Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Robert M. Barbati, M.D.,
(NPI: 1134219967),
Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-786
Decision No. CR2670

Date: November 21, 2012

DECISION

Petitioner, Robert M. Barbati, M.D. appears pro se and appeals the Centers for Medicare
and Medicaid Services (CMS) contractor reconsideration decision issued on March 27,
2012. I grant summary judgment and sustain the determination of CMS finding that the
undisputed evidence establishes that CMS properly enrolled Petitioner in the Medicare
program effective September 26, 2011.!

' CMS explains in a footnote to its brief that the Medicare contractor erroneously referred
to August 27, 2011 as Petitioner’s effective date of enrollment. The regulations require
the contractor to assign the date of receipt of the application that is subsequently
processed to approval as the effective date of Petitioner’s enrollment, while permitting
the contractor to grant retrospective billing privileges for up to 30 days prior to the
effective date. Thus, I am treating the contractor’s action as if it intended to set
September 26, 2011 as the effective date of Petitioner’s enrollment, with the regulations
permitting Petitioner to bill retrospectively for services provided beginning on August 27,
2011.
I. Procedural History

Petitioner is a gastroenterologist. On March 27, 2012, the CMS contractor, First Coast
Service Options, Inc. (First Coast), issued an unfavorable reconsideration decision
denying Petitioner’s request that it change Petitioner’s effective date for Medicare billing
privileges to June 1, 2011. CMS Exhibit (CMS Ex.) 3.

Petitioner filed a hearing request (HR) with the Civil Remedies Division of the
Departmental Appeals Board on May 19, 2012, and the case was assigned to me for
hearing and decision. In accordance with my Acknowledgment and Pre-hearing Order
issued on June 6, 2012, CMS timely filed its pre-hearing exchange, incorporating a
Motion for Summary Judgment and brief (CMS Br.), with six exhibits (CMS Exs. 1-6),
on July 9, 2012. Petitioner did not respond to the CMS Motion for Summary Judgment
nor did Petitioner file a pre-hearing exchange as directed by my June 6, 2012 Order. I
subsequently issued an Order to Show Cause to Petitioner on August 28, 2012.

On September 7, 2012, Petitioner submitted his response (P. Response) to the Order to
Show Cause. Petitioner’s response, which is virtually identical to his HR, does not
dispute the facts set forth in the CMS motion. Therefore, this matter is appropriate for a
decision on the written record by summary judgment.

II. Background Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Payment under the program for services rendered to Medicare
beneficiaries may only be made to eligible providers of services and suppliers. Act

§§ 1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395(u)(h)(1)). The Act
requires the Secretary of the U.S. Department of Health and Human Services to issue
regulations that establish a process for the enrollment of providers and suppliers,
including the right to a hearing and judicial review of certain enrollment determinations.
Act § 1866(j) (42 U.S.C. § 1395ce(j)).

A provider or supplier must be enrolled in the Medicare program and be issued a billing
number to have billing privileges and to be eligible to receive payment for services
rendered to Medicare-eligible beneficiaries. 42 C.F.R. § 424.505. Further, physicians
must report a change in practice location to their Medicare contractor within 30 days. 42
CFR. § 424.516(d)(1)(iii).
III. Discussion
A. Issue

The issue in this case is whether CMS’s contractor and CMS had a legitimate basis for
determining the effective date of Petitioner’s enrollment and retrospective billing
privileges in the Medicare program.

B. Applicable Standard
The Departmental Appeals Board (Board) stated the standard for summary judgment:

Summary judgment is appropriate when the record shows that
there is no genuine issue as to any material fact, and the
moving party is entitled to judgment as a matter of law... .
The party moving for summary judgment bears the initial
burden of showing that there are no genuine issues of material
fact for trial and that it is entitled to judgment as a matter of
law. ... To defeat an adequately supported summary
judgment motion, the non-moving party may not rely on the
denials in its pleadings or briefs, but must furnish evidence of
a dispute concerning a material fact — a fact that, if

proven, would affect the outcome of the case under governing
law. ... In determining whether there are genuine issues of
material fact for trial, the reviewer must view the evidence in
the light most favorable to the non-moving party, drawing all
reasonable inferences in that party’s favor.

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).

The role of an Administrative Law Judge (ALJ) in deciding a summary judgment motion
differs from the ALJ’s role in resolving a case after a hearing. The ALJ should not assess
credibility or evaluate the weight of conflicting evidence. Holy Cross Vill. at Notre
Dame, Inc., DAB No. 2291, at 5 (2009).

C. Findings of Fact and Conclusions of Law

I. CMS’s contractor and CMS properly determined Petitioner’s effective
date of Medicare enrollment.

The material facts in this case are not disputed, and I draw all reasonable inferences in
favor of Petitioner. Petitioner submitted a Medicare enrollment application to First Coast
to update his provider information, specifically, to submit a change in his practice
locations starting as of May 16, 2011. CMS Ex. 1. First Coast received Petitioner’s
Medicare enrollment application on September 26, 2011. CMS Ex. 5. On November 23,
2011, First Coast notified Petitioner that his Medicare enrollment application had been
approved for direct reimbursement of services provided at the new locations starting as of
August 27, 2011. CMS Ex. 4.

Petitioner has not contested the arguments CMS presents in its brief but contends that his
effective date of enrollment should be June 1, 2011. Petitioner does not deny that the
CMS contractor received his completed application on September 26, 2011. Petitioner
argues, however, that his effective date should be earlier because he was unaware that he
needed to update his provider information because he was already a Medicare provider,
and he provided “medical care in the hospital setting to the Medicare recipients in good
faith.” CMS Ex. 2; HR; P. Response. Petitioner argues further that he “provided
emergency on-call services to Medicare patients” without concern as to whether they
were insured. CMS Ex. 2. He states that not receiving two months of revenue would be
a “financial hardship.” HR; P. Response.

The effective date of Medicare enrollment and billing privileges is dictated by 42 C.F.R.
§ 424.520(d). The regulation provides:

(d) Physicians, nonphysician practitioners, and physician and nonphysician
practitioner organizations. The effective date for billing privileges for physician,
nonphysician practitioners, and physician and nonphysician practitioner
organizations is the later of the date of filing of a Medicare enrollment application
that was subsequently approved by a Medicare contractor or the date an enrolled
physician or nonphysician practitioner first began furnishing services at a new
practice location.

(Italics in original, emphasis added).

An enrolled provider or supplier may bill Medicare for services provided to Medicare-
eligible beneficiaries up to 30 days prior to the effective date of enrollment, if
circumstances precluded enrollment before the services were provided. Retrospective
billing for up to 90 days prior to the effective date of enrollment is permitted only in case
of a Presidentially-declared disaster. 42 C.F.R. § 424.521.

The regulation is clear, and the effective date for Medicare billing privileges is
determined according to the later of the two dates specified by the regulation. The “date
of filing” is the date that the Medicare contractor receives a signed enrollment application
that the Medicare contractor is able to process to approval. 42 C.F.R. § 424.510(d)(1); 73
Fed. Reg. 69,726, 69,769 (Nov. 19, 2008). Because it is undisputed that the contractor
received Petitioner’s enrollment application on September 26, 2011, which is after the
date Petitioner began providing services at his new practice locations, the regulation
dictates that this is the effective date of Petitioner’s enrollment, and I have no discretion
to determine an earlier effective date.

2, Tam unable to waive the legal requirements for Petitioner.

Petitioner made various arguments for equitable relief despite not meeting the legal
requirements for an earlier effective date. I am without authority to order either First
Coast or CMS to provide an exemption to Petitioner under the circumstances. Even
accepting all of Petitioner’s assertions as true, Petitioner’s equitable arguments give me
no ground to grant Petitioner an earlier effective date of enrollment. See US Ultrasound,
DAB No. 2302, at 8 (2010) (“Neither the ALJ nor the Board is authorized to provide
equitable relief by reimbursing or enrolling a supplier who does not meet statutory or
regulatory requirements.”). Moreover, I have no authority to declare statutes or
regulations invalid or ultra vires. 1866[CPayday.com, L.L.C., DAB No. 22839, at 14
(2009) (“An ALJ is bound by applicable laws and regulations and may not invalidate
either a law or regulation on any ground.”).

Petitioner did not argue that he filed an application on an earlier date than CMS
determined or that the contractor or CMS incorrectly applied the regulatory criteria. I
have no authority to change Petitioner’s Medicare enrollment date based upon equitable
considerations. Although it is possible to sympathize with aspects of Petitioner’s
position, the regulations were promulgated with the understanding that limited
retrospective billing periods were a necessary means to further program integrity. See 73
Fed. Reg. at 69,768.

Accordingly, I conclude that Petitioner’s effective date of Medicare enrollment was
September 26, 2011, the date on which First Coast received Petitioner’s complete
enrollment application that could be processed to approval. Petitioner was also properly
authorized to retrospectively bill Medicare for services provided to Medicare
beneficiaries up to 30 days prior to the effective date of enrollment starting on August 27,
2011.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Spine Physicians Institute, P.A.,
Petitioner,

v.

Centers for Medicare and Medicaid Services.
Docket No. C-12-755
Decision No. CR2669

Date: November 21, 2012

DECISION

Spine Physicians Institute, P.A. (Petitioner) appealed the determination of Trailblazer
Health Enterprises, LLC (Trailblazer), a Medicare contractor, that it was not eligible for
enrollment in the Medicare program earlier than November 30, 2011 and could not
submit claims for reimbursement earlier than November 1, 2011. I deny the Centers for
Medicare and Medicaid Services’ (CMS’s) motion to dismiss because it did not have a
proper basis to reject Petitioner’s application. I find Trailblazer and Petitioner were
actively communicating to resolve issues relating to Petitioner’s application that
Trailblazer received on September 26, 2011, the date which necessarily determines
Petitioner’s effective date of Medicare enrollment.

I. Background

Dr. Venkat Sethuraman, an orthopedic surgeon and Petitioner’s sole owner, began
providing services to Medicare beneficiaries at the Spine Physicians Institute Professional
Association (Petitioner’s legal business name) in June 2011. P. Exs. 1, 2. On September
26, 2011, Trailblazer received Petitioner’s enrollment application for Medicare billing
privileges that included an Electronic Funds Transfer (EFT) Authorization Agreement, a
required part of the Medicare application. See 42 C.F.R. § 424.510(d)(2)(iv). Along with
its application, Petitioner submitted a voided check for account holder “Spine Physicians
Institute P.A. LLC” and a June 23, 2011 bank letter listing “Spine Physicians Institute
PA, LLC” as the account designated to receive the EFT funds. Trailblazer informed
Petitioner, by letter dated October 18, 2011 and faxed on October 19, 2011, that there
were several errors in its application. In the section detailing the errors with the EFT
agreement, Trailblazer informed Petitioner that “[i]f the [voided] check is in a name other
than your legal business name, we can accept a copy of a letter from your bank that ‘your
legal business name’ and ‘the name on your check’ are one in the same entity. . . “’ CMS
Ex. 2, at 2 (emphasis in original). On October 26, 2011, Trailblazer received Petitioner’s
submission including a new EFT agreement, an October 24, 2011 bank letter, and another
voided check. CMS Ex. 3.

By letter dated November 22, 2011, Trailblazer denied Petitioner’s application for
enrollment. Petitioner and Trailblazer had made progress on resolving the errors except
for Trailblazer’s request for a bank letter confirming that Petitioner’s legal name and
account name were referring to the same entity despite the “LLC” appearing after
Petitioner’s name in the bank information. The November 22, 2011 letter stated that
Trailblazer denied Petitioner’s application because Petitioner had failed to submit the
missing information or documentation within 30 days of Trailblazer’s request. CMS Ex.
4. The denial notified Petitioner that it could request a Corrective Action Plan (CAP) or
request reconsideration.

Petitioner requested a CAP and resubmitted the October 24, 2011 bank letter on
November 30, 2011. CMS Ex. 5. Trailblazer treated Petitioner’s submission as a new
application. CMS Ex. 13. On February 16, 2012, Trailblazer notified Petitioner that
there were errors in the CAP, specifically that its voided check was in a name other than
Petitioner’s legal business name and that Trailblazer could accept a letter from the “bank
stating that ‘your legal business name’ and ‘the name on your check’ are one in the same
and [you] have an account in their bank.” CMS Ex. 6, at 1. On the same day, Petitioner
faxed a corrected CAP and a new bank letter that stated, “[p]lease note, Spine Physicians
Institute Professional Association and Spine Physicians PA LLC are one in the same.”
CMS Exs. 7, 8.

On March 1, 2012, Trailblazer granted Petitioner a Medicare number with an effective
date of November 30, 2011 and a retrospective billing date of November 1, 2011.' CMS

De

' Trailblazer erroneously referred to November 1, 2011 as Petitioner’s “effective date”
(CMS Ex. 10). Regulations actually require the contractor to assign the date of receipt of
the application as the effective date of Petitioner’s enrollment while permitting the
contractor to grant retrospective billing privileges for 30 days prior to the effective date.
See 42 C.F.R. § 424.521(a)(1). Thus, I am treating Trailblazer’s action as if it intended to
set November 1, 2011 as the earliest date for which Petitioner may submit claims, with
the effective date of Petitioner’s enrollment as November 30, 2011.
Ex. 10. Trailblazer informed Petitioner that, if dissatisfied with this determination,
Petitioner could request reconsideration. Seeking an earlier billing date, Petitioner timely
requested reconsideration. CMS Exs. 11, 12. On March 29, 2012, CMS issued an
unfavorable decision letter, which informed Petitioner of its hearing rights before an
Administrative Law Judge (ALJ). On May 22, 2012, Petitioner timely filed a hearing
request.

On June 1, 2012, this case was assigned to me for hearing and decision. CMS filed a
Motion to Dismiss (CMS MTD) accompanied by 13 exhibits. Petitioner filed a Response
to CMS’s Motion To Dismiss and Brief in Support of Petitioner’s Appeal (P. Br.)
accompanied by 10 exhibits.

CMS proposed no witness testimony. Petitioner proposed the testimony of four
witnesses: Dr. Venkat Sethuraman, James Degollado, Lisa Hoyos, and an unnamed
witness from “CMS c/o Trailblazer.” As directed by my prehearing order, Petitioner
submitted declarations of written direct testimony for two proposed witnesses, James
Degollado and Lisa Hoyos. CMS moved to strike testimony from Dr. Sethuraman and
the unnamed witness from “CMS c/o Trailblazer” because Petitioner did not provide any
written direct testimony from them. I grant CMS’s motion.

Neither party objected to any proposed exhibits. Accordingly, I admit them all into
evidence. CMS did not request an opportunity to cross-examine Petitioner’s remaining
witnesses, James Degollado or Lisa Hoyos; therefore, a hearing is not necessary, and I
make my decision based on the written record.

IL. Issue

The issue in this case is whether CMS had a legal basis to determine November 30, 2011
as Petitioner’s effective date of Medicare enrollment.

II. Findings

My findings of fact and conclusions of law are set forth in italics and bold in the
discussion captions of this decision.

A, I deny CMS’s Motion to Dismiss because CMS did not properly reject
Petitioner’s September 26, 2011 application.

CMS argues that the November 22, 2011 denial letter from Trailblazer to Petitioner was a
“clear mischaracterization.” CMS now urges that the “denial” was really a “rejection.”

CMS MTD at 9. Accordingly, CMS argues that I must dismiss because a rejection of an
application is not afforded appeal rights. See 42 C.F.R. § 424.525(d). However, the
regulations do not bar an ALJ, on a properly filed appeal of an effective date of
enrollment determination, from considering an earlier application in that process to
determine the correct effective date for the supplier. See Andrew J. Elliot, M.D., DAB
No. 2334, at n.7 (2010).

A Medicare contractor that receives an enrollment application with missing information
or supporting documentation will request the information or documentation from the
provider or supplier and give the provider or supplier at least 30 days to respond with the
missing information in order to cure any deficiencies in the application. See 42 C.F.R.

§ 424.525. The regulatory history of section 424.525 makes it clear that applicants will
be given an opportunity to cure any deficiencies or supply any missing documentation
before an application will be rejected. See 71 Fed. Reg. 20,754, 20,759 (April 21,
2006)(‘if a provider or supplier enrolling in the Medicare program for the first time fails
to furnish complete information on the CMS [form] 855, or fails to furnish missing or any
necessary supporting documentation as required by CMS under this or other statutory or
regulatory authority within 60 calendar days of our request to furnish the information, we
would reject the provider or supplier's 855 application.”); 68 Fed. Reg. 22,064, 22,070
(April 25, 2003). Further, the preamble to the final rule shortening the time period for
submitting information or supporting documentation from 60 to 30 days specifically
stated that “[r]Jejection would not occur if the provider or supplier is actively
communicating with us to resolve any issues regardless of any timeframes.” 71 Fed.
Reg. at 20,759; see Tri-Valley Family Medicine, Inc., DAB No. 2358, at 5 (2010).

Petitioner’s September 26, 2011 application listed the account to receive EFT funds as
“Spine Physicians Institute PA LLC” while Petitioner’s legal business name is “Spine
Physicians Institute Professional Association.” CMS Ex. 1. An enrollment application
must include an EFT agreement and must “uniquely identify the provider or supplier.”
42 C.F.R. §§ 424.510(d)(ii), (iv) (emphasis added). The name on the voided check did
not exactly match Petitioner’s legal business name because the “LLC” was not included
in Petitioner’s legal business name. The bank letter that accompanied Petitioner’s
September 26, 2011 application also referenced Petitioner’s account using the “LLC”
suffix. Trailblazer was therefore unable to confirm that the EFT agreement was accurate
and complete because there was a discrepancy between Petitioner’s legal business name
and the name on the bank account.

In response to Trailblazer’s October 19, 2011 fax, Trailblazer received additional
information from Petitioner on October 26, 2011. Although Petitioner provided corrected
information on some deficiencies in the application, the bank letter that Petitioner
submitted was similar to the original bank letter received on September 26, 2011. CMS
Ex. 3, at 5. Therefore CMS now wants to reject Petitioner’s application as of November
22, 2011 because 35 days had passed since Trailblazer first requested, on October 19,
2011, bank confirmation that Petitioner’s legal business name and the name on
Petitioner’s bank account information were the same entity.

However, I find there was no 30-day period that Petitioner was not in active
communication with the contractor. Trailblazer received Petitioner’s application on
September 26, 2011. On October 19, 2011 Trailblazer requested corrected information
from Petitioner. Within 30 days, on October 26, 2011, Trailblazer received additional
information from Petitioner that partly satisfied Trailblazer’s request, except an updated
bank letter still did not satisfy an issue Trailblazer had with reconciling the two names.
On November 22, 2011 Trailblazer sent its denial letter. Within 30 days and as part of its
corrective efforts, on November 30, 2011, Petitioner resubmitted the same bank letter it
submitted on October 26, 2011 along with an IRS notice confirming an EIN for Petitioner
issued in the name of “Spine Physicians Institute Professional Association.” CMS Ex. 5.
The next communication from Trailblazer was dated February 16, 2012 and informed
Petitioner that it needed a new bank letter stating that Petitioner’s legal business name
and the name on its sample check were the same. CMS Ex. 6, at 1; CMS Ex. 2, at 2.
Within 30 days, actually that same afternoon, Petitioner sent a letter that satisfied
Trailblazer’s concerns. CMS Exs. 8, 10.

After Trailblazer received the September 26, 2011 application, every time Trailblazer
requested information from Petitioner, Petitioner responded without letting 30 days lapse.
Although Trailblazer may not have definitively confirmed Petitioner’s names within 30
days, I find Petitioner and CMS were actively communicating to resolve this outstanding
issue. Therefore, I do not find that CMS had a basis to reject Petitioner’s application.

B. CMS’s September 26, 2011 receipt of Petitioner’s application is
determinative of Petitioner’s Medicare enrollment date and billing privileges.

The effective date for enrollment for a physician practitioner organization is “the /ater of
the date of filing of a Medicare enrollment application that was subsequently approved
by a Medicare contractor or the date an enrolled physician . . . first began furnishing
services at a new practice location.” (Emphasis added). See 42 C.F.R. § 424.520(d).
The “date of filing” is the date that the Medicare contractor “receives” a signed provider
enrollment application that the Medicare contractor is able to process to approval. 73
Fed. Reg. 69,725, 69,769 (Nov. 19, 2008).

In this case, the effective date of Medicare enrollment depended on the date the
contractor first received an approvable application considering that event happened after
June 2011, the time when Petitioner first started providing services to Medicare covered
beneficiaries. As discussed in detail above, Trailblazer received an application from
Petitioner on September 26, 2011 that it was able to subsequently process to approval on
March 1, 2012.
IV. Conclusion

Accordingly, I deny CMS’s Motion to Dismiss and conclude that Petitioner’s effective
date of Medicare enrollment was September 26, 2011. Petitioner is also authorized to
retrospectively bill Medicare for services provided to Medicare beneficiaries up to 30
days prior to its new effective date. See 42 C.F.R. § 424.521.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Lori Rae Johanesen-McEwen
(OI File No. H-11-41929-9),

Petitioner,
v.
The Inspector General.
Docket No. C-12-636
Decision No. CR2667

Date: November 21, 2012

DECISION

I sustain the determination of the Inspector General (1.G.) to exclude Petitioner, Lori Rae
Johanesen-McEwen, from participating in Medicare, Medicaid, and other federally
funded health care programs for a period of five years. I find that the I.G. is authorized to
exclude Petitioner pursuant to sections 1128(a)(3) and 1128(a)(4) of the Social Security
Act (Act) (42 U.S.C. §§ 1320a-7(a)(3), 1320a-7(a)(4)) and that the five-year exclusion is
the minimum mandatory period of exclusion pursuant to section 1128(c)(3)(B) of the Act
(42 U.S.C. § 1320a-7(c)(3)(B)).

I. Background

Petitioner is a pharmacist who pled guilty to felony charges relating to deceptively
obtaining prescription drugs without authorization from a prescriber. In a letter dated
February 29, 2012, the I.G. notified Petitioner that she was being excluded from
participation in Medicare, Medicaid, and all federal health care programs for the
minimum statutory period of five years pursuant to sections 1128(a)(3) and 1128(a)(4) of
the Act. The basis cited for Petitioner’s exclusion pursuant to section 1128(a)(3) was her
felony convictions in the Court of Common Pleas, Stark County, Ohio, of criminal
offenses related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other
financial misconduct in connection with the delivery of a health care item or service. The
basis cited for Petitioner’s exclusion pursuant to section 1128(a)(4) was her felony
convictions, in the same court, of criminal offenses related to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled substance as defined under federal
or state law. Petitioner timely requested a hearing on April 28, 2012. The case was
assigned to me for hearing and decision.

On June 4, 2012, I convened a prehearing conference by telephone, the substance of
which is summarized in my Order and Schedule for Filing Briefs and Documentary
Evidence, dated June 4, 2012.

The LG. filed a brief (I.G. Br.) on August 3, 2012, with the I.G.’s exhibits (I.G. Exs.) 1
through 8. Petitioner filed a response (P. Br.) on September 6, 2012, with Petitioner’s
exhibits (P. Exs.) 1 through 7. The L.G. filed a reply brief (I.G. Reply) on September 24,
2012. Petitioner did not object to the I.G.’s exhibits, and I admit into evidence I.G. Exs.
1-8. The I.G. objected to Petitioner’s proposed exhibits arguing that they are irrelevant
and inadmissible because they are offered in support of an impermissible collateral attack
on Petitioner’s underlying convictions. I.G. Reply at 3. P. Ex. | is Petitioner’s
explanation of her decision to plead guilty to the underlying felony charges. P. Ex. 2 is
Petitioner’s guilty plea. P. Ex. 3 is an Ohio state court order terminating Petitioner’s
probation accompanied by a report from Petitioner’s parole agent. P. Ex. 4 is Petitioner’s
curriculum vitae. P. Ex. 5 is a letter from Petitioner to the State court judge. P. Ex. 6 isa
statement from Petitioner describing the sequence of events leading to her convictions.

P. Ex. 7 is an index of exhibits. As discussed below, I do reject Petitioner’s collateral
attacks; however, I find all of these exhibits probative of the facts that Petitioner was a
pharmacist convicted of felony charges involving fraud and controlled substances, and I
admit them to the record.

I directed the parties to indicate in their briefs whether an in-person hearing would be
necessary, and, if so, to describe the testimony the party wishes to present, the names of
the witnesses it would call, and a summary of each witnesses’ proposed testimony. Both
parties indicated that they did not believe an in-person hearing was necessary to decide
this case.

IL. Issues
The issues in this case are:
1. Whether the LG. has a basis for excluding Petitioner from participating in Medicare,

Medicaid, and all other federal health care programs pursuant to sections 1128(a)(3)
and 1128(a)(4) of the Act; and
2. Whether the length of the exclusion is unreasonable.
Ill. Findings of Fact, Conclusions of Law, and Analysis

A, Petitioner’s exclusion is mandated by section 1128(a)(3) of the Act
because Petitioner was convicted of felony offenses related to
Sraudulently obtaining prescription drugs.

The four essential elements necessary to support an exclusion based on section
1128(a)(3) of the Act are: (1) the individual to be excluded must have been convicted of
a felony offense; (2) the felony offense must have been based on conduct relating to
fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial
misconduct; (3) the felony offense must have been for conduct in connection with the
delivery of a health care item or service, or the felony offense must have been with
respect to any act or omission in a health care program operated by or financed in whole
or in part by any federal, state, or local government agency; and (4) the felonious conduct
must have occurred after August 21, 1996. 42 U.S.C. § 1320a-7(a)(3). The terms of
section 1128(a)(3) are restated in the regulatory language at 42 C.F.R. § 1001.101(c).

In her brief, Petitioner denies that she was convicted of any felony offenses.' Petitioner
argues that she “was charged, not convicted.” She acknowledges that she pled guilty but
states that she did so “only because [she] was ill-advised that [her] life would return to
normal after 2 years. No Contest was not an option.” P. Br. at 1.

For exclusion purposes, an individual is convicted of a criminal offense when: (1) a
judgment of conviction has been entered against him or her in a federal, state, or local
court whether an appeal is pending or the record of the conviction is expunged; (2) there
is a finding of guilt by a court; (3) a plea of guilty or no contest is accepted by a court; or
(4) the individual has entered into any arrangement or program where judgment of
conviction is withheld. Act §1128(i) (42 U.S.C. § 1320a-7(i)).

Court records conclusively establish that Petitioner was “convicted,” as set out by
subsections 1128(i)(1) and (3), of four felony offenses that justify her exclusion.

Specifically, on December 13, 2010, in the Court of Common Pleas, Stark County, Ohio,
Petitioner pled guilty to two counts of Illegal Processing of Drug Documents, felonies of
the fifth degree in violation of OHIO REV. CODE ANN. § 2925.23(A)(F)(2), and two

counts of Deception to Obtain a Dangerous Drug, felonies of the fifth degree in violation
of OHIO REV. CODE ANN. § 2925.22(A)(B)(3)(a). IG. Exs. 5, 6; see I.G. Exs. 2-4. The

' To the contrary, in her hearing request Petitioner appears to admit that she was
convicted of a felony stating, “Being given a felony conviction for not having any way of
guaranteeing what another individual records in their phone records is already too harsh.”
Court accepted Petitioner’s guilty plea and entered judgment of conviction against her on
December 17, 2010. 1.G. Ex. 5. The court’s entry of judgment explicitly states, “The
Court hereby convicts [Petitioner] of the criminal offenses to which she had pled guilty.”
LG. Ex. 5, at 2.

On January 25, 2011, the court sentenced Petitioner to three years of community control,
subject to the general supervision and control of the court, and 100 hours of community
service. The court also ordered her to pay court costs and monitoring fees, complete drug
and alcohol assessments, comply with the Board of Pharmacy, and notify her employers
of her conviction. I.G. Ex. 6, at 3-5.

I find further that the conduct for which Petitioner was convicted related to fraud in
connection with the delivery of a health care item or service after 1996. The Grand Jury
Indictment charged Petitioner with two counts of knowingly making false statements in a
prescription, order, report, or record for the drugs Hydrocodone/APAP and Nexium, and
two counts of procuring by deception, “the administration of, a prescription for, or the
dispensing of’ Hydrocodone/APAP and Nexium, or “‘possess[ing] an uncompleted
preprinted prescription blank used for writing a prescription for a dangerous drug.” I.G.
Ex. 2. The Bill of Information described Petitioner’s criminal conduct as having
occurred during the time period from August 20, 2008 to December 11, 2009. LG. Ex. 4.

According to an Order of the Ohio State Board of Pharmacy, dated May 5, 2011, the
relevant criminal acts included the following: on or about August 20, 2008, Petitioner
added five refills to a prescription for Hydrocodone/APAP when two refills had been
authorized by a prescriber; on or about September 29, 2008, December 31, 2008, July 15,
2009, November 11, 2009, and April 22, 2010, Petitioner created telephone prescriptions
for Hydrocodone/APAP without authorization from a prescriber; and on or about March
23, 2009 and December 11, 2009, Petitioner created a telephone prescription for Nexium
without authorization from a prescriber.’ I.G. Ex. 7, at 2-3.

The I.G. has demonstrated that all elements required for exclusion under Section
1128(a)(3) of the Act are satisfied. Petitioner pled guilty to felony convictions that had a
clear common-sense connection to fraudulently obtaining a health care item after August
21, 1996.

* The Ohio State Board of Pharmacy suspended Petitioner’s license to practice pharmacy
retroactively to February 4, 2011, and it placed her on probation for three years. I.G. Ex.
7.
B. Petitioner’s exclusion is mandated by section 1128(a)(4) of the Act
because Petitioner was convicted of felony offenses related to the
unlawful distribution of a controlled substance.

The LG. is required to exclude from participation in Medicare, Medicaid, and all federal
health care programs any individual or entity: (1) convicted of a felony criminal offense
under federal or state law; (2) where the offense occurred after August 21, 1996; and (3)
the criminal offense related to the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance. Act § 1128(a)(4) (42 U.S.C. § 1320a-7(a)(4)). The
terms of section 1128(a)(4) are restated somewhat more broadly in regulatory language at
42 CFR. § 1001.101(d).

As discussed above, Petitioner was a pharmacist who was convicted pursuant to her
guilty plea of two counts of Illegal Processing of Drug Documents, felonies of the fifth
degree in violation of OHIO REV. CODE ANN. § 2925.23(A)(F)(2), and two counts of
Deception to Obtain a Dangerous Drug, felonies of the fifth degree in violation of OHIO
REV. CODE ANN. § 2925.22(A)(B)(3)(a). Specifically, during a period of time from
August 2008 through April 2010, Petitioner created false prescriptions for a controlled
substance, Hydrocodone/APAP, and she used deception to obtain them. The Schedules
of Controlled Substances in the Code of Federal Regulations list Hydrocodone as a
controlled substance. 21 C.F.R. § 1308.12. Thus, there can be no dispute that the
offenses for which Petitioner was convicted clearly had a nexus to the unlawful
prescription of a controlled substance. I.G. Exs. 2-6. Accordingly, I conclude that there
is also a basis to exclude Petitioner pursuant to section 1128(a)(4) of the Act.

C. Iam unable to consider collateral attacks to predicate convictions.

Petitioner claims, when pleading guilty to the predicate offenses, she was not fully
advised of the consequences and did not want to incur the legal expenses of going to trial
when she understood that her “life would return to normal after 2 years.” P. Br. at 1;

P. Ex. 1. Further, she maintains her innocence and explains that a doctor did authorize
the prescriptions at issue in her felony convictions. P. Ex. 1.

Petitioner’s arguments amount to a collateral attack on her predicate convictions, and
they are not reviewable in the instant proceeding. “When the exclusion is based on the
existence of a criminal conviction . . . where the facts were adjudicated and a final
decision was made, the basis for the underlying conviction . . . is not reviewable and the
individual or entity may not collaterally attack it either on substantive or procedural
grounds in this appeal.” 42 C.F.R. § 1001.2007(d). The Departmental Appeals Board
(Board) has repeatedly affirmed this categorical preclusion. See, e.g., Lyle Kai, R.Ph.,
DAB No. 1979, at 8 (2005) (“Excluding individuals based on criminal convictions
‘provides protection for federally funded programs and their beneficiaries and recipients,

without expending program resources to duplicate existing criminal processes.’” (internal

cite omitted)).

D. Petitioner’s exclusion for five years is not unreasonable
as a matter of law.

Five years is the minimum authorized period for a mandatory exclusion pursuant to
Section 1128(a). Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)). I have found there
is a basis for Petitioner’s exclusion pursuant to sections 1128(a)(3) and 1128(a)(4) of the
Act. Accordingly, the minimum period of exclusion is five years, and, as a matter of law,
that period is not unreasonable.

Petitioner requests that her exclusion “be retroactive to April 2010 when [her]
employment ceased, for a duration of 24 years.” P. Ex. 1, at 2. However, by law, an
exclusion becomes effective 20 days from the date of the I.G.’s written notice of
exclusion to the affected individual or entity. 42 C.F.R. § 1001.2002(b). I have no
discretion to change the effective date of Petitioner’s exclusion. 42 C.F.R.

§ 1005.4(c)(1); see Randall Dean Hopp, DAB No. 2166, at 2-4 (2008); Thomas Edward
Musial, R.Ph., DAB No. 1991 (2005).

IV. Conclusion

For the foregoing reasons, I sustain the I.G.’s determination to exclude Petitioner from
participating in Medicare, Medicaid, and all federal health care programs for five years
pursuant to sections 1128(a)(3) and 1128(a)(4) of the Act.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Laurie S. Coyner, M.D.,
(NPI: 1376547828),

Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-765
Decision No. CR2666

Date: November 19, 2012

DECISION

Wisconsin Physicians Service (WPS), an administrative contractor acting on behalf of the
Centers for Medicare and Medicaid Services (CMS), determined that Petitioner was not
eligible for enrollment in the Medicare program earlier than January 6, 2012, and that
Petitioner could not submit claims for payment of services performed or delivered earlier
than December 7, 2011. Petitioner appealed. For the reasons stated below, I affirm
WPS’s determination concerning Petitioner’s enrollment effective date.

I. Case Background and Procedural History

On January 5, 2012, Petitioner mailed to WPS a Medicare enrollment application (Form
CMS-855R) seeking to reassign her Medicare billing privileges to Newton Medical
Center (NMC). CMS Ex. 1. An official from NMC and Petitioner signed the application
on January 3, 2012, and January 4, 2012, respectively. CMS Ex. 1, at 3. WPS received
the application on January 6, 2012. CMS Ex. 2, at 1. On February 15, 2012, WPS issued
an initial determination in which WPS approved Petitioner’s Medicare enrollment
application with an “Effective Billing Date” of December 7, 2011. CMS Ex. 3, at 1.
In February 2012, NMC, acting on behalf of Petitioner, timely requested reconsideration
of the effective billing date. CMS Ex. 4. Petitioner claimed that she began seeing
patients at the NMC on February 1, 2011, and that it was “during the month of February
2011] that we submitted an application to Medicare to obtain a provider number so that
we could bill for services rendered to Medicare Beneficiaries.” CMS Ex. 4, at 1.
Petitioner asserted that she did not receive a response back from Medicare regarding the
status of Petitioner’s application, but believed that Petitioner had up to a year to
retroactively bill Medicare for her services. In December 2011, NMC contacted WPS
and WPS informed NMC that it had not received an application from Petitioner.
Petitioner requested an effective billing date of February 1, 2011. CMS Ex. 4, at 1.

On April 4, 2012, WPS issued a reconsidered determination affirming its initial
determination. CMS Ex. 5. WPS stated that it received a valid application from
Petitioner on January 6, 2012, which WPS approved with an enrollment effective date
based on the January 6, 2012 receipt date. CMS Ex. 5, at 2. WPS further stated that it
ad “no record of applications being received in February 2011” and that Petitioner’s
‘effective billing date will remain December 7, 2011.” CMS Ex. 5, at 2.

Petitioner timely filed a request for a hearing with the Departmental Appeals Board, Civil
Remedies Division. Following the issuance of my June 4, 2012 Acknowledgment and
Pre-hearing Order (Order), CMS filed a motion for summary disposition, a pre-hearing
brief and memorandum in support of its motion for summary disposition (CMS Br.), and
five proposed exhibits (CMS Exs. 1-5). CMS asserted that an in-person hearing was not
necessary in this case (CMS Br. at 4) and did not propose any witnesses. Petitioner,
through counsel, filed a response to CMS’s motion, a brief (P. Br.), and four proposed
exhibits (P. Exs. 1-4). Three of Petitioner’s four proposed exhibits included the affidavits
of NMC employees Staci Hershberger (P. Ex. 1), Paul Lavender (P. Ex. 2), and Chris
Kelly (P. Ex. 4). Because neither party has objected to any of the proposed exhibits, I
admit all of them into the record.

The 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. Order ff 8, 10, 11; 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
affidavits of three witnesses; however, CMS did not request to cross-examine any of
these individuals. 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 decide this matter based on the written record. Order § 12.

II. Discussion
A. Issue

Whether CMS had a legitimate basis for finding that January 6, 2012, was the effective
date for Petitioner’s Medicare enrollment and that Petitioner could retrospectively bill for
services rendered to Medicare beneficiaries on or after December 7, 2011.

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

The Social Security Act authorizes the Secretary of Health and Human Services
(Secretary) to promulgate regulations governing the enrollment process for providers and
suppliers in the Medicare program. 42 U.S.C. §§ 1302, 1395cc(j). Under the
Secretary’s regulations, a provider or supplier who seeks billing privileges under
Medicare must “submit enrollment information on the applicable enrollment application.
Once the provider or supplier successfully completes the enrollment process ... CMS
enrolls the provider or supplier into the Medicare program.” 42 C.F.R. § 424.510(a).

I. WPS received Petitioner’s completed Form CMS-855R (Medicare
enrollment application for reassignment of Medicare benefits) on
January 6, 2012.

NMC and Petitioner completed and signed a Form CMS-855R enrollment application on
January 3, 2012, and January 4, 2012, respectively. CMS Ex. 1, at 3. Petitioner
submitted the Form CMS-855R to WPS by United States Postal Service Express Mail on
January 5, 2012. CMS Ex. 1, at 8. WPS acknowledged receiving the Form CMS-855R
on January 6, 2012 (CMS Ex. 3, at 1), and Petitioner does not dispute that this completed
Form CMS-855R was received by WPS on January 6, 2012. See P. Br. at 3. Therefore,
the evidence of record supports the conclusion that WPS received Petitioner’s January 4,
2012 enrollment application on January 6, 2012.

2. WPS properly concluded that Petitioner’s reassignment of Medicare
benefits was effective on January 6, 2012, with a retrospective billing
period commencing on December 7, 2011.

WPS determined that the effective billing date of Petitioner’s reassignment of benefits
was December 7, 2011. CMS Ex. 3, at 1. WPS indicated that “[t]his effective billing

' My findings of fact and conclusions of law are set forth in italics and bold font.

° A “supplier” furnishes services under Medicare, and the term supplier applies to
physicians and other nonphysician practitioners and facilities that are not included within
the definition of the phrase “provider of services.” 42 U.S.C. § 1395x(d).
date is based on 30 days prior to the filing date” for the Form CMS-855R. CMS Ex. 3, at
1; see also CMS Ex. 5, at 1-2.

The Secretary’s regulations provide that the effective date of enrollment of physicians is:

the later of the date of filing of a Medicare enrollment application
that was subsequently approved by a Medicare contractor or the date
an enrolled physician . . . first began furnishing services at a new
practice location.

42 C.F.R. § 424.520(d) (emphasis added). The “date of filing” is the date that the
Medicare contractor “receives” a signed provider/supplier enrollment application that the
Medicare contractor is able to process to approval. 73 Fed. Reg. 69,725, 69,769 (Nov.
19, 2008). The regulations applicable to this case permit limited retrospective billing for
physician services provided to Medicare beneficiaries for up to 30 days before the
effective date of enrollment. 42 C.F.R. § 424.521(a). Thus, WPS correctly determined,
based on a January 6, 2012 date of filing, that the enrollment effective date is January 6,
2012, and Petitioner could retrospectively bill for services provided to beneficiaries
beginning on December 7, 2011.

3. Petitioner has not proven that WPS received a Form CMS-855R from
Petitioner earlier than January 6, 2012.

Petitioner does not dispute that 42 C.F.R. § 424.520(d) means that the effective date for a
Medicare enrollment application is the date of filing. P. Br. at 2-3. However, Petitioner
asserts that she submitted a completed Form CMS-855R in mid to late January 2011. P.
Br. at 3. Petitioner argues that the earlier submission date should result in an earlier
enrollment effective date.

Petitioner provided the following chronology in support of her case. In anticipation of
Petitioner’s employment with NMC, NMC filed the Form CMS-855R with WPS and
with multiple commercial carriers at the same time “all in January or February 2011.”
P. Br. at 1; P. Ex. 3. Petitioner indicated that while NMC received confirmation of
receipt of its applications from the commercial carriers, it did not receive any
confirmation from WPS. P. Br. at 1-2. Rather than immediately consulting WPS about
whether it received the enrollment application allegedly submitted sometime in January
or February 2011, Petitioner waited until “November or December of 2011” to contact
WPS to inquire about the status of the application. P. Ex. 4. When it learned that WPS
had not received any application from Petitioner, NMC submitted a second application
for Petitioner that WPS received on January 6, 2012, and subsequently approved. P. Ex.
4.

Despite Petitioner’s allegation that NMC filed a Form CMS-855R in early 2011, WPS
indicated in its reconsideration determination that it had no record of receiving any
applications from Petitioner in February 2011. CMS Ex. 5, at 2. “CMS does not bear the
burden of establishing that a prospective provider or supplier failed to file enrollment
applications; rather, the prospective provider or supplier must show affirmatively that he
filed his enrollment application.” Jorge M. Ballesteros, CVRA, DAB CR2067, at 3
(2010). Because Petitioner contends that she should have an earlier effective date based
on an alleged previously submitted application, Petitioner has the burden to prove that
WPS received the previous application. See Caroline Lott Douglas, PA, DAB CR2406,
at 5-7 (2011) (holding that the date of receipt of an enrollment application determines the
“date of filing,” and thus the effective date for enrollment). Based on the evidence of
record, I find that Petitioner has not met her burden of proof.

Petitioner has presented no proof that NMC mailed the Form CMS-855R in January or
February of 2011. Even if I were to assume the application was mailed as alleged, there
is no evidence, such as a United States Postal Service return receipt card or
documentation from a commercial carrier, that WPS received the application.

Although Petitioner submitted affidavits from NMC employees concerning the alleged
mailing of the application in early 2011 and a copy of the first application that Petitioner
purports to have submitted, Petitioner’s submissions are so inconsistent and vague
concerning the mailing that they are not reliable proof of mailing, let alone receipt by
WPS.

In her request for hearing as well as her request for reconsideration to WPS (CMS Ex. 4),
Petitioner contends that Petitioner’s application was sent to WPS on February 22, 2011.
Yet in her brief, Petitioner was much less specific about when she submitted the
enrollment application to WPS, stating only that it was sometime in January or early
February 2011. P. Br. at 1. The affidavit of Staci Hershberger, an employee of NUC
who was responsible for the mailing of Petitioner’s applications to the commercial
carriers as well as to WPS, differs from Petitioner’s assertions, stating “an application
was prepared by me and mailed by mid-to-late January 2011 . . . I don’t know the exact
date I mailed the document but it was mailed shortly after obtaining Mr. Lavender’s
signature, mid to late January 2011.” P. Ex. 1, at 1. Rather than proving mailing of the
application, this information only casts further doubt as to whether an application was in
fact mailed. Ms. Hershberger’s affidavit makes it clear that neither Petitioner nor NMC
kept accurate records regarding the filing of the application.

Petitioner’s failure to maintain accurate records concerning the alleged filing of an
enrollment application in early 2011 is consistent with the lack of care apparent when I
reviewed the application. P. Ex. 1, at 3-10. For example, while Petitioner signed her
name on the application, she did not date her signature, and the NMC official signing the
application provided an incorrect date next to his signature. P. Ex. 1, at 8. Further,
Petitioner’s failure to contact WPS concerning the application until approximately 11
months had passed creates doubt as to whether Petitioner’s original application was
actually mailed.

4. The Secretary’s regulation at 42 C.F.R. § 424.525(b) does not provide
WPS with the discretion to set an earlier effective date for Petitioner
and, even if it did, WPS’s refusal to exercise that discretion is not
reviewable.

In her brief, Petitioner argues that WPS has discretion, under 42 C.F.R. § 424.525(b) to
approve a February 1, 2011 effective date. P. Br. at 3-4. Petitioner quotes the following
from the regulations as support: “Respondent has the discretion to ‘choose to extend the
30 day period if CMS determines that the prospective provider or supplier is actively
working with CMS to resolve any outstanding issues.” P. Br. at 3.

Section 424.525 is inapplicable to this case because it provides procedures for the
rejection of a provider or supplier application. WPS did not reject Petitioner’s
application; rather, WPS asserted it never received an application in January or February
of 2011. CMS Ex. 5, at 2. Further, even if section 424.525 provided WPS with the
discretion to take action favorable in this matter, a failure to exercise such discretion is
not appealable. 42 C.F.R. § 424.525(d); see also 42 C.F.R. §§ 498.3, 498.5, 498.40.

II. Conclusion

WPS’s determination that Petitioner’s effective date of enrollment was January 6, 2012,
with a 30-day retrospective billing period commencing on December 7, 2011, is affirmed.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Ralph Baskerville
d/b/a 4744 Corner Store,

Respondent.

Docket No. C-12-1037
FDA Docket No. FDA-2012-H-0792

ALJ Ruling No. 2013-1
Date: November 19, 2012

RULING DENYING MOTION
TO REOPEN DEFAULT JUDGMENT

I deny the motion of Respondent, Ralph Baskerville d/b/a Corner Store to reopen
the default judgment that Administrative Law Judge (ALJ) Scott Anderson issued
in this case because Respondent has not shown that extraordinary circumstances
prevented him from answering the administrative complaint that was served by the
Center for Tobacco Products (CTP).

Respondent operated a business that sold tobacco products. On August 8, 2012,
CTP issued an administrative complaint charging that Respondent had sold
tobacco products to a minor under the age of 18 and had failed to verify the age of
a minor by means of photographic identification. CTP sought a civil money
penalty of $500. The administrative complaint was sent to Respondent’s place of
business at 4744 Alhambra Avenue, Baltimore, Maryland. An individual named
“Price” signed a United Parcel Service receipt for the document.
The administrative complaint advised Respondent that he had 30 days within
which to file an answer, if Respondent desired a hearing to challenge the
allegations and the proposed civil money penalty. Respondent failed to file an
answer within the 30-day period. On October 2, 2012, ALJ Anderson issued an
initial decision and default judgment against Respondent. The initial decision and
default judgment was sent to Respondent’s 4744 Alhambra Avenue address by
certified mail, return receipt requested, and, as was the case with the
administrative complaint, an individual named “Price” signed the receipt for the
document.

On October 8, 2012, Respondent contacted the Appellate Division of the
Departmental Appeals Board to inquire about his appeal rights. On November 1,
2012, Respondent filed a motion with the Board’s Civil Remedies Division that
effectively asked me to reopen the initial decision and default judgment that I had
entered against him. CTP opposed the motion.

In his motion, Respondent asserts that he dissolved his business in May 2012 and
that “there were documents and/or letters that I did not receive because I was no
longer physically in the store.” Respondent does not explain why he failed to
receive the administrative complaint but received the initial decision and default
judgment on or about the date that it was delivered to his now-former business.
Respondent gives no explanation of the mechanism — if any — that he put into
place to assure that documents of importance relating to his dissolved business be
transmitted to him.

A motion to reopen an initial decision and default judgment is governed by
regulations at 21 C.F.R. § 17.11(d). The regulation precludes reopening, unless
the Respondent can establish the presence of “extraordinary circumstances
excusing the failure to file an answer in a timely manner.” The term
“extraordinary circumstances” is not defined. However, in the context of the
regulation, the term clearly means circumstances that are beyond a party’s ability
to control that prevent it from discharging the duty to file a timely answer.

“Extraordinary circumstances” describes circumstances that are analogous to what
constitutes “good cause” pursuant to regulations published at 42 C.F.R. Part 498
that govern hearings in cases involving the Centers for Medicare and Medicaid
Services (CMS). The CMS regulations have always been interpreted to mean that
good cause for an untimely filing must constitute events that are beyond an
individual’s ability to control that preclude an individual from filing something
timely. “Good cause” has never been defined so generously as to include ordinary
negligence.
Respondent has not shown that circumstances that were beyond his ability to
control prevented him from filing an answer in this case. Even if he had dissolved
his business, he had a duty to assure that documents of importance were
transmitted to him timely. I take notice of the fact that a business that is dissolved
still is responsible for acts that it committed, or that were committed on its behalf,
before the dissolution. The proprietor of any business is legally required to answer
for, and be responsible for, pre-dissolution events.

In this case, that meant that Respondent was obligated to assure that a document
such as the administrative complaint would be brought to his attention. Accepting
Respondent’s assertion as true, the fact that he did not see the administrative
complaint because he was no longer physically present at his former place of
business is no explanation of extraordinary circumstances for his failure to receive
it. At best, Respondent’s explanation amounts to an assertion that he was
negligent in assuring that he be given documents of importance. As I have stated,
ordinary negligence can never constitute “extraordinary circumstances.”

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Glenoaks Nursing Center,
(CCN: 25-5181),

Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-11-423
Decision No. CR2660

Date: November 19, 2012

DECISION

Glenoaks Nursing Center (Petitioner or the facility) challenges the determination of the
Centers for Medicare and Medicaid Services (CMS) that it was not in substantial
compliance with Medicare program participation requirements. Petitioner also
challenges CMS’s imposition of a civil money penalty (CMP) of $3,550 per day from
December 24, 2010 through January 27, 2011, and $150 per day from January 28 through
February 18, 2011. For the reasons discussed below, I sustain CMS’s imposition of the
CMPs.

I. Background

Petitioner is a nursing facility, located in Lucedale, Mississippi, that participates in the
Medicare and Medicaid programs. The Mississippi Department of Health (state agency)
completed a complaint survey at Petitioner’s facility on January 28, 2011 and a revisit
survey on March 30, 2011. Based on the findings of the January 28, 2011 survey, CMS
found that Petitioner was not in substantial compliance with three program deficiencies:
F224 (staff treatment of residents) and F323 (accidents and supervision), and F514
(clinical records). CMS cited both F224 and F323 at a scope and severity level of “J,”
constituting immediate jeopardy to resident health and safety and cited F514 at a scope
and severity level of “E,” constituting a pattern of no actual harm with the potential for
more than minimal harm. CMS determined that immediate jeopardy was abated on
January 28, 2011 and lowered the scope and severity of the deficiencies to a “D” level,
constituting no actual harm with the potential for more than minimal harm. CMS Ex. 1,
at 12. CMS found that Petitioner returned to substantial compliance during its March 30,
2011 revisit survey. By letters dated March 11, 2011 and April 5, 2011, CMS notified
Petitioner that it was imposing the enforcement remedies of a CMP of $3,550 per day
from December 24, 2010 through January 27, 2011, $150 per day from January 28, 2011
through February 18, 2011, and withdrawal of approval of Petitioner’s nurse aid training
and competency evaluation program (NATCEP) for a period of two years. CMS Ex. 2, at
2, 4-7.

By letter dated April 28, 2011, Petitioner requested an Administrative Law Judge (ALJ)
hearing, disputing the CMS determination that it was not in substantial compliance with
program requirements and imposition of the proposed remedies. Petitioner’s request was
received at the Civil Remedies Division, assigned to me for hearing and decision, and on
May 4, 2011, I issued an Acknowledgment and Initial Prehearing Order.

CMS filed 48 proposed exhibits, marked as CMS Exs. 1-48. Petitioner filed 39 proposed
exhibits, marked as P. Exs. 1-39. During a prehearing conference on October 12, 2011,
there being no objections raised, I admitted CMS Exs. 1-48 and P. Exs. 1-39 into the
record.

CMS filed the written direct testimony of Lauree Chase, RN as one of its proposed
exhibits. CMS Ex. 48. Petitioner filed the written direct testimony of eleven witnesses:
Lori Rogers, LPN (P. Ex. 22); Jacqueline Knight, CNA (P. Ex. 23); Kim Wright (P. Ex.
24); Elisha Buker, LPN (P. Ex. 25); Jana Miller, RN (P. Ex. 26); Jordan Maples (P. Ex.
27); Shirley Fairley (P. Ex. 28); Chardai Grant, RN (P. Ex. 29); Wanda Khan, RN (P. Ex.
30); Angela Hillman, RN (P. Ex. 31); and Teresa Crabtree (P. Ex. 32). CMS elected not
to cross-examine any of Petitioner’s witnesses; however, Petitioner requested to cross-
examine the CMS witness, Ms. Chase. On November 29, 2011, I convened a video
hearing, and Ms. Chase was produced for cross-examination. CMS Ex. 48; Tr. at 8-50.
A transcript of the proceedings was prepared.’ Both parties filed post-hearing briefs
(CMS Br. and P. Br.) and post-hearing replies (CMS Reply and P. Reply).

' The parties reviewed the transcript for errata. Petitioner filed its proposed corrections
on March 8, 2012, and the transcript is amended to reflect Petitioner’s two proposed
corrections.
Il. Discussion
A. Issues
The issues presented are:

1. Whether Petitioner was in substantial compliance with the Medicare
participation requirements of:

a. 42 C.F.R. § 483.75(/)(1) (F514) pertaining to Clinical Records;

b. 42 C.F.R. § 483.25(h) (F323) pertaining to Accidents and Supervision;
and

c. 42 C.F.R. § 483.13(c) (F224) pertaining to Staff Treatment of
Residents;

2. Ifso, whether CMS’s determination of immediate jeopardy level
noncompliance is clearly erroneous; and

3. Whether the CMPs that CMS imposed are reasonable.
B. Applicable Law

The Social Security Act (Act) sets forth requirements for a long-term care facility’s
participation in the Medicare program and authorizes the Secretary of Health and Human
Services (the Secretary) to promulgate regulations implementing those statutory
provisions. Act § 1819 (42 U.S.C. § 1395i-3). The Secretary’s regulations are found at
42 C.F.R. Part 483. To participate in the Medicare program, a facility must maintain
substantial compliance with program requirements. To be in substantial compliance, a
facility’s deficiencies may pose no greater risk to resident health and safety than “the
potential for causing minimal harm.” 42 C.F.R. §§ 488.301, 488.330.

The state agency or CMS conduct surveys of nursing facilities to determine whether they
are in compliance with the requirements of Part 483. Ifa facility is found to be not in
substantial compliance then CMS has the authority to impose one or more of the
enforcement remedies listed in section 1819(h) of the Act (42 U.S.C. § 1395i-3(h)) and
42 C.F.R. § 488.406, including a per day CMP and loss of NATCEP such as that imposed
in this case. Remedies are applied on the basis of scope and severity of the
noncompliance found during surveys. 42 C.F.R. § 488.402(b). The factors to be
considered by CMS when selecting remedies are set forth at 42 C.F.R. § 488.404.

C. Findings

The incident that led to the January 2011 complaint survey stems from the elopement of
one of Petitioner’s residents who, for privacy reasons, is identified as Resident 1 (R1).
CMS Exs. 48, at § 5; 5, at 1. On December 24, 2010, R1 exited Petitioner’s facility
unsupervised and without staff knowledge. Some of the Facility’s staff while taking a
work break in “the day room,” happened to observe R1 through the window, walking
around outside of the facility. The staff immediately notified LPN Lori Rogers and LPN
Ednita Fountain. The LPNs secured R1 and returned her through the front door between
11:15 a.m. and 11:30 a.m. Facility staff assessed R1 for injuries, notified her family and
physician, and placed her on 1:1 supervision with 15-minute visual checks starting at
11:30 a.m. P. Exs. 22, at J 6; 24, at § 4; 28, at | 4; 29, at {| 6; 32, at ¢ 13; CMS Ex. 23, at
1. On December 27, 2010, the facility discharged R1 to the Senior Care Unit at George
Regional Hospital. CMS Exs. 12, at 2; 23, at 10. Petitioner’s administrator explained to
R1’s daughter that, while the facility did have door code alarms, it was not a “lock-down
alzheimer’s unit,” and it had “limited options in dealing with R1’s behavior.” CMS Ex.
12, at 13.

Based on the survey findings, CMS alleges that Petitioner: failed to maintain clinical
records that are complete and accurate in violation of 42 C.F.R. § 483.75(/)(1) (F514);
failed to ensure that R1 and other residents, whom Petitioner identified as at risk for
elopement, received adequate supervision in violation of 42 C.F.R. § 483.25(h) (F323);
and failed to implement written policies and procedures to prevent neglect of its residents
in violation of 42 C.F.R. § 483.13(c) (F224). CMS Ex. 1.

Petitioner contests all three deficiencies. Request for Hearing; P. Br. at 2. My findings
of fact and conclusions of law are set forth below in the discussion captions of this
decision.

1. Petitioner was not in substantial compliance with 42 C.F.R.
§ 483.75()(1) (F514) (Clinical Records) because it did not
properly document that staff monitored R1’s arm band that
helped identify her as an elopement risk.

CMS maintains that Petitioner was in violation with the requirements of 42 C.F.R.
§ 483.75(/)(1) during the January 2011 survey. The regulation provides in pertinent part:

The facility must maintain clinical records on each resident, in accordance
with accepted professional standards and practices that are complete,
accurate, readily accessible, and systematically organized.

The Statement of Deficiencies (SOD) alleges that Petitioner fell short of its obligation to
meet this requirement with respect to two residents, R1 and R2, who Petitioner identified
as at risk for wandering. The surveyor cited Petitioner for noncompliance because
Petitioner had no documentation in the residents’ medical records that it monitored the
placement of green arm bands/bracelets, which Petitioner used to alert people that certain
individuals were elopement risks. CMS Ex. 1, at 33.

At the time of the survey R1 was a 73-year-old woman who had been admitted to
Petitioner’s facility on December 13, 2010 with diagnoses including Alzheimer’s,
dementia with behavior disturbance, paranoid state, altered mental status, anxiety,

earing loss and diabetes mellitus. She was ambulatory and alert but had impaired daily
decision-making skills. R1 had moderate difficulty hearing and required the use of a
earing aide. CMS Exs. 11, at 1, 3; 17, at 1, 2, 3; 19, at 3-4; 48, at 3. Her plan of care,
dated December 17, 2010, shows that she wandered and was at risk for elopement. An
Elopement Risk Assessment, dated December 17, 2010, identified R1 as a “significant
risk” for elopement and notes that she should receive frequent monitoring. CMS Exs. 16,
at 2; 20, at 6. R1’s Minimum Data Set (MDS), dated December 20, 2010, describes R1
as having severe cognitive impairment with wandering behavior. CMS Ex. 17, at 1. A
History and Physical report dated December 22, 2010, identifies R1’s chief complaint as
“[p]rogressive confusion with dementia.” CMS Ex. 23, at 1. A psychological services
initial evaluation note, dated December 16, 2010, states that R1 was referred to
Petitioner’s facility due to occasional wandering and restless behavior. CMS Ex. 15, at 1.

R1’s plan of care included the following staff interventions: monitoring doors for
complete closure; checking door alarms for proper working order frequently; keeping
picture and face sheet in elopement book; indicating to staff that she is at risk for
elopement resident with the placement of a green arm band; ensuring the resident was
wearing identification bracelets at all times (i.e. green armband); placing green stickers
on the spine of the resident’s chart and ADL record to identify her as an elopement risk;
and including R1’s name on the facility’s elopement list, which is kept at the nurses’
station.” CMS Exs. 20, at 6-7; 34, at 36.

At the hearing, Lauree Chase, RN, the state agency surveyor who conducted the January
2011 complaint survey and drafted the SOD, explained that during the survey she
interviewed facility staff, and several staff informed her that on the morning of December
24 “they were not aware or did not know if [R1] had an armband on.” Tr. at 21, 23.
Surveyor Chase testified that the failure to document in the resident’s medical record that
R1’s green arm band was monitored for placement was the only issue with this

> CMS claims that Petitioner had three other elopement prone residents — R2, R3, and R4
—and that each had been care planned with the same interventions of a green arm band,
monitoring doors for closure, and redirection. However, I find that I do not need to
address the facts related to R2, R3, and R4 because the facts and events related to the care
of R1 provide a sufficient basis for CMS’s determination of noncompliance and fully
support the proposed penalty in this case.
deficiency. Tr. at 37. In her written declaration, she stated that during the survey she
interviewed Petitioner’s Social Service Director (SSD), Jordan Maples. She noted that
SSD Maples told her that she was the only staff member who checked residents for
placement of the green arm bands and that she checked them once per week. CMS Ex.
48, at 911. Inher direct testimony, SSD Maples explains that the facility uses the green
arm bands as an additional means of visually identifying residents who are identified as
elopement risks. P. Ex. 27, at § 4. SSD Maples stated that she maintains an ID Bracelet
book which stays in her office, and she also confirmed Surveyor Chase’s testimony when
she noted that facility policy required that the green arm bands be checked for proper
placement by her once per week. P. Ex. 27, at Jf] 5, 6; see also CMS Ex. 3, at 27
(surveyor notes).

Petitioner maintains that the green arm band was one of many interventions the facility
was employing to identify residents at risk of elopement. P. Br. at 2. Petitioner argues
that there are no federal regulations that require the facility to document the monitoring
of resident identification bracelets each shift. P. Reply at 11. Petitioner states that its
facility policy requires that the identification bracelets be checked one time per week and
that facility staff did monitor and document in accordance with the facility policy.
Petitioner presented evidence that on December 22, SSD Maples checked and confirmed
that R1 was wearing her green arm band. P. Ex. 27, at § 6; CMS Ex. 8, at 2. Petitioner
so presented declarations from several of its staff who stated that on December 24 they
noticed that R1 was wearing her green arm band. P. Exs. 32, at ¥ 13; 28, at 99 4, 5; 24, at
45; 23, at §§ 7, 8; CMS Ex. 29, at 12.

2

Facility reliance on the green arm band was critical as a means for staff and visitors to
identify all elopement prone residents and to ensure resident safety. Petitioner did not
maintain an electronic monitoring system, and there were no audible door alarms to let
staff know when someone exited. Petitioner instead relied upon a keycode lock system
used for all six of its exit doors. Staff and facility visitors were given the code to the
front door so they could leave the facility on their own. Petitioner did not have a staffed
reception desk near the facility’s front door. Ifa resident was not wearing a green arm
band, then staff could easily assume that the resident was not at risk for elopement.

R1 was identified as at high risk of elopement, she was exhibiting wandering behaviors,
she articulated a desire to leave the facility, and her care plan specifically required staff to
check that she was wearing her green arm band at all times. Even accepting that R1 was
wearing her green arm band on December 24, Petitioner did not present any evidence
documenting adherence to the staff intervention identified in R1’s care plan that
specifically required staff to ensure “that R1 is wearing all identification bracelets at all
times.” CMS Ex. 20, at 7. The monitoring requirement for R1, identified by her
interdisciplinary team that included the staff who assessed R1 and who cared for R1,
clearly requires more than the once per week documentation and monitoring that
Petitioner’s facility policy provided.
2. Petitioner was not in substantial compliance with 42 C.F.R.
§ 483.25(h) (F323) (Accidents and Supervision).

The regulation at 42 C.F.R. § 483.25(h) is part of the quality of care regulation at section
483.25 requiring that a facility ensure —

(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.

While section 483.25(h)(2) does not make a facility strictly liable for accidents that
occur, it does require the 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. Golden Age Skilled Nursing & Rehab.
Ctr., DAB No. 2026, at 11 (2006), citing Woodstock Care Ctr. v. Thompson, 363 F.3d
583, 589-90 (6" Cir. 2003) (sustaining the Departmental Appeals Board (Board) and
ALJ’s holding that a skilled nursing facility must take “all reasonable precautions against
residents’ accidents”). A facility is permitted the flexibility to choose the methods of
supervision it uses to prevent accidents, but the chosen methods must be adequate under
the circumstances, and whether supervision is “adequate” depends on the resident’s
ability to protect himself or herself from harm under the circumstance. Golden Living
Ctr. — Riverchase, DAB No. 2314, at 8 (2010).

a. Petitioner did not take all reasonable measures to adequately
supervise a resident who was a known elopement risk because she
was able to exit the facility unnoticed.

R1’s care plan states R1 “will not suffer harm or injury [as a result of her] wandering
behaviors.” Considering R1 was able to exit the facility unnoticed while exhibiting high
risk elopement behaviors for days prior to her elopement demonstrates Petitioner did not
provide adequate supervision pursuant to 42 C.F.R. § 483.25(h)(2).

Petitioner maintains that R1’s elopement was “not reasonably foreseeable” and that it
took all reasonable measures to address any risk. P. Br. at 12. Specifically, Director of
Nursing (DON) Angela Hillman, RN, stated that when R1 was admitted to Petitioner’s
facility, she interviewed R1 and her family to complete the pre-admission screening
(PAS). She stated that “[a]t that time, the family told me that R1 had no history of
wandering or elopement.” P. Ex. 31, at J 7.
Petitioner does not dispute that R1 was cognitively impaired. Nonetheless, Petitioner
contends R1 was free from harm because R1 made no prior attempts to elope, she just
momentarily exited the building, and within five minutes of her exiting, facility staff
returned R1 to the facility. P. Br at 1. Although Petitioner asserts that R1 had no prior
history of elopement or exit seeking behavior, the evidence shows that days before the
actual elopement, R1 was noted as “confused” and exhibited wandering behaviors within
the facility.

For example, there are entries in the Daily Skilled Nurse’s Notes on December 14, 15,
16, and 17, 2010 that describe R1 as confused. CMS Ex. 20, at 22, 24, 26. A December
18 nursing note states that R1 walked up and down the hall asking where her husband
was and whether he had a car accident. CMS Ex. 20, at 28. A December 19 nursing note
states that R1 informed staff she was going home soon. CMS Ex. 20, at 30. A December
20 nursing note describes R1 as confused and requiring redirection. CMS Ex. 20, at 32.
A December 21 nursing note describes the resident as “confused” and notes that she was
walking around stating she was looking for her purse and that she must find it. CMS Ex.
20, at 34. A December 22 nursing note describes R1 as “confused.” CMS Ex. 20, at 36.
On December 23, a nursing note describes R1 as being confused and a “high elopement
risk given her [degree] of cognition and Alzheimer’s.” CMS Ex. 20, at 38.

As additional evidence, in the general nurses’ notes, there are entries that also
show R1 was confused and required frequent re-orientation and monitoring. A
December 13 entry recorded at 10:50 a.m. states that R1 is oriented but has
confusion and requires redirection with verbal cues. It then notes that R1 is
“requiring almost constant redirection.” Later that day, an 8:05 p.m. entry states
that R1 “has been confused and trying to locate her husband.” CMS Ex. 18, at 1,
3. On December 14, an entry at 8:00 p.m. notes that R1 remained confused and
required frequent re-orientation to her room number and location. Then on
December 16, an entry at 6:30 p.m. states that R1 was seen by the SSD that day
ambulating throughout the facility. The note further states that “resident is an
elopement risk and is observed/re-oriented as indicated.” The note also explains
that R1 had been ambulating throughout the facility, was confused, and staff were
unable to reorient her to place and time. It further notes that R1 left the dining
room several times through the meal stating that she had “a telephone call [at] the
concession stand.” CMS Ex. 18, at 4. There also is an entry that tells staff to
monitor and observe R1 throughout the shift. CMS Ex. 18, at 4-5. An entry on
December 17 at 6:50 p.m. states that R1 “has not attempted any elopement this
shift but has voiced the need to go home as her husband had an accident which she
heard about in [a] phone call in her room.” The note says “continuing to monitor.”
CMS Ex. 18, at 5.

A review of the Social Progress Notes for R1, as reported by SSD Maples, shows that on
December 13 and 14, R1 was confused, and a December 15 note says that the resident
was “ambulating throughout the facility” and that she “is an elopement risk and is
observed.” A December 20 entry states that R1 “has episodes of disorganized thinking”
and “documented episodes of delusions” and that she is “noted wandering about facility
often.” CMS Ex. 22, at 1-3.

The staff entries outlined above, all within days of R1’s elopement, establish that
Petitioner had prior warning that: (1) R1 continued in a confused state; and (2) R1 was at
high risk for elopement. Yet, Petitioner did not institute additional supervisory measures
to prevent R1 from eloping from the facility.

b. Petitioner did not take all reasonable measures to secure its exits
to prevent residents who were elopement risks from leaving the
facility unnoticed.

Petitioner does not dispute that R1 left the building unsupervised on December 24.
Petitioner also does not dispute where R1 was found after she left the facility. CMS Ex.
12, at 3,4. Rather, Petitioner contends that R1’s elopement was not reasonably
foreseeable and that it took all reasonable measures in order to provide adequate
supervision of its elopement risk residents. P. Br. at 12. In her direct testimony, DON
Hillman states that the facility implemented several interventions to protect residents at
risk of elopement. In addition to the green arm band intervention discussed previously,
these interventions included checking and maintaining keycode locks on all doors as well
as frequent monitoring of the residents. DON Hillman states that the facility has a
protocol of visual checks and increased monitoring, which was implemented for isolated
incidents of exit-seeking. The facility has six exit doors and all exit doors are
electronically locked with an interior keypad. A five-character keycode must be punched
into the keypad in order to open any of these doors. DON Hillman states that every day,
on each shift, staff check of all keypads and locks and then log these checks. P. Ex. 31, at

q 4, 6.

However, as Surveyor Chase explains, Petitioner’s six exit doors were not alarmed and
Petitioner did not maintain a staffed reception desk. Although there is a keypad on all six
exit doors, the key code is freely given to visitors. She states that by pushing a button
visitors can enter the front door. The other five doors require a code be entered into a
keypad from the outside and inside. CMS Ex. 48, at ¥ 8.

Petitioner’s elopement policy and R1’s care plan required that all doors be monitored for
closure. CMS maintains that Petitioner’s use of keycode locks the exit doors as its
primary system to protect its residents at risk of elopement was not an adequate
intervention because the code to the door was freely given to visitors so they could exit
the facility without staff assistance. I agree with CMS that this system was not secure
and placed elopement prone residents at risk.
10

Petitioner maintains that all coded exit doors are checked each shift every day to ensure
they are secure and functioning properly. Petitioner maintains that a staff log establishes
that staff checked the exit doors to ensure they were functioning properly. Petitioner
admits that it gave some of its door codes out to visitors before December 24, 2010, but it
stopped this practice following R1’s elopement. P. Reply at 9; CMS Ex. 44.

CMS correctly points out, though, that the staff log only started on January 11, 2011, and
states, “Check all door alarms every shift, sign off if no problems noted, or notify
maintenance if any problem exists.” CMS Ex. 44, at 4. Before then the logs were simply
titled, “Door Alarm Check” or “Door Alarm Check List” and they did not indicate which
doors staff actually monitored. CMS Ex. 44, at 1-3. Even if facility staff were
monitoring all doors for closure on every shift, Petitioner’s system was insufficient to
meet the needs of its elopement prone residents because it was freely sharing its access
code with visitors. Petitioner counters that it placed signs on the exit doors advising
visitors to not allow residents out of the facility. Nonetheless, some residents can be
easily mistaken for a visitor. In fact, R1’s physician and a facility staff noted that R1
could easily be mistaken for a visitor instead of a resident. CMS Br. at 7-8; CMS Exs. 3,
at 31; 10, at 4. And this is how Petitioner surmises R1 was able to exit the facility on
December 24 behind a delivery person who was leaving the facility.

3. Petitioner was not in substantial compliance with 42 C.F.R.
§ 483.13(c) (F224) because it did not develop and implement policies
and procedures to protect residents at risk of eloping.

A facility must develop and implement written policies and procedures prohibiting
mistreatment, neglect, and abuse of residents and the misappropriation of residents’
property. 42 C.F.R. § 483.13(c). Noncompliance with section 483.13(c) can be based on
either failure to develop policies or procedures adequate to prevent neglect, or it can be
based on failure to implement such policies. See, e.g., Mississippi Care Ctr. of
Greenville, DAB No. 2450, at 14-15 (2012) (finding noncompliance with section
483.13(c) where facility that relied on its exit door lock code and security camera systems
to prevent elopement failed to develop written policies and procedures, adequate to
protect residents at risk of elopement).

Petitioner did not develop and implement written policies and procedures adequate to
protect its residents who were identified at risk of elopement. This deficiency is closely
related to the previously discussed F514 and F323 deficiencies involving accurate records
and adequate supervision.

Petitioner’s policy requiring identification bracelets be checked one time per week did
not comport with R1’s care plan requirement that staff ensure she was wearing the
identification bracelet at all times. Also, despite increasing signs that R1 was at risk for
11

elopement, Petitioner did not implement any policy or procedure to adequately supervise
RI to prevent her from leaving the facility unnoticed.

Further, Petitioner had no written policies or procedures to prevent residents at risk of
elopement from obtaining the door lock keypad codes or from following visitors out the
doors. Specifically, Petitioner has not provided evidence that at the time of the incident,
the facility had effective policies and procedures that addressed: (1) employee access to
the codes; (2) employee dissemination of these codes; (3) changing the codes when
needed; or (4) warnings to not give away the codes or let residents out. The lack of
written policies and procedures addressing the door keypad lock codes meant that the
keypad lock codes did not function as intended to deter residents from exiting the facility
without supervision. This was demonstrated when R1 was able to follow a visitor out the
front door of the facility without anyone noticing.

4, CMS’s determination that Petitioner’s deficiencies posed immediate
jeopardy was not clearly erroneous.

Immediate jeopardy exists when 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 that a deficiency constitutes immediate jeopardy must be upheld
unless the facility is able to prove that the determination is clearly erroneous. 42 C.F.R.
§ 498.60(c)(2); see also Beverly Health Care Lumberton, DAB No. 2156, at 4 (2008),
citing Woodstock Care Ctr., DAB No. 1726, at 39 (2000), aff’d, Woodstock Care Ctr. v.
Thompson, 363 F.3d 583 (6" Cir. 2003). The “clearly erroneous” standard means that
CMS’s immediate jeopardy determination is presumed to be correct, and the burden of
proving the determination clearly erroneous is a heavy one. See, e.g., Owensboro Place
& Rehab. Ctr., DAB No. 2397, at 9 (2001), citing Azalea Court, DAB No. 2352, at 16-17
(2010), aff'd, Azalea Court v. HHS, 2012 WL 2913808 (11th Cir. July 18, 2012).

Here, CMS alleges that Petitioner’s actions in regards to F323 and F224 amounted to a
scope and severity level of “J,” constituting immediate jeopardy to resident health and
safety. Petitioner did not carry its burden to show that CMS’s immediate jeopardy
determination was clearly erroneous. Immediate jeopardy does not require actual harm
but, as the regulatory definition indicates, only a likelihood of serious harm. See, e.g.,
Kenton Healthcare, LLC, DAB No. 2186, at 23-24 (2008) (upholding an immediate
jeopardy determination, in part, because there was a likelihood of serious harm to
impaired residents who briefly eloped and were found unharmed in facility’s parking lot).
Although there is no evidence that R1 was harmed during her elopement on December
24, the likelihood of harm was manifest. The danger of R1’s elopement was obvious and
was known by Petitioner prior to and at the time of R1’s elopement. R1’s risk for
elopement, wandering, and confusion were well documented in her clinical record. I
agree with Surveyor Chase’s opinion that R1’s health and safety were seriously

12

threatened because she was “confused, at risk for falls, [at risk for] wandering away from
the facility and into the street.” See CMS Ex. 48, at 413;

Petitioner maintains that immediate jeopardy can only be cited in a “crisis situation.”
Petitioner contends that the conditions at its facility did not pose any danger to its
residents’ health and safety. Request for Hearing at 5, citing State Operations Manual
(SOM) § 3010 and Appendix Q, Section 1; P. Br. at 16. I reject this argument here, as
the Board has rejected similar arguments in other cases, because while ALJs and the
Board may find the SOM instructive, they are bound by the regulatory definition in
42 C.F.R. § 488.301, not by the SOM. In Foxwood Springs Living Ctr., DAB No. 2294,
at 9 (2009), the Board explained that “[w]hile the SOM may reflect CMS’s
interpretations of the applicable statutes and regulations, the SOM provisions are not
substantive rules themselves.” In Agape Rehab. of Rock Hill, DAB No. 2411, at 19
(2011), the Board noted that section 488.301 does not define immediate jeopardy as a
“crisis situation,” and it does not require an ALJ to find a “crisis situation” in order to
uphold a CMS determination that a petitioner’s noncompliance was “likely to cause,
serious injury, harm, impairment, or death to a resident.”

Even if the regulations did define immediate jeopardy as a “crisis situation,” I would
have no trouble finding a crisis situation here in light of the facts surrounding R1’s
elopement and Petitioner’s inadequate elopement prevention interventions, policies and
procedures, which affected all its residents assessed as elopement risks. Petitioner does
not explain why R1’s being outside the facility without supervision did not present a
crisis situation. Petitioner attempts to minimize the situation by explaining it had a
system in place to prevent elopement and that R1’s elopement was a “one-time, isolated
incident.” Request for Hearing at 5.

Under the circumstances outlined above, and given R1’s cognitive and physical
impairments, including her lack of safety awareness, there was a clear likelihood of
serious harm to R1 while she was outside the facility. Once she eloped from the facility,
she was at risk for wandering beyond the perimeter of the building into the parking lot, or
even beyond the parking lot onto the street adjacent to Petitioner’s property, and thus was
at risk of being struck by a motor vehicle. A facility map shows the facility’s location to
the adjacent area and public road, and it also shows the door R1 was believed to have
exited the building and its proximity to Petitioner’s parking lot. CMS Ex. 5. Moreover,
CMS showed there were chilly temperatures in the area around the time of R1’s
elopement ranging from 51 to 61 degrees Fahrenheit. CMS Ex. 41, at 2, 3, 5.

Regardless of whether staff happened to find R1 within a few minutes, R1 was still
exposed to dangers that presented a likelihood of serious harm or death. R1’s clinical
record shows that she was not capable of judging what was safe and unsafe without
supervision outside the facility, and had staff not happened to spot her while on break,

13

she likely would have been seriously harmed from the threats of vehicle traffic, falls,
weather and untreated medical conditions.

5. CMS’s determination of the duration of Petitioner’s noncompliance is
not clearly erroneous.

The Board has made it clear that the facility bears the burden of showing that it returned
to substantial compliance on a date earlier than that determined by CMS and has rejected
the idea that CMS must establish a lack of substantial compliance during each day in
which a remedy remains in effect. Kenton Healthcare, LLC, DAB No. 2186, at 24-25;
Lake Mary HealthCare, DAB No. 2081, at 30 (2007). Similarly, the facility’s burden of
demonstrating clear error in CMS’s immediate jeopardy determination “extends to
overcoming CMS’s determination as to how long the noncompliance remained at the
immediate jeopardy level.” Azalea Court, DAB No. 2352, at 17, citing Brian Ctr. Health
& Rehab./Goldsboro, DAB No. 2336, at 7 (2010). As the Board held in Brian Center,
“{a] determination by CMS that a [facility’s] ongoing [noncompliance] 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 of
review under section 498.60(c)(2).” Brian Ctr., DAB No. 2336, at 7-8.

The Board has also held that “[t]he burden is on the facility to show that it timely
completed the implementation of [its] plan [of correction] and in fact abated the jeopardy
(to reduce the applicable CMP range) or achieved substantial compliance (to end the
application of remedies).” Lake Mary, DAB No. 2081, at 29, citing, e.g., Spring
Meadows Health Care Ctr., DAB No. 1966 (2005). Here, CMS found Petitioner was not
in substantial compliance, at an immediate jeopardy level, from December 24, 2010 to
January 27, 2011 and did not return to substantial compliance until February 18, 2011.
Thus, it is not incumbent on CMS to justify these dates but rather on Petitioner to show
an earlier date of abatement and return to substantial compliance.

I do not find CMS’s determination that Petitioner did not abate immediate jeopardy until
January 28, 2011 to be clearly erroneous. Petitioner’s plan of correction, signed March
11, 2011, states “[t]he administrator and/or designee will change al/ door codes at least
once a month and more frequently if needed.” CMS Ex. 1, at 6 (emphasis added).
Petitioner acknowledges that on December 24, 2010, the date of the incident, staff only
changed the keycode lock on the front door, thus failing to address any changes to the
five other exit doors. This failure resulted in the extension of the immediate jeopardy
time period. P. Br. at 14-15; see also CMS Ex. 3, at 55; P. Ex. 32, at 7.

Immediately after R1’s elopement, the facility administrator informed staff that the
facility would no longer be providing codes to visitors or family and that a staff member
must let out all visitors. P. Ex. 32, at 7. Nonetheless, on January 28, 2011, during a
revisit survey, Surveyor Chase observed a visitor telling Petitioner’s maintenance
14

supervisor that she knew the current code to open and enter through one of the facility
doors. Both Surveyor Chase and the maintenance supervisor tested the code the visitor
gave them and were able to confirm that the code opened the door. CMS Ex. 3, at 74. As
a consequence of Petitioner either not changing all door codes or continuing to share the
door codes with visitors, it clearly did not secure its facility nor did it implement the
corrective actions in order to abate the immediate jeopardy before January 27.

As for Petitioner’s continued noncompliance at a non-immediate jeopardy level,
Petitioner argues that it came into compliance once it completed in-service training to
staff on the policy changes and additional measures that it implemented starting
December 24, 2010. Petitioner says it completed this training on December 28, 2010.
Petitioner also maintains that its Quality Improvement Committee met on December 28,
2010, to discuss the elopement incident and all related issues. P. Br. at 21.

As evidence to support its assertion that it completed its staff training by December 28,
2011, Petitioner presents three in-service training signature sheets. P. Ex. 5. However
review of these documents show that two of these trainings were conducted prior to the
December 24, 2010 elopement (December 1 and 13, 2010). Therefore, these documents
do not support Petitioner’s assertion that it completed training to staff by December 28 in
response to R1’s elopement. CMS Ex. 5, 1-4. The December 27, 2010 training sign-in
sheet shows that just nine staff attended the training, much less than the number of staff
Petitioner employed. CMS Ex. 5, at 5.

Before CMS considered Petitioner back in substantial compliance, it considered the more
comprehensive in-service training Petitioner provided to staff on February 7, 2011. In
this training, Petitioner instructed all staff that only staff would know the exit codes and
there was an immediate reporting requirement when non-staff were observed using one to
exit the facility. CMS Ex. 1, at 13. Further, CMS considered that Petitioner’s Quality
Assurance Committee met on February 16, 2011 to discuss specific survey issues and
implementation of the new policies. CMS Ex. 1, at 14. Therefore, I find CMS’s
determination was not clearly erroneous.

6. CMS’s determination of the amount of CMP is reasonable.

In determining whether the CMP imposed here is reasonable, I apply the factors listed in
42 C.F.R. § 488.438(f), which include: (1) the facility’s history of compliance; (2) the
facility’s financial condition; (3) the factors specified at 42 C.F.R. § 488.404; and (4) the
facility’s degree of culpability, which includes neglect, indifference, or disregard for
resident care, comfort, or safety. The absence of culpability is not a mitigating factor.
The factors at 42 C.F.R. § 499.404 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.
15

Here, Petitioner has a history of noncompliance with 42 C.F.R. § 483.25 (F323).
Petitioner had a quality of care deficiency under this requirement during a survey
conducted in February 2009 when it was cited for that deficiency at a scope and severity
level of “D” and also a prior violation of 483.75(/)(1) (F514) found during a March 2008
survey, which was cited at a scope and severity level of “D.” CMS Ex. 47, at 1.
Petitioner has not argued its inability to pay the CMP, and, unless a facility contends that
a particular regulatory factor does not support the CMP amount, the ALJ must sustain it.
Coquina Ctr., DAB No. 1860 (2002). The deficiencies cited here are serious,
constituting immediate jeopardy for F224 and F323, and the potential for more than
minimum harm for F514.

I find that the $3,550 per day CMP from December 24, 2010 through January 27, 2011, is
much less than the maximum that CMS could have imposed upon Petitioner for
immediate jeopardy-level deficiencies. In fact, it is in the very low end of the CMP range
for immediate jeopardy level deficiencies ($3,050 per day to $10,000 per day). 42 C.F.R.
§§ 488.438(a)(1)(i), (d)(2). I find further that the $150 per day CMP from January 28, to
February 18, 2011, is also at the very low end of the CMP range for non-immediate
jeopardy level deficiencies ($50 per day to $3,000 per day). 42 C.F.R.

§ 488.438(a)(1)(ii).

Accordingly, I find the CMPs that CMS imposed are reasonable. Further, the state is
required by law to withdraw any approval given, or to deny any approval sought, by
Petitioner to conduct a NATCEP for a period of two years because the CMP imposed
here was in excess of the $5,000. See 42 C.F.R. §§ 483.151(b)(2) and (e)(1).

IV. Conclusion

I conclude that Petitioner was not in substantial compliance with 42 C.F.R. § 483.25(h)
(F323) pertaining to Accidents and Supervision, 42 C.F.R. § 483.13(c) (F224) pertaining
to Staff Treatment of Residents, and 42 C.F.R. § 483.75(J)(1) (F514) pertaining to
Clinical Records. Further, Petitioner has not shown that CMS’s determination that the
violations posing immediate jeopardy to the health and safety of facility residents was
clearly erroneous, and I conclude the CMP that CMS imposed was reasonable.

/s/
Joseph Grow
Administrative Law Judge