Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )
) Date: June 15, 2007
Sunset Manor, )
(CCN: 17-5363), )
)
Petitioner, ) Docket No. C-05-392
) Decision No. CR1606
v. )
)
Centers for Medicare & Medicaid )
Services. )
)
DECISION

Petitioner, Sunset Manor, violated 42 C.F.R. § 483.70(a),' on April 4, 2005. A per
instance civil money penalty (PICMP) of $2000 is reasonable.

I. Background

Petitioner is a long-term care facility located in Frontenac, Kansas. Petitioner is
authorized to participate in the federal Medicare program as a skilled nursing facility
(SNF) and the Kansas Medicaid program as a nursing facility (NF). On April 4, 2005,
Petitioner was subject to a Life Safety Code survey by the Kansas Fire Marshal’s Office
acting on behalf of the Kansas Department on Aging (the state agency). The surveyor
concluded that Petitioner was in violation of the Life Safety Code and that the violation
posed immediate jeopardy to resident health and safety. Joint Stipulation dated October
21, 2005 (Jt. Stip.).

' All references are to the revision of the Code of Federal Regulations (C.F.R.) in
effect at the time of the surveys, unless otherwise indicated.
2

The Centers for Medicare & Medicaid Services (CMS) notified Petitioner by letter dated
April 26, 2005, that it concurred with the survey finding that Petitioner violated the Life
Safety Code, Tag K51’, and that the violation posed immediate jeopardy for one day,
April 4, 2005. CMS further advised Petitioner that, based upon the violation of Tag K51,
it was imposing: a PICMP of $5,000; and a denial of payment for new admissions
effective May 5, 2005 and continuing until Petitioner returned to substantial compliance
with program participation requirements or termination of Petitioner’s provider
agreement. Petitioner’s Exhibit (P. Ex.) 1, at 4-6. CMS notified Petitioner by letter dated
June 24, 2005, that the PICMP was reduced to $2000. P. Ex. 2. The DPNA was never
effectuated. Transcript (Tr.) at 63.

Petitioner requested a hearing by an administrative law judge (ALJ) by letter dated June
8, 2005. P. Ex. 1. The case was assigned to me for hearing and decision on July 6, 2005.
A one-day hearing was conducted on December 14, 2005, in Topeka, Kansas. CMS
exhibits 1 through 13 were offered and admitted. CMS exhibit 14 was offered but not
admitted at hearing subject to my review of the parties post-hearing briefs. Based on the
arguments of counsel, I find that CMS exhibit 14 is authentic and relevant and it is
admitted.’ Petitioner’s exhibits 1 through 6 were offered and admitted. Brian Love, Fire
Prevention Inspector with the Kansas Fire Marshal’s Office, testified for CMS. Kevin
Knaup, Administrator of Sunset Manor, testified for Petitioner. The parties submitted
post-hearing briefs and reply briefs.

? This “Tag” designation is the “ID Prefix” from the survey form, CMS-2786R,
used by the surveyor. CMS Exhibit (CMS Ex.) 1, at 15. Tag K51 is also used in the
Statement of Deficiency, CMS-2567, dated April 4, 2005 (SOD). CMS Ex. 2, at 9. Other
alleged violations cited by the survey were not cited by CMS as the basis for imposing a
remedy and those violations are not on appeal before me.

3 The document is an extract from the 1999 edition of the National Fire Protection
Association (NFPA) document number 72, National Fire Alarm Code® (National Fire
Alarm Code) and the 1999 National Fire Alarm Code Handbook (which sets forth
provisions of the code). Further discussion related to the admissibility of this document is
found in the Analysis section of this decision. CMS requested that I take administrative
notice of the remaining provisions of the 1999 edition of the National Fire Alarm Code.
CMS Post-hearing Brief (CMS Brief) at 6, fn. 2. However, no copy of the complete code
was provided and one is not readily available for my use. Furthermore, CMS has not
provided any rationale for why administrative notice of the remaining provisions of the
code is warranted.
IL. Discussion

A. Findings of Fact

The following findings of fact are based upon the exhibits admitted and the transcript of
the proceedings. Citations to transcript pages and exhibit numbers related to each finding
of fact may be found in the analysis section of this decision if not indicated here.

1.

The state agency completed a Life Safety Code survey of Petitioner on April 4,
2005. CMS Ex. 1.

CMS notified Petitioner that the conditions found during the Life Safety Code
survey constituted immediate jeopardy to resident health and safety for one day,
April 4, 2005. P. Ex. 2.

CMS notified Petitioner that it was imposing a PICMP of $5000, which was later
reduced to $2000. P. Exs. 1, at 4-6; 2.

Petitioner filed a request for hearing on July 6, 2005. P. Ex. 1, at 1-3.

On April 4, 2005, during a Life Safety Code survey the state agency cited
Petitioner because:

a. end-of-line resisters were installed on two terminals (31 and 32) on the
fire alarm control panel (CMS Ex. 2, at 9-10);

b. the facility performed silent drills during the months of June, September,
and December of 2004 and March 2005, but failed to sound the fire alarm
in 4 out of the 12 previous months (CMS Ex. 2, at 8); and

c. during a fire drill witnessed by the surveyor it was noted that the fire
alarm monitoring company was unable to reach the fire department dispatch
center for five minutes and 20 seconds as a result of telephone busy signals
(CMS Ex. 2, at 10-12).

There were end-of-line resistors installed on two terminals in Petitioner’s fire
alarm control panel.

Petitioner did not sound its audible fire alarm in June, September, and December
2004 and March 2005.
10.

4

The evidence does not show that the presence of end-of-line resistors in
Petitioner’s alarm control panel interfered with the operation of the alarm system.

During a fire drill conducted on April 4, 2005, the fire alarm was delivered to
Petitioner’s alarm monitoring company without unreasonable delay but the alarm
monitoring company was unable to deliver the alarm to the fire department for five
minutes and 20 seconds.

Petitioner had no alternative or back-up plan to ensure that a fire alarm was
delivered to the fire department without unreasonable delay in the event its fire
alarm system failed to timely deliver the alarm.

B. Conclusions of Law
Petitioner’s request for hearing was timely and I have jurisdiction.

The 2000 edition of the Life Safety Code is incorporated by reference in 42 C.F.R.
§ 483.70(a), and it has the force and effect of a regulation.

The NFPA 72, the National Fire Alarm Code (1999 ed.) is not incorporated by
reference in 42 C.F.R. § 483.70(a), and the provisions of the National Fire Alarm
Code do not have the force and effect of a regulation.

The National Fire Alarm Code is evidence of industry standard in the area of fire
alarms.

CMS must identify the statute, regulation or other legal criteria to which it seeks to
hold the provider.

CMS has failed to show that Petitioner had actual knowledge of the provisions of
the National Fire Alarm Code (1999 ed.).

CMS has failed to identify any legal criteria or credible evidence of an industry
standard that prohibits the use of end-of-line resistors in an alarm control panel.

CMS has failed to make a prima facie showing the end of the line resistors found
on two terminals in Petitioner’s fire alarm control panel violated 42 C.F.R.
§ 483.70.

CMS has failed to identify any legal criteria or credible evidence of an industry
standard that requires a long-term care facility to sound its audible fire alarm
signal every month.
5

10. CMS has failed to make a prima facie showing that Petitioner’s failure to sound its
audible fire alarm signal in four months during a 12-month period violated 42
CR. § 483.70.

11. CMS has made a prima facie showing that on April 4, 2005, Petitioner was in
violation of 42 C.F.R. § 483.70, because the fire alarm caused by the drill the
surveyor triggered was not delivered to the fire department without unreasonable
delay.

12. Petitioner has failed to show that it was in substantial compliance with 42 C.F.R.
§ 483.70 on April 4, 2005, prior to taking corrective action on that date.

13. Petitioner has failed to show that it had any affirmative defense to its violation of
42 C.F.R. § 483.70 on April 4, 2005.

14. _ There is a basis for the imposition of an enforcement remedy in this case.
15. | A PICMP of $2000 is reasonable.

C. Issues
The issues in this case are:

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

Whether the remedy imposed is reasonable.
D. Applicable Law

Petitioner is a long-term care facility participating in the federal Medicare program as a
SNF and in the state Medicaid program as a NF. The statutory and regulatory
requirements for participation by a long-term care facility are found at sections 1819 and
1919 of the Social Security Act (Act) and at 42 C.F.R. Part 483. Sections 1819 and 1919
of the Act vest the Secretary of Health and Human Services (the Secretary) with authority
to impose civil money penalties against a long-term care facility for failure to comply
substantially with federal participation requirements.

Pursuant to the Act, the Secretary has delegated to CMS and the states the authority to
impose remedies against a long-term care facility that is not complying substantially with
federal participation requirements. Facilities that participate in Medicare may be
surveyed on behalf of CMS by state survey agencies in order to determine whether the
6

facilities are complying with federal participation requirements. 42 C.F.R. §§ 488.10-
488.28, 488.300-488.335. Pursuant to 42 C.F.R. Part 488, CMS may impose a per
instance or per day CMP against a long-term care facility when a state survey agency
concludes that the facility is not complying substantially with federal participation
requirements. 42 C.F.R. §§ 488.406; 488.408; 488.430. The regulations in 42 C.F.R.
Part 488 also give CMS a number of other remedies that can be imposed if a facility is not
in compliance with Medicare requirements. /d. Pursuant to 42 C.F.R. § 488.301,
“[i]mmediate jeopardy means a situation in which the provider’s noncompliance with one
or more requirements of participation has caused, or is likely to cause, serious injury,
harm, impairment, or death to a resident.” (emphasis in original). Further, “/s/ubstantial
compliance means a level of compliance with the requirements of participation such that
any identified deficiencies pose no greater risk to resident health or safety than the
potential for causing minimal harm.” Jd. (emphasis in original).

The regulations specify that a CMP that is imposed against a facility on a per day basis
will fall into one of two ranges of penalties. 42 C.F.R. §§ 488.408, 488.438. The upper
range of CMP, of from $3050 per day to $10,000 per day, is reserved for deficiencies that
constitute immediate jeopardy to a facility’s residents, and in some circumstances, for
repeated deficiencies. 42 C.F.R. §§ 488.438(a)(1)(i), (d)(2). The lower range of CMP,
from $50 per day to $3000 per day, is reserved for deficiencies that do not constitute
immediate jeopardy but either cause actual harm to residents, or cause no actual harm, but
have the potential for causing more than minimal harm. 42 C.F.R. § 488.438(a)(1)(ii).
There is only a single range of $1000 to $10,000 for a per instance CMP, which applies
whether or not immediate jeopardy is present. 42 C.F.R. §§ 488.408(d)(1)(iv);
488.438(a)(2).

The Act and regulations make a hearing before an ALJ available to a long-term care
facility against which CMS has determined to impose a CMP. Act, § 1128A(c)(2); 42
C.F.R. §§ 488.408(g); 498.3(b)(13). The hearing before an ALJ is a de novo proceeding.
Anesthesiologists Affiliated, et al, DAB CR65 (1990), aff'd, 941 F.2d 678 (8" Cir. 1991);
Emerald Oaks, DAB No. 1800, at 11 (2001); Beechwood Sanitarium, DAB No. 1906
(2004); Cal Turner Extended Care, DAB No. 2030 (2006); The Residence at Salem
Woods, DAB No. 2052, (2006). A facility has a right to appeal a “certification of
noncompliance leading to an enforcement remedy.” 42 C.F.R. § 488.408(g)(1); see also
42 C.F.R. §§ 488.330(e) and 498.3. However, the choice of remedies by CMS or the
factors CMS considered when choosing remedies are not subject to review. 42 C.F.R.

§ 488.408(g)(2). A facility may only challenge the scope and severity level of
noncompliance found by CMS if a successful challenge would affect the amount of the
CMP that could be collected by CMS or impact upon the facility’s nurse aide training
program. 42 C.F.R. §§ 498.3(b)(14) and (d)(10)(i). CMS’s determination as to the level
of noncompliance “must be upheld unless it is clearly erroneous.” 42 C.F.R. §
498.60(c)(2). This includes CMS’s finding of immediate jeopardy. Woodstock Care
7

Center, DAB No. 1726, at 9, 38 (2000), aff'd, Woodstock Care Center v. Thompson, 363
F.3d 583 (6" Cir. 2003). The Departmental Appeals Board (the Board) has long held that
the net effect of the regulations is that a provider has no right to challenge the scope and
severity level assigned to a noncompliance finding, except in the situation where that
finding was the basis for an immediate jeopardy determination. See, e.g., Ridge Terrace,
DAB No. 1834 (2002); Koester Pavilion, DAB No. 1750 (2000). Review of a CMP by
an ALJ is governed by 42 C.F.R. § 488.438(e).

When a penalty is proposed and appealed, CMS must make a prima facie case that the
facility has failed to comply substantially with federal participation requirements. “Prima
facie” means that the evidence is “(s)ufficient to establish a fact or raise a presumption
unless disproved or rebutted. Black’s Law Dictionary 1228 (8" ed. 2004); see also,
Hillman Rehabilitation Center, DAB No. 1611, at 8 (1997), aff'd Hillman Rehabilitation
Center v. U.S. Dept. of Health and Human Services, No. 98-3789 (GEB), slip op. at 25
(D.N.J. May 13, 1999). To prevail, a long-term care facility must overcome CMS’s
showing by a preponderance of the evidence. Batavia Nursing and Convalescent Center,
DAB No. 1904 (2004); Batavia Nursing and Convalescent Inn, DAB No. 1911 (2004);
Emerald Oaks, DAB No. 1800 (2001); Cross Creek Health Care Center, DAB No. 1665
(1998); Hillman Rehabilitation Center, DAB No. 1611.

E. Analysis

There is little dispute about the pertinent facts in this case. On April 4, 2005, Brian Love
of the Kansas Fire Marshal’s office visited Petitioner’s facility to conduct a Life Safety
Code inspection. Inspector Love saw what he believed were end-of-line resistors on
terminals 31 and 32 in Petitioner’s fire alarm control panel. Inspector Love alleged in the
SOD that the resistors should not be where he found them and that they were not
approved components, devices or equipment installed in accordance with the National
Fire Alarm Code. CMS Ex. 2, at 10. Petitioner questions whether what Inspector Love
observed were end-of-line resistors and, if they where, what prohibits them from being
where Inspector Love observed them, particularly in light of the fact that the alarm
functioned properly when tested on April 4, 2005. Petitioner’s Prehearing Brief at 9-10;
Petitioner’s Reply to CMS’s Post-Hearing Brief (P. Reply) at 3-5. Inspector Love also
reviewed Petitioner’s documentation of fire drills and concluded that Petitioner had failed
to “sound a fire alarm test” in June, September, and December 2004 and March 2005 in
violation of what he believed to be a requirement to “manually” test fire alarm systems
monthly. CMS Ex. 2, at 10. Petitioner argues that Inspector Love and CMS have never
identified any provision of the Life Safety Code that requires a monthly, audible test of a
fire alarm. P. Reply at 2-3. Finally, Inspector Love observed a fire drill on April 4, 2005.
He learned that it took Petitioner’s fire alarm monitoring company over five minutes to
reach the local fire department dispatch center and he alleged that Petitioner’s residents
were “subjected to unnecessary risk.” CMS Ex. 2, at 10-11. Inspector Love testified at
8

hearing that the problem he detected regarding the alarm monitoring company contacting
the local fire department caused him to conclude that Petitioner’s residents were subject
to immediate jeopardy on April 4, 2005, however immediate jeopardy was abated on that
day by corrective action of Petitioner. Tr. 58, 127-28, 154; see also CMS Ex. 2, at 11-12.
Petitioner’s position is that its alarm worked and that it should not be held accountable for
the fact that all the telephone lines at the fire department dispatch center were busy when
Petitioner’s alarm monitoring company attempted calling on April 4, 2005. Petitioner’s
Prehearing Brief at 10-13; Petitioner’s Post-Hearing Brief (P. Brief) at 14-19.

Based on the foregoing facts, CMS presents three examples to support its position that
Petitioner was in violation of 42 C.F.R. § 483.70(a) on April 4, 2005. However, before
addressing the individual examples of violations, it is necessary to address a legal issue
raised by Petitioner.

1. The legal standard by which Petitioner’s compliance with 42 C.F.R.
§ 483.70(a) is judged.

I advised the parties in the Prehearing Order’ that I intended to apply the Board’s prior
rationale in Hillman when allocating the burden of persuasion in this case. I similarly
advised the parties at the beginning of the hearing. Tr. 7-8. The evidence is not in
equipoise in this case and there is no issue raised regarding the proper allocation of the
burden of persuasion. The Board’s definition of the requirements for a prima facie case
from Hillman is, nevertheless, helpful in resolving this case:

HCFA [now known as CMS] must identify the legal criteria
to which it seeks to hold a provider. Moreover, to the extent
that a provider challenges HCFA’s findings, HCFA must
come forward with evidence of the basis for its determination,
including the factual findings on which HCFA is relying and,
if HCFA has determined that a condition of participation was
not met, HCFA’s evaluation that the deficiencies found meet
the regulatory standard for a condition-level deficiency.

DAB No. 1611, at 8. This passage from Hillman is important because it shows that for a
considerable time the Board has recognized that CMS has an initial burden to make a
prima facie showing of a violation of some legal criteria to which it seeks to hold a
provider such as Petitioner. In order make a prima facie case, CMS must: (1) identify the
statute, regulation or other legal criteria to which it seeks to hold a Petitioner; (2) come

* Notice of Case Assignment and Prehearing Case Development Order (Prehearing
Order), dated July 6, 2005, para. C.4.
9

forward with evidence upon which it relies for its factual conclusions that are disputed by
the Petitioner; and (3) show how the violation or deficiency it found amounts to
noncompliance that warrants an enforcement remedy.

Petitioner in this case objects that CMS seeks to hold it responsible for a violation of the
National Fire Alarm Code. Petitioner argues that the National Fire Alarm Code does not
have the force and effect of the Act or the Secretary’s regulations, and violation of the
Code is not a proper basis for imposition of an enforcement remedy.

The Secretary requires by regulation that a long-term care “facility must be designed,
constructed, equipped, and maintained to protect the health and safety of residents,
personnel and the pubic.” 42 C.F.R. § 483.70. Subsection (a) of the regulation, entitled
“Life safety from fire” requires that a facility meet the applicable provisions of the 2000
edition of the Life Safety Code published by NFPA (Life Safety Code), which has been
incorporated in the regulation by reference in accordance with 5 U.S.C. § 552(a).°
Specific exceptions to the application of the 2000 edition of the Life Safety Code are
listed in the regulation. 42 C.F.R. § 483.70(a)(1)(ii). CMS is also granted authority to
waive provisions of the Life Safety Code that would result in unreasonable hardship to
the facility so long as the waiver would not adversely affect the health and safety of the
patients. 42 C.F.R. § 483.70(a)(2). Petitioner does not dispute that the regulation
properly incorporates the 2000 edition of the Life Safety Code or that the incorporated
edition of the Life Safety Code has the effect of a regulation. Petitioner is correct,
however, that the regulation does not incorporate by reference the National Fire Alarm
Code, though it is referred to in 42 C.F.R. § 483.70(a)(7)(iii)(A).

The surveyor worksheet used by Inspector Love in this case requires, under Tag K51 for
existing structures, that the surveyor determine whether the facility has:

A fire alarm system with approved component, devices or
equipment installed according to NFPA 72, National Fire
Alarm Code to provide effective warning of fire in any part of
the building. Activation of the complete fire alarm system
shall be by manual fire alarm initiation, automatic detection or
extinguishing system operation. Pull stations in patient
sleeping areas, may be omitted provided that manual pull
stations are within 200 ft of nurse’s stations. Pull stations are
located in the path of egress. Electronic or written records of

* Section 1819(d)(2)(B) of the Act provides that a SNF must meet the provisions
of the edition of the Life Safety Code specified by the Secretary in regulation. Section
1919(d)(2)(B) imposes the same requirement for nursing facilities.
10

tests shall be available. A reliable second source of power
must be provided. Fire alarm systems shall be maintained
periodically and records of maintenance kept readily
available. There shall be annunciation of the fire alarm
system to an approved central station. 19.3.4, 9.6

CMS Ex. I, at 15. The SOD (CMS Ex. 2, at 9) includes similar language and also refers
to subsection 19.3.4 and section 9.6 of the Life Safety Code. Extracts of those provisions
are at CMS Ex. 11, at 3-8. Life Safety Code § 19.3.4, titled “Detection, Alarm, and
Communications Systems,” requires that health care facilities with occupants have a fire
alarm system in accordance with section 9.6. Life Safety Code § 9.6 is titled “Fire
Detection, Alarm and Communications Systems.” Life Safety Code § 9.6.1.4 requires
that a fire alarm system be “installed, tested, and maintained in accordance with the
applicable requirements of NFPA 70, National Electrical Code, and NFPA 72, National
Fire Alarm Code,” with exceptions. Life Safety Code § 9.6.1.7 requires that a fire alarm
system have an approved maintenance and testing program complying with NFPA 70,
National Electrical Code and NFPA 72, National Fire Alarm Code. The National Fire
Alarm Code is referred to in multiple additional subsections of Life Safety Code § 9.6.

The surveyor worksheet and the SOD language suggests that CMS treat the National Fire
Alarm Code as imposing requirements upon long-term care facilities related to their fire
alarm systems beyond what is specified by the regulations. Petitioner’s argument turns
on the notion that it cannot be bound by the provisions of the National Fire Alarm Code
or penalized for their violation unless that Code has been properly incorporated by
reference in the Secretary’s regulations. CMS argues that the 1999 edition of the
National Fire Alarm Code was incorporated by reference by § 2.1.1 of the 2000 edition of
the Life Safety Code, furthering the impression that CMS seeks to give the provisions of
the National Fire Alarm Code the force and effect of a regulation. Tr. 19-21.

I concur with Petitioner that the National Fire Alarm Code has never been incorporated
by reference by the Secretary’s regulations. Accordingly, the provisions of the National
Fire Alarm Code do not have the same force and effect as the provisions of the
Secretary’s regulations. The requirements of the Act and the Administrative Procedure
Act (APA) are controlling law in this case. The APA provides that each agency of the
federal government must make available to the public by publication in the Federal
Register all “substantive rules of general applicability” (5 U.S.C. § 552(a)(1)(D)) and that
“except to the extent that a person has actual and timely notice of the terms thereof, a
person may not. . . be adversely affected by, a matter required to be published in the
Federal Register and not so published.” 5 U.S.C. § 552(a)(1). The APA provides that
11

incorporation by reference is sufficient. 5 U.S.C. § 552(a)(1).° In this case the problem
for CMS is that only the 2000 edition of the Life Safety Code is incorporated by reference
in 42 C.F.R. § 483.70(a), there is no mention of incorporation of the 1999 edition of the
National Fire Alarm Code.’

The requirement of the APA that a regulation must be properly published in the Federal
Register in order to be enforceable was considered in Appalachian Power Company v.
Train, 566 F.2d 451 (4" Cir. 1977). The Fourth Circuit Court of Appeals considered the
requirements for publication of regulations and incorporation by reference in the context
of an Environmental Protection Agency (EPA) regulation challenged by multiple power
companies. The regulation in question required the affected companies to comply with a
document referred to as the “Development Document.” There was no disagreement in the
case that the lengthy document was not set forth in the regulations and that, while the
EPA intended to incorporate the document by reference in the regulations, the EPA failed
to follow the procedures for incorporation by reference specified at 1 C.F.R. Part 51. The
court found that the provisions of the “Development Document” were unenforceable
against the companies. The court reasoned that 5 U.S.C. § 552(a)(1) of the APA is clear
that a person or entity may not be required to “resort to, or be adversely affected” by
something that is required to be published in the Federal Register but is not. Id. at 455.
Section 552(a)(1)(D) requires agencies to publish in the Federal Register “substantive
tules of general applicability.” The court found the document in question is a substantive
rule of general applicability based on the fact that it imposed mandatory obligations upon
members of the public. Thus, the court found that for the terms of the document to be
enforceable it either had to be published in the Federal Register in its entirety or it had to
be incorporated by reference following the procedures specified by, and with approval of,
the Director of the Federal Register. Jd. The court agreed with the EPA that if the EPA
could show that the companies in that case had actual and timely notice of the terms of

® These provisions were added to the APA by the act popularly known as “The
Freedom of Information Act.” Pub. L. 104-231 § 2(a).

’ Effective March 11, 2003, the Secretary adopted the 2000 edition of the Life
Safety Code to be applicable to all regulated facilities on a phased-in schedule. The 2000
edition of the Life Safety Code is incorporated in 42 C.F.R. § 483.70(a) by reference. See
68 FR 1374. In discussing the promulgation of the final rule, the proponent describes the
history leading to the final rule, including the proposed rule of August 1, 1990 (55 FR
31196) which was withdrawn October 26, 2001 (66 FR 54179). The proponent also
specifically discusses the applicability of 5 U.S.C. § 552, and the requirement for the
Secretary to adopt a particular edition of the Life Safety Code and the requirement for
incorporation by reference of the edition of the code in the regulation with a copy of that
edition being on file at the Office of the Federal Register.
12

the document, then the actual knowledge exception of 5 U.S.C. § 552(a)(1) applied.
However, the court found that the EPA did not prove that the companies had such actual
notice of the contents of the Development Document. The court rejected the EPA
argument that it was sufficient that the document was reasonably available on grounds
that the APA requires a showing of actual notice and not simply availability. See also,
Morton v. Ruiz, 415 U.S. 199, 232-33 (1974); Timber Access Industries, Co., Inc. v.
United States, 553 F.2d 1250, 1255 (1977).

In the case before me, CMS argues that the provisions of the 1999 edition of the National
Fire Alarm Code should be applied like a regulation. CMS Post-hearing Brief (CMS
Brief) at 2; CMS Post-hearing Reply (CMS Reply) at 3. However, that code has not been
published in the Federal Register or incorporated by reference. CMS seeks to apply the
National Fire Alarm Code as a substantive rule of general applicability to the extent that
its application would impose specific obligations upon Petitioner subject to enforcement
remedies for failure to comply. Accordingly, pursuant to 5 U.S.C. § 552(a) and based on
the analysis of that statute in Appalachian Power, if CMS wants to enforce the code as a
regulation, CMS either needed to set out that edition in the regulation in its entirety or
must have met the requirements for incorporation by reference. CMS did neither. CMS
argues that section 2.1.1 of the Life Safety Code makes the National Fire Alarm Code a
mandatory reference and actually incorporates that code by double reference into the
regulation. I am not persuaded that the reference in section 2.1.1 amounts to
incorporation by reference into the regulation as required by 5 U.S.C. § 552(a).

There is also an issue of whether or not Petitioner had actual knowledge of the
requirements of the 1999 edition of NFPA 72, the National Fire Alarm Code, so that it is
enforceable against Petitioner within the exception created by 5 U.S.C. § 552(a). I agree
with the court in Appalachian Power that the statute clearly specifies there must be a
showing of actual knowledge and that availability alone is not enough. After careful
review of all the evidence and pleadings in this case, I find no evidence that Petitioner
had actual knowledge of the provisions of the National Fire Alarm Code or its application
and, in fact, Petitioner denies availability of the code and, by implication, actual
knowledge of its provisions. P. Brief at 16-17. Accordingly, I conclude that CMS has
failed to show that Petitioner had actual knowledge of the provisions of the 1999 edition
of the National Fire Alarm Code and its provisions may not be enforced as a regulation.

Although the provisions of the 1999 edition of the National Fire Alarm Code, are not
enforceable against Petitioner as a regulation in this case, the Code is nevertheless
credible evidence of the industry standards related to fire alarms, their components,
installation and maintenance. See e.g., Fed. R. Evid. 803(18); John W. Strong,
McCormick on Evidence § 321 (5" ed. 1999). Thus, I find it appropriate to admit and
13

consider CMS Ex. 14, which contains extracts from the 1999 edition of the National Fire
Alarm Code as relevant evidence of the industry standard reflected by those extracted
provisions. There is no question that the NFPA, which publishes the Life Safety Code
and the National Alarm Code among other documents, is a primary source for industry
standards related to fire safety. Tr. 18.

2. Petitioner violated 42 C.F.R. § 483.70 on April 4, 2005.

The surveyor made three findings and conclusions that are cited as violations of 42 C.F.R.
§ 483.70(a): (a) end-of- line resistors were found on two terminals in the fire alarm
control panel; (b) the facility failed to sound the fire alarm in four out of the 12 previous
months; and (c) during a fire drill during the survey, the fire alarm monitoring company
could not reach the fire department for more than five minutes. CMS Ex. |, at 15; CMS
Ex. 2, at 10. I consider each of the allegations. :

a. The evidence does not show that end-of-line resistors are
prohibited by law or regulation or that their use is inconsistent
with industry standard.

The surveyor alleges in the Fire Safety Survey Report under Tag K51 (CMS Ex. 1, at 15)
and the SOD under Tag K051 (CMS Ex. 2, at 10), that end-of-line resistors were
observed at terminals 31 and 32 in the fire alarm control panel. CMS and the surveyor
allege that use of end-of-line resistors in the alarm control panel was not in accordance
with the requirements of the Life Safety Code because they are not approved components,
devices or equipment installed according to the National Fire Alarm Code.

CMS offered the testimony of the surveyor, Brian Love. While I accept that Inspector
Love is qualified as a Life Safety Code surveyor, the evidence does not show that Life
Safety Code surveyors are trained or qualified so that they might credibly opine as to the
proper electrical components for use in alarm panels. Further, it has not been shown that
Inspector Love had experience or qualifications as an electrical engineer or as a fire alarm
technician or installer, qualifications or experience that would give credibility to his
opinion regarding the appropriate use of end-of-line resistors in an alarm control panel.
Tr. 23. Inspector Love’s testimony that he was a professional firefighter and did
company inspections; that he was trained to do Life Safety Code inspections by CMS;
and that he worked for a “private fire protection engineer” doing inspections (Tr. 23)

8 There is no question as to the authenticity of the extract. I do recognize the
hearsay nature of the document, however the document may certainly be viewed as within
the exception to the hearsay rule as applied in the federal courts under Fed. R. Evid.
803(18).
14

does not show that he has the knowledge or experience to credibly testify as to the
appropriate use of end-of-line resistors in fire alarm panels, even if I accept his assertions
that he recognizes a resistor on sighting it.

The documentary evidence CMS offered also does not support the allegations regarding
the use of the resistors. The extract from the 1999 edition of the National Fire Alarm
Code (CMS Ex. 14), which I accept as reflecting the industry standard for fire alarms,
does not indicate that the use of end-of-line resistors in the manner described by Inspector
Love (Tr. 28, 31-34) is impermissible. None of the other documents CMS submitted
related to the Life Safety Code address the use of end-of-line resistors. There is also no
evidence that the end-of-line resistors Inspector Love saw had any adverse effect on the
correct operation of the facility alarm system or any other evidence from which one might
infer that the resistors were incorrectly used. Tr. 72.

The Act and Secretary’s regulations do not address the use of end-of-line resistors.

I find no legal prohibition, statutory or regulatory (Life Safety Code included), of the use
of end-of-line resistors in the manner Inspector Love described. I find no evidence that
the use of end-of line resistors configured in an alarm control panel as Inspector Love
observed is inconsistent with industry standards as reflected by the National Alarm Code.
I do not find that Inspector Love has the expertise to opine as to the proper use of specific
electrical components in an alarm control panel. I also do not find any evidence that the
configuration described by Inspector Love prevented the proper operation of Petitioner’s
fire alarm system. I conclude that this example does not constitute a violation of 42
CER. § 483.70(a).

b. Petitioner’s failure to sound an audible fire alarm four out of
12 months is not a violation of 42 C.F.R. § 483.70(a).

There is no dispute that the facility did silent drills during night shifts in June 2004,
September 2004, December 2004 and March 2005, and did not sound the audible fire
alarm in those four months. CMS alleges that failure to test by sounding the audible fire
alarm constitutes a violation of the regulation. However, CMS has failed to identify a
provision of the Act or other statute, a regulation, or other legal requirement that
Petitioner must sound its fire alarm every month. Inspector Love did not refer to a
specific regulatory requirement for an audible test of the fire alarm, and, upon my specific
inquiry, could point to no specific regulatory requirement. Tr. 36-38. On my
questioning, he opined that such a requirement might be in the Life Safety Code, but
stated he believed there was an exception for audible testing during evening shifts. He
testified after being given a copy of the Life Safety Code as follows:
15

Q BY MR. BRUCE (Counsel for CMS): The 2000
edition, which is the edition at issue in this case. Can
you refer to -- what was that section you referred to
again?

A (Inspector Love) 19.7.1.2.

Q Can you take and find that provision there and review

that provision and tell us if that is the provision you're

referring to?

It is.

And what does that provision provide?

Fire drills in health care occupancy shall include the

transmission of a fire alarm signal and the simulation

of an emergency fire condition. Drills shall be
conducted quarterly on each shift to familiarize facility
personnel with the signals and emergency action
required under varied conditions. When drills are
conducted between 9:00 p.m. and 6:00 a.m., a coded
announcement shall be permitted to be used instead of
audible alarms.

>roOP>

Tr. 135-36.

Inspector Love opined that monthly testing of the audible fire alarm is an industry
standard, but he provided no basis for that opinion. Tr. 37. CMS is obliged to establish
the legal criteria to which it seeks to hold Petitioner. The Act and the Secretary’s
regulations do not establish standards for sounding an audible fire alarm. The plain
language of Life Safety Code § 19.7.1.2 (2000 ed.), which has the force and effect of a
regulation, does not specify that audible alarms must be sounded monthly and specifically
excepts sounding the audible alarm when a drill is conduct between 9:00 p.m. and 6:00
a.m. (commonly know as the night shift). CMS Ex. 12, at 21. Inspector Love’s opinion
that there is some industry standard to sound the audible alarm every month, even if
correct, does not amount to a legal requirement for Petitioner to do so.

I conclude CMS has identified no legal requirement that Petitioner sound its audible fire
alarm every month. Accordingly, CMS has failed to make a prima facie showing of a
violation arising from this example.
16

c. Petitioner’s failure to notify the local fire department of a fire
alarm without unreasonable delay during a fire drill on April 4,
2005, is a violation of 42 C.F.R. § 483.70.

The parties stipulated that on April 4, 2005, Inspector Love witnessed a fire drill initiated
at his request. Petitioner’s fire alarm monitoring company timely received a fire alarm
signal from Petitioner’s fire alarm system. The monitoring company began placing
telephone calls to the Frontenac, Kansas fire department, the fire department that serves
the area where Petitioner is located, within four seconds of receiving the alarm signal
from Petitioner’s system. The alleged deficiency is based upon the fact that the
monitoring company was unable to establish a telephone connection with the fire
department for five minutes, 20 seconds because each time the alarm company attempted
calling the fire department dispatch center it received a telephone busy signal. Petitioner
was unaware of any technical or logistical difficulties at the fire department dispatch
center that would prevent or interfere with its timely receipt of notification from
Petitioner’s fire alarm monitoring company. Joint Stipulation (Jt. Stip.).

Life Safety Code § 19.3.4.3.2 requires that fire department notification be accomplished
in accordance with Life Safety Code § 9.6.4. CMS Ex. 11, at 7; CMS Ex. 12, at 17-18.
Life Safety Code § 9.6.4 requires that a fire alarm system accomplish notification of the
fire department of fire or other emergency and allows four methods of transmission:
auxiliary alarm system, central station connection, proprietary system, or remote station
connection. CMS Ex. 11, at 4-5; CMS Ex. 12, at 13-14. These provisions of the Life
Safety Code, which are cited on the Fire Safety Survey Report (CMS Ex. 1, at 15) and the
SOD (CMS Ex. 2, at 9), do not specify how quickly notification of the fire department
must be accomplished.

National Fire Alarm Code § 5-2.6.1.1(1) specifies that a fire alarm monitoring company
must immediately retransmit the alarm to the fire department communications center.
Immediately is defined as “without unreasonable delay.” It is also stated that routine
handling should take a maximum of 90 seconds from receipt of the alarm signal by the
monitoring station until “initiation of retransmission” to the fire department
communications center. CMS Ex. 14, at 3-4. A note that appears in the National Fire
Alarm Code Handbook advises that alarm monitoring companies must give highest
priority to handling and retransmission of fire alarm signals because in the worst case it
may take 15 minutes for the signal from the protected premises to reach the monitoring
station. I have already discussed that I do not view the National Fire Alarm Code as
having the force and effect of a regulation, but that I do find it to be good evidence of
industry standard. However, the standard for how quickly a fire alarm needs to be
transmitted by a fire alarm system from a protected long-term care facility through a fire
17

alarm monitoring company to the fire department so that the fire department may respond,
is not answered by any of the evidence presented to me in this case. The Act and the
Secretary’s regulations also do not address this specific issue which seems to be the focus
of the parties.

However, 42 C.F.R. § 483.70 does impose upon all long-term care facilities that choose
to participate in the Medicare or Medicaid programs the obligation to ensure that:

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

The requirement established by 42 C.F.R. § 483.70(a) that each long-term care facility
meet the provisions of the 2000 edition of the Life Safety Code, is one of the ways that
the Secretary has specified that a long-term care facility will satisfy its overarching
obligation to protect the health and safety of its residents, its personnel, and the public.
The surveyor and the parties in this case have focused extensively upon the timing
involved in the transmission and/or retransmission of the alarm signal and who should
bear fault for failure of the Frontenac Fire Department to receive the alarm from the alarm
monitoring company. The Act, the regulations, and the Life Safety Code do not specify
how much time is permissible. The National Alarm Code suggest times from 90 seconds
to 15 minutes, but it does not establish a clear industry standard. However, this is not the
critical issue. The important issue is whether or not Petitioner met its regulatory
obligation to protect the health and safety of its residents, its personnel, and the public.

The real problem in this case is that Petitioner’s system for notifying the fire department
did not function as it should have, i.e., the alarm monitoring company received the signal
but could not communicate the alarm to the fire department because all the phones were
busy. In fact, Petitioner’s system for notifying the fire department did not work for more
than five minutes due to the fact the fire department could not be notified. I find this
sufficient to establish a prima facie showing of a violation of 42 C.F.R. § 483.70, because
Petitioner’s facility was not equipped and maintained to protect the health and safety of
its residents, its personnel, and the public during periods when its system was not
functioning.

Petitioner is afforded the opportunity to disprove or rebut the prima facie showing or to
establish some affirmative defense. The fact that the fire department could not be notified
for more than five minutes due to busy signals is not disputed. Petitioner has presented
no evidence to show that it had some back-up notification process such as calling 911,
and, it admits it has no such plan. P. Brief at 7. In fact, Petitioner takes the position that
so long as it has an alarm system it is not obliged to call 911. P. Brief at 7; P. Reply at 2.
Reading the Life Safety Code in a very technical manner, I agree with Petitioner that it
18

does not require a facility to have a plan to call 911 if there is a functioning alarm
system.’ However, I am not persuaded that the incorporation by reference of the Life
Safety Code should be a bar to requiring long-term care facilities to exercise common
sense and judgment when protecting its residents and personnel. Calling 911 or another
emergency service number, in a fire drill or actual emergency, would seem to be a
reasonable step for any long-term care facility to take as a back-up measure to ensure that
the alarm is delivered or to ensure emergency services understand the alarm is only a
drill. Petitioner has not presented evidence that it had a reliable back-up plan and its
system failed in the presence of the surveyor. Petitioner has not rebutted the prima facie
case. I also find unpersuasive Petitioner’s argument that Inspector Love’s incorrect
marking on the Fire Safety Survey Report, should be grounds for excusing its regulatory
violation. Petitioner’s Prehearing Brief at 3-4; P. Brief at 4-5; Tr. 110-13; 121-22.

I conclude that Petitioner was in violation of 42 C.F.R. § 483.70 on April 4, 2007.
2. A PICMP of $2000 is reasonable.

In determining the amount of the CMP, the following factors specified at 42 C.F.R.

§ 488.438(f) must be considered: (1) the facility's history of noncompliance, including
repeated deficiencies; (2) the facility's financial condition; (3) the seriousness of the
deficiencies as set forth at 42 C.F.R. § 488.404; and (4) the facility’s degree of
culpability.

The regulation authorizes the imposition of a PICMP ranging from $1000 to $10,000, for
a regulatory violation. Pursuant to the guidance in Emerald Oaks, DAB No. 1800, I must
assess de novo the reasonableness of the CMP proposed by CMS based on the factors set
forth at 42 C.F.R. § 488.438(f). The PICMP of $2000 proposed by CMS is at the lower
end of the range for a PICMP. CMS provided me with no evidence related to Petitioner’s
past history of noncompliance other than to allege past noncompliance in May 2004,
without any detail as to the nature of that noncompliance. I also have received no
evidence regarding Petitioner’s ability to pay, nor has Petitioner denied the means to pay.

A facility may only challenge the scope and severity level of noncompliance found by
CMS if a successful challenge would affect the amount of the CMP that could be
collected by CMS or impact upon the facility’s nurse aide training program. 42 C.F.R.
§§ 498.3(b)(14) and (d)(10)(i). Petitioner’s authority to conduct a nurse aide training
program was withdrawn but later restored. Tr. 63-65. Further, whether or not a

° Ina technical sense, Petitioner’s alarm system was not functioning as the system,
including the equipment at Petitioner’s facility and monitoring company, could not
deliver the alarm to the fire department as it was intended to.
19

deficiency poses immediate jeopardy is irrelevant to the amount of the PICMP that may
be imposed as there is only a single range for a PICMP. However, to the extent that a
declaration of immediate jeopardy reflects upon the seriousness of the deficiency, it is
reasonable to consider whether or not immediate jeopardy existed as an evidentiary
matter.

Inspector Love testified at hearing that the problem he detected regarding the alarm
monitoring company contacting the local fire department caused him to conclude that
Petitioner’s residents were subject to immediate jeopardy on April 4, 2005. CMS agreed
with the state agency determination that immediate jeopardy was abated on April 4, 2005
by corrective action of Petitioner. Tr. 58, 127-28, 154; see also CMS Ex. 2, at 11-12.
Petitioner argues that CMS has presented no competent evidence that the noncompliance
would likely or probably cause serious injury, harm, impairment, or death.

Immediate jeopardy is appropriately found when a deficiency has caused, or is likely to
cause, serious injury, harm, impairment, or death to a resident. 42 C.F.R. § 488.301. The
Board recently explained that on appeal, there is a presumption CMS's determination of
immediate jeopardy is correct. The long-term care facility must rebut the presumption in
favor of the CMS declaration of immediate jeopardy by showing it is clearly erroneous.
Daughters of Miriam Center, DAB No. 2067 at 7 (2007). Petitioner argues that its
facility is only one-story with a fully automatic sprinkler system. The audible fire alarm
and sprinklers are tested regularly and have never failed. In 25 years of existence, the
facility had only one fire 20 years ago that was suppressed by the sprinkler system.
Petitioner argues its staff is well-trained and during the fire drill triggered by Inspector
Love it only took staff 1.5 minutes to evacuate all residents at risk. Petitioner concludes
that the fire department’s delayed receipt of the fire alarm on April 4, 2005 did not cause
and was not likely to cause serious injury, harm, impairment or death to any resident. P.
Brief at 19-24. I am not persuaded by Petitioner’s argument or the evidence that it points
to as showing that the CMS immediate jeopardy determination was clearly erroneous.
Petitioner’s argument suggests that the fire department response to a fire alarm is really
unnecessary for protection of Petitioner’s residents and staff given Petitioner’s sprinkler
system and trained staff. However, inherent in the regulations and the Life Safety Code,
and as a matter of common-sense, timely response of the fire department to a real fire is
critical to avoid serious injury or death to facility residents. The adverse conditions
associated with a real fire such as smoke, heat, explosions, and structural collapse are not
present and do not hinder prompt evacuation in the case of a fire drill. Whether or not
Petitioner’s sprinkler system could completely control every fire has not been
demonstrated. Similarly, Petitioner’s staffs performance under real fire conditions has
not been demonstrated, at least not within the last 20 years. The unrebutted testimony of
Inspector Love is that fire can spread rapidly, thus rapid response to a fire alarm is
critical. Tr. 154. After review of all the facts and with due consideration of Petitioner’s
20

arguments, I cannot conclude that the declaration of immediate jeopardy was clearly
erroneous in this case and I do find that this was a serious violation. While I do not find
that Petitioner was significantly culpable in this violation based on the administrator’s
testimony, I do not find that the $2000 proposed PICMP should be reduced.

Accordingly, I conclude that a $2000 PICMP is reasonable.
III. Conclusion

For the foregoing reasons, I find that Petitioner violated 42 C.F.R. § 483.70(a) on April 4,
2005, and that a PICMP of $2000 is reasonable.

/s/

Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )
)

The Gardens at Issaquah, ) Date: June 15, 2007
(CCN: 50-5004), )
)

Petitioner, ) Docket No. C-07-334

) Decision No.CR1605
v. )
)
Centers for Medicare & Medicaid )
Services. )
)

DECISION

Petitioner’s request for hearing is dismissed pursuant to 42 C.F.R. § 498.68.
1. Background

Petitioner, The Gardens at Issaquah, which is owned by Bouchy, LLC, requested a
hearing by letter dated March 20, 2007. Petitioner’s facility was subject to a survey by
the Washington Department of Social and Health Services, Division of Residential Care
Services, Aging and Disability (the state agency) that was completed on January 26,
2007. The Centers for Medicare & Medicaid Services (CMS) notified Petitioner by letter
dated January 30, 2007, that based upon the survey concluded on January 26, 2007, CMS
was imposing a denial of payment for new admissions (DPNA) effective February 14,
2007; that Petitioner’s authority to conduct a Nurse Aide Training and Competency
Evaluation Program (NATCEP) was withdrawn; and that Petitioner’s provider agreement
would be terminated effective February 18, 2007, if Petitioner did not return to substantial
compliance with program requirements before that date. CMS also advised Petitioner that
three regulatory violations or deficiencies were considered to be at the level of immediate
jeopardy, the violations of 42 C.F.R. §§ 483.13(b), 483.13(c), and 483.75. In its request
for hearing, Petitioner specifically alleged that the four alleged immediate jeopardy
deficiencies were erroneous and requested review of those deficiency allegations. The
case was assigned to me for hearing and decision on April 2, 2007.
2

On April 20, 2007, Petitioner filed a motion for summary judgment with supporting
memorandum (P. Brief) and exhibits (P. Ex.) a - e.

On May 3, 2007, I ordered that CMS show cause why this case should not be dismissed
pursuant to 42 C.F.R. § 498.70(b). On May 9, 2007, CMS filed its cross-motion for
summary judgement and/or dismissal of Petitioner’s request for hearing with supporting
brief (CMS Brief). Petitioner filed a request for stay and a reply (P. Reply) in support of
its motion for summary judgment on May 14, 2007. The request for stay is moot as Iam
ruling upon the cross-motions and dismissing Petitioner’s request for hearing.

II. Discussion

Petitioner requests summary judgment and dismissal of its request for hearing citing 42
C.F.R. §§ 498.68 and 498.70. Petitioner argues it is entitled to summary judgment of
dismissal as there are no disputed issues of material fact and the only remaining issues
may be resolved as questions of law. Petitioner argues that CMS has rescinded the
remedies in this case and that Petitioner no longer has a right to hearing. P. Brief at 5-6.

CMS proposed two enforcement remedies based upon the survey concluded on January
26, 2007: termination and a DPNA. CMS notified Petitioner by letter dated March 5,
2007, that based upon a revisit survey on February 26, 2007, it was found to be in
substantial compliance. P. Ex. e. However, as Petitioner acknowledges, it was subject to
a DPNA that was effectuated during the period February 14 through 20, 2007. P. Brief at
3. Both the DPNA and the termination remedy triggered the right to request a hearing. In
general, a participating nursing facility will have a right to a hearing if CMS makes an
initial determination to impose a remedy against that facility. 42 C.F.R. § 498.3(b)(13).
The possible remedies that CMS might impose against a facility, in addition to
termination of the provider agreement, are specified at 42 C.F.R. § 488.406(a). No right
to a hearing exists pursuant to 42 C.F.R. § 498.3(b)(13), unless CMS determines to
impose — and actually imposes — one of the specified remedies. Lutheran Home —
Caledonia, DAB CR674 (2000), aff'd DAB No. 1753 (2000); Schowalter Villa, DAB
CR568 (1999), aff'd DAB No. 1688 (1999); Arcadia Acres, Inc., DAB CR424 (1996),
aff'd DAB No. 1607 (1997). It is the remedy, and not the citation of a deficiency, that
triggers the right to a hearing. Eaglecare, Inc., d/b/a Beech Grove Meadows, DAB
CR923 (2002); Schowalter Villa, DAB No. 1688 (1999); Arcadia Acres, Inc., DAB No.
1607 (1997). See also, The Lutheran Home-Caledonia, DAB No. 1753 (2000), Walker
Methodist Health Center, DAB CR869 (2002), Charlesgate Nursing Center, DAB CR868
(2002), D.C. Association for Retarded Citizens, DAB CR776 (2001), Alpine Inn Care,
Inc., DAB CR728 (2000), Woodland Care Center, DAB CR659 (2000), and Fort Tryon
Nursing Home, DAB CR425 (1996).
3

Arguably, Petitioner did have a right to a hearing to challenge the deficiency findings that
provided a basis for imposition of the DPNA, even though the termination remedy was
rescinded. The gist of the CMS cross-motion for summary judgment is that Petitioner
only requested review of four deficiencies cited at the level of immediate jeopardy and
that there were other deficiency citations that provided an adequate basis for imposition
of the DPNA. CMS has not, however, submitted evidence in support of its cross-motion
for summary judgment and that motion must be denied.

Whether Petitioner preserved its right to review of all deficiency citations or whether
deficiency citations other than those specified in the request for hearing are an adequate
basis for imposition of a DPNA, are not issues that I need to reach in this decision.
Petitioner cited 42 C.F.R. § 498.68, as alternate grounds for dismissal. Pursuant to
section 498.68, Petitioner may withdraw its hearing request and request dismissal at
anytime before I issue a decision. Petitioner need state no cause for such a request.
Accordingly, I find that this is a proper basis upon which to dismiss Petitioner’s request
for hearing.

HI. Conclusion

For the foregoing reasons, Petitioner’s request for hearing is dismissed pursuant to 42

C.F.R. § 498.68. Pursuant to 42 C.F.R. § 498.72, I may vacate a dismissal of a request
for hearing upon a showing of good cause by a party if such showing is made not more
than 60 days from receipt of this Decision. See 42 C.F.R. § 498.22(b)(3).

/s/

Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Brightmoor Nursing Center, ) Date: June 15, 2007
(CCN: 34-5140) )
Petitioner, )
)
-V.- ) Docket No. C-07-125

Centers for Medicare & Medicaid ) Decision No. CR1604
Services. )
)

DECISION

GRANTING SUMMARY DISPOSITION

I grant the motion for summary disposition filed by the Centers for Medicare & Medicaid
Services (CMS) against Petitioner, Brightmoor Nursing Center. I premise my decision on
Petitioner’s failure to challenge 22 findings of noncompliance that were made at a survey
of Petitioner’s facility that was completed on August 19, 2006 (August survey). In this
decision I find that the deficiencies not challenged by Petitioner support imposition of
civil money penalties against Petitioner in amounts of $300 per day for each day of a
period that began on August 19, 2006 and which ran through October 15, 2006.

I. Background

Petitioner is a skilled nursing facility in Salisbury, North Carolina. It participates in the
Medicare program. Its participation in Medicare is governed by sections 1819 and 1866
of the Social Security Act (Act) and by implementing regulations at 42 C.F.R. Parts 483
and 488.

CMS notified Petitioner that it had determined to impose civil money penalties against it
in amounts of $300 per day for each day of the August 19 - October 15, 2006 period,
based on the noncompliance findings that were made at the August survey. On
November 29, 2006, Petitioner’s administrator filed a written request for a hearing before
an administrative law judge. The administrator asserted that Petitioner was requesting a
hearing in the matter of citations that were made at the August survey. She stated that:
2

Specifically, we are requesting a hearing on tags F-224 and F-309.
Hearing request, at 1.

The reference to “tags” in the hearing request is a reference to two of the deficiency
citations that were made in the report of the August survey. The request then discusses
the findings that were made with respect to each of the two tags and explains Petitioner’s
defenses and arguments concerning these findings. The request concludes by stating that:

the citations received at F-224 and F-309 were based on erroneous
determinations that have resulted in incorrect findings and conclusions.

Id., at 2.

The request is silent as to the 22 other deficiency citations that were made in the report of
the August survey which form a part of CMS’s remedy determination in this case.

The case was assigned to me for a hearing and a decision. On December 12, 2006 I
issued a pre-hearing order in which I directed the parties to file pre-hearing exchanges.
CMS filed its exchange on April 16, 2007, and its exchange included a motion for
summary disposition. Petitioner replied on May 16, 2007. It opposed CMS’s motion.
Additionally, it cross-moved for summary disposition as to the noncompliance findings
that were made at tags F-224 and F-309 of the August survey report.’

IL. Issues, findings of fact and conclusions of law
A. Issue

The issue in this case is whether there are grounds for imposing summary disposition
against Petitioner.

' With its pre-hearing exchange CMS filed a total of 46 proposed exhibits,
including the written direct testimony of its witnesses. In response, Petitioner filed a total
of 37 proposed exhibits, which also included the written direct testimony of Petitioner’s
witnesses. The exhibits are identified as CMS Exs. | - CMS Exs. 46 and P. Exs. 1 - P.
Exs. 37. For the purposes of this decision, I am receiving these exhibits into the record of
the case.
3

1. Petitioner did not request a hearing as to 22 deficiency findings that
were made at the August survey and with which CMS concurs and,
consequently, these deficiency findings are administratively final.

The regulation governing the content of a hearing request is precise. A hearing request
must:

(1) Identify the specific issues, and the findings of fact and conclusions of
law with which the affected party disagrees; and

(2) Specify the basis for contending that the findings and conclusions are
incorrect.

42 C.F.R. § 498.40(b)(1), (2).

The regulation imposes on a party requesting a hearing the obligation to state explicitly in
its request what aspects of CMS’s determination it is challenging and to explain why it is
doing so. A hearing request need not be unduly lengthy or complex, but it must at
minimum give CMS notice as to what is being contested.

Petitioner’s request was explicit in that it challenged only two of the 24 findings of
noncompliance made by CMS based on the August survey. It is completely silent as to
the other 22 findings of noncompliance. Its failure to challenge them renders them
administratively final.

Petitioner argues that its hearing request did not exclude a challenge to the 22 deficiencies
not mentioned in the request. According to Petitioner:

While . . . [Petitioner] discussed in more detail . . . F-224 and F-309, they
never stated that these were the only tags that they were disputing.

Petitioner’s response to CMS’s motion for summary judgment, request for partial
summary judgment, and pre-hearing brief (Petitioner’s response) at 2.

It is true that Petitioner’s hearing request did not state that it sought on/y to challenge the
two tags that were cited in the request. But, the absence of that disclaimer does not give
Petitioner a basis for now raising other challenges subsequent to filing its request. The
regulation governing hearing requests does not give a party the right to omit from its
request assertions and arguments that are minimally necessary to satisfy regulatory
completeness requirements.
4

Petitioner now belatedly makes arguments concerning the 22 findings that it did not
challenge in its hearing request. Petitioner’s response at 8 - 17. I find these arguments to
be untimely and, for that reason, I do not accept them. A party challenging an adverse
determination by CMS has 60 days to file a hearing request. 42 C.F.R. § 498.40(a)(2).
Failure to file a request timely absent a showing of good cause for that failure is grounds
for dismissal of the request. 42 C.F.R. § 498.70(c). If I were to construe Petitioner’s
response as a request for hearing concerning the 22 deficiencies that it did not challenge
previously I would be obligated to dismiss it as being untimely unless Petitioner could
show good cause for its late filing.

Petitioner has not offered any justification for challenging now what it failed to challenge
previously. It did not claim that it was misled by CMS into failing to challenge most of
the findings made at the August survey nor has it asserted that it was prevented from
challenging these findings by circumstances that were beyond its ability to control.

Petitioner’s hearing request was made by its administrator who, apparently, is not an
attorney. However, Petitioner has not asserted that its administrator failed to understand
the regulatory requirements governing hearing requests or that she was not put on notice
by CMS about these requirements. Petitioner’s counsel made no effort to amend or to
expand on the hearing request when she entered an appearance in the case.’ Indeed,
counsel never addressed the 22 deficiencies not challenged by Petitioner until after CMS
filed its motion for summary disposition. Nor has counsel explained why she waited until
now to challenge the 22 remaining deficiencies.

Allowing Petitioner now to challenge these deficiencies — more than six months after it
filed its hearing request — would prejudice CMS. My initial pre-hearing order directed
CMS to brief and to offer evidence addressing each and every issue raised by Petitioner.
CMS dutifully did so and it addressed the two deficiencies that Petitioner challenged.
Opening the door at this time to allow Petitioner to challenge the 22 additional
deficiencies would, by necessity, require me to start the pre-hearing exchange process all
over. That would, inevitably, delay the hearing and my final decision in the case and
would frustrate the remedial intent of the Act.

I make no findings concerning the two deficiencies that Petitioner challenged, cited at
Tags 224 and 309 of the August survey report, because they are not a basis for CMS’s
motion for summary disposition. See CMS Ex. 4. Nor do I address Petitioner’s motion
for summary disposition as to those two deficiency tags because it is unnecessary that I
do so.

? Counsel entered her appearance on March 14, 2007, more than a month prior to
the date when CMS submitted its pre-hearing exchange and motion.
5

2. Civil money penalties of $300 per day are a reasonable remedy for the
22 deficiencies that Petitioner did not challenge.

The range of permissible daily civil money penalties for deficiencies that are not at the
immediate jeopardy level of scope and severity is from $50 to $3,000. 42 C.F.R.

§ 488.438(a)(1)(ii). There are regulatory factors which must be considered in deciding
what penalty amount within the range is reasonable. 42 C.F.R. §§ 488.438(f)(1) - (4);
488.404 (incorporated by reference into 42 C.F.R. § 488.404(f)(3)). These factors include
the seriousness of deficiencies, a facility’s compliance history, its culpability, and its
financial condition.

CMS based its remedy determination on the presence of 24 deficiencies including the 22
that Petitioner did not challenge. The daily penalty amount determined by CMS — $300 —
is quite modest, comprising only ten percent of the maximum permissible daily civil
money penalty amount for a non-immediate jeopardy level deficiency. What I must
decide here is whether that $300 amount is reasonable predicated on the presence of 22 of
the 24 deficiencies originally determined by CMS.

In deciding whether the $300 daily penalty is justified I must consider only the facts
offered by CMS. That is because the 22 deficiencies are administratively final. The final
findings of noncompliance encompass not only CMS’s determination that deficiencies
existed, but its determination as to scope and severity as well. Nor may I consider any
challenge by Petitioner as to the duration of these 22 deficiencies because CMS’s
unchallenged findings of noncompliance encompass findings of duration.

I find that $300 is a reasonable daily civil money penalty amount. The 22 deficiencies
not challenged by Petitioner are sufficiently serious, when considered in combination, as
to justify the penalty amount.’ Indeed, two of them, which demonstrate widespread
noncompliance by Petitioner with participation requirements, are sufficiently serious in
and of themselves to justify penalties of $300 per day.

My finding that the penalty amount is justified by the 22 unchallenged deficiencies takes
into consideration that, during the August 19 - October 15, 2006 period, Petitioner
manifested a very large number of deficiencies, 22 in all. Each of these deficiencies
posed a potential for more than minimal harm to residents. CMS Ex. 4. In two instances,
comprising Petitioner’s failure to comply with the requirements of 42 C.F.R.

§ 483.15(h)(2) and its failure to comply with the requirements of 42 C.F.R. § 483.75(0),
Petitioner’s noncompliance constituted a widespread occurrence of noncompliance that
posed the potential for harm to residents. CMS Ex. 4, at 15 - 25; 80 - 82.

> CMS offered no facts as to Petitioner’s culpability or as to its compliance history.
6

The widespread noncompliance at Petitioner’s facility included a failure by Petitioner’s
staff to provide housekeeping and maintenance services necessary to maintain a sanitary,
orderly, and comfortable interior. 42 C.F.R. § 483.15(h)(2). Several areas of three of
Petitioner’s principal corridors were dirty, in disrepair, or both. The problems had
persisted at Petitioner’s facility for some time but had not been addressed. The
widespread noncompliance also included failure by Petitioner to implement a quality
assurance program, in contravention of the requirements of 42 C.F.R. § 483.75(o).
Petitioner failed to conduct quality assurance meetings of its staff notwithstanding
regulatory requirements that it conduct such meetings at least quarterly to identify and
address quality assurance issues.

These two instances of widespread noncompliance posing a potential for harm to
residents in and of themselves justify the extremely modest civil money penalties that
CMS determined to impose. But, these deficiencies were, in fact, part of a much larger
constellation of noncompliance by Petitioner and its staff. These deficiencies address:
elements of care including sanitation and housekeeping; dietary services; administration
of medication; infection control; treating urinary incontinence; naso-gastric tubes; and
care planning. CMS Ex. 4. The overall image created by these additional unchallenged
deficiencies is of a facility that was not closely managed to assure that its residents
received care consistent with regulatory requirements.

In order to accomplish the Act’s remedial purposes a civil money penalty must be
reasonably related both to the deficiencies manifested by facility and to the need to assure
that the facility attain compliance with regulatory requirements. Barnhill Care Center,
DAB 1848 (2002). The extremely modest $300 daily civil money penalty that CMS
determined to impose here meets that test.

Petitioner argues that I may not issue summary judgment finding that the 22 deficiencies
that it did not challenge support a $300 daily penalty because the two deficiencies that it
did challenge remain unresolved and their presence or absence forms an integral element
of the penalty determination. The two deficiencies challenged by Petitioner were found
by CMS to be deficiencies that caused residents to experience actual harm. Petitioner
reasons that, if a penalty of $300 per day is based on the presence of actual harm, then
something less than that cannot on its face justify a penalty amount of $300. Thus,
according to Petitioner, a full hearing as to the two deficiencies it challenged must be
completed in order to decide whether these deficiencies were, in fact, present. Petitioner
implies that penalties of less than $300 would be necessitated by my decision not to
sustain one or both of the two challenged deficiencies.
7

I find this argument to be unpersuasive. I am certain that the presence of additional
deficiencies beyond the 22 that I sustain in this decision would provide additional basis
for the $300 daily penalties that CMS determined to impose. But, I do not find those
additional deficiencies to be necessary to support penalties of $300 per day. As I explain
above, the 22 deficiencies that Petitioner did not challenge provide ample support for the
very modest penalty amount that is at issue here.

/s/

Steven T. Kessel
Administrative Law Judge