance with
DMEPOS supplier standards. See Letantia Bussell, M.D., DAB No. 2196, at 13 (2008).
Revocation of Petitioner’s billing privileges was not premised on the amount Petitioner
billed Medicare for DME items but on Petitioner’s failure to be accredited. CMS Ex. 1.
5. Petitioner received an opportunity to correct its deficient compliance
and Petitioner does not have a right to administrative law judge review
of the decision to reject Petitioner’s CAP.

Petitioner argued that it never received NSC’s August 3, 2011 letter and, as a
consequence, “Petitioner was not given the opportunity to correct the deficient
compliance requirement [under 42 C.F.R. § 424.535(a)(1)] before a final determination to
revoke billing privileges” and “therefore was forced to submit a CAP that was improperly
considered.” P. Br. at 8. Further, in its amended hearing request, Petitioner argued that I
should review NSC’s rejection of Petitioner’s CAP. See RH at § 2. However, Petitioner
received an opportunity to correct its deficiencies and Petitioner has no right to seek
further review of its CAP.

While it is true that CMS must afford a supplier the opportunity to correct deficiencies
before a final determination to revoke is made, 42 C.F.R. § 424.535(a)(1), such an
opportunity can be provided through the submission of a CAP. DMS Imaging, Inc., DAB
No. 2313, at 7 (2010). Because there is no dispute that the initial determination to revoke
informed Petitioner of the opportunity to submit a CAP (CMS Ex. 9, at 2) and Petitioner
submitted a CAP in response to the initial determination (P. Ex. C), Petitioner received an
opportunity to correct as required by the regulations. DMS Imaging, Inc., DAB No.
2313, at 4 (“[Petitioner] does not deny that it received an opportunity to correct through
the submission of a CAP. Therefore, we need not reach the question of whether the
scope of review by an [administrative law judge] of a revocation under section
424.535(a)(1) includes determining whether CMS granted a supplier an opportunity to
correct.”).

Moreover, I find that NSC provided that opportunity through the issuance of its August 3,
2011 letter. CMS Ex. 7. Although Petitioner asserts that it never received that letter, see
P. Br. at 6, NSC sent the letter by certified mail, return receipt requested, and the United
States Postal Service (USPS) delivered it to Petitioner’s address on August 6, 2011. The
certified mail receipt indicates the same item number as the signed return receipt card,
and a USPS internet printout showing delivery also indicates the same item number.
CMS Exs. 7, 7A, 19. Such evidence creates “a strong presumption that Petitioner
received the notice,” Sunil R. Lahiri, M.D., DAB CR296, at 17 (1993), a presumption that
Petitioner did not rebut through Mr. Berger’s simple denial of receipt. P. Ex. F, at §§ 9-
11. I find that the signed USPS certified mail return receipt and corroborating USPS
printout, which show delivery of the letter to Petitioner’s address and receipt of the letter
from the signatory, significantly outweigh the affidavit. This is especially so because
Petitioner did not object to CMS’s Exhibit 19 or deny the validity of the return receipt
card or the signature on it.

Finally, Petitioner argues that CMS erred in rejecting its CAP and seeks review of that
decision. However, CMS’s decision to reject a CAP is not an initial determination under
42 C.F.R. Part 498, see 42 C.F.R. § 405.874(e) (2011); therefore, Petitioner has no right
to seek administrative law judge review of that decision. See 42 C.F.R. §§ 498.5, 498.40;
DMS Imaging, DAB No. 2313, at 8, 10-11.

IV. Conclusion

Upon weighing the evidence in this case, I find that Petitioner was not in compliance with
DMEPOS Supplier Standard 22 when it furnished and billed the Medicare program for
DME items requiring accreditation. Therefore, CMS’s determination to revoke
Petitioner’s Medicare billing privileges is affirmed.

/s/
Scott Anderson
Administrative Law Judge


Department

of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products

D

Complainant,
v.
C.Y.J. Inc.,
Respondent

ocket No. C-12-1040

FDA Docket No. FDA-2012-H-0795

Decision No. CR2619

Date: September 20, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

I enter a default judgment against Respondent, CYJ Inc. d/b/a Arco AM/PM #

82832 (also doing business as P

eter’s Kirkland Mini Market). The Center for

Tobacco Products (CTP) filed an administrative complaint against Respondent
that alleges facts and legal authority that are sufficient to justify the imposition of

a civil money penalty of $250.

Respondent did not timely answer the complaint

nor did it request an extension of time within which to file an answer.

CTP began this case by serving
the complaint with the Food an

a complaint on Respondent and by filing a copy of
Drug Administration’s (FDA) Division of

Dockets Management. The complaint alleges that Respondent impermissibly sold

tobacco products to a minor an

failed to verify the age of a person purchasing

tobacco products, violating the Federal food, Drug, and Cosmetic Act (Act) and its
implementing regulations at 21 C.F.R. Part 1140. See Complaint fj 1,7. CTP
seeks a civil money penalty of $250.

On July 27, 2012, CTP served t

e complaint on Respondent by United Parcel

Service, as is provided for by 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 in which to
file an answer. Complaint J 13. See also Cover Letter. 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 it to
pay the full amount of the proposed penalty. Complaint § 18. Respondent did not
file an answer 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 decide whether a default judgment is
appropriate here, and I conclude that it is merited based on the allegations of the
administrative complaint and Respondent’s failure to answer them.

For purposes of this decision, I assume that the following facts alleged in the
complaint are true. Specifically:

e Respondent is an establishment that sells tobacco products. It is located at
11600 124" Avenue Northeast, Kirkland, WA 98034. Complaint § 2.

e On October 29, 2011, an FDA-commissioned inspector made observations
at Respondent’s place of business that included: sale of cigarettes or
smokeless tobacco to a minor under the age of 18. Complaint § 9.

e¢ On December 29, 2011, CTP issued a Warning Letter to Respondent that
recited the October 29, 2011 observations. The letter informed Respondent
that the observed facts constituted violations of regulations at 21 CFR §
1140.14(a) that prohibited sales of tobacco products to individuals under
the age of 18. It advised Respondent that failure to correct the violations
could result in the imposition of a civil money penalty or other regulatory
action by FDA. Complaint § 9.

e The Warning Letter was delivered to Respondent. See Proof of Service.
Respondent did not reply.

© On April 15, 2012, at about 11:38 a.m., PT, an inspector observed a minor
under the age of 18 buy a package of Camel Blue cigarettes at
Respondent’s place of business. Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). 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.

Here, Respondent sold tobacco products to individuals younger than age 18 on
two occasions, on October 29, 2011, and on April 15, 2012. These actions and
omissions by Respondent constitute a violation of law for which a civil money
penalty is merited. Therefore, I find that a civil money penalty of $250 is
permissible under 21 C.F.R. § 17.2

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Retail Investments Incorporated d/b/a Shell Finish Line #14,

Respondent.

Docket No. C-12-1057

FDA Docket No. FDA-2012-H-0811
Decision No. CR2618

Date: September 19, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated the above-captioned matter when it
filed an Administrative Complaint for Civil Money Penalties (Complaint) with the
Departmental Appeals Board, Civil Remedies Division (CRD) and the Food and Drug
Administration’s (FDA) Division of Dockets Management. CTP seeks to impose civil
money penalties under the Federal Food, Drug, and Cosmetic Act (Act) and the Act’s
implementing regulations.

The Complaint alleges the following facts. Respondent owns an establishment in
Lumberton, Mississippi, that sells tobacco products. Complaint § 2. CTP conducted two
inspections of the establishment. Complaint J 8. During the first inspection on
November 9, 2011, an FDA-commissioned inspector observed that Respondent:
2
[Sold] cigarettes or smokeless tobacco products to a person younger than
18 years of age... , [and] fail[ed] to verify by means of photographic
identification, containing the bearer’s date of birth, that no person purchasing
cigarettes or smokeless tobacco is younger than 18 years of age.”

Complaint § 10.

On January 19, 2012, CTP issued a warning letter to Respondent describing the
violations the inspector observed. Complaint § 10. The letter warned Respondent that a
failure to correct the violations could result in the imposition of civil money penalties and
that it was Respondent’s responsibility to ensure compliance with the law. Complaint

4 10. CTP did not receive a response to the warning letter. Complaint § 11.

Subsequently, during a two-part follow-up inspection, an FDA-commissioned inspector
again documented that Respondent “[sold] tobacco products to a minor.” Complaint § 9.
“Specifically, a person younger than 18 years of age was able to purchase a package of
Grizzly Long Cut Wintergreen smokeless tobacco on March 29, 2012, at approximately
4:45 PM CT” and “the minor’s identification was not verified before the sale ... on
March 29, 2012, at approximately 4:45 PM CT.” Complaint § 9.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on August 1, 2012, via United Parcel Service. CTP charged Respondent with
violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21 C.F.R.

§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth). Complaint
4 1,9, 10. CTP asked the CRD to impose a $500 civil money penalty based on three
alleged violations of the regulations in a 24-month period. Complaint 13. Both the
cover letter to the Complaint and the Complaint provided detailed instructions related to
filing an answer and requesting an extension of time to file an answer. The letter and
Complaint stated that failure to file an answer could result in the imposition of a civil
money penalty against Respondent. Respondent neither filed an answer nor requested an
extension of time within the 30-day time period prescribed in 21 C.F.R. § 17.9.

If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that the:

presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by
law for the violations alleged; or (2) The amount asked for in the complaint,
whichever amount is smaller.
3

21 C.F.R. § 17.11 (a). Further, a failure to file a timely answer means that “respondent
waives any right to a hearing and to contest the amount of penalties and assessments”
imposed in the initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. I also find that CTP’s request to impose a $500 civil
money penalty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $500.
This initial decision becomes final and binding upon both parties within 30 days of the
date of its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge