Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Decision No. CR1583
Centers for Medicare & Medicaid
Services.

In the Case of: )
)
High Tech Home Health, Inc., )
) Date: April 3, 2007
Petitioner, )
)
-V.- ) Docket No. C-06-442
)
)
)
)

DECISION AND ORDER DISMISSING CASE

This matter is before me on my own motion, and is illuminated by the history of this case
since CMS’s Motion in Limine filed December 28, 2006. My Order in Limine of January
17, 2007 granted most of CMS’s Motion in Limine, and ruled that Petitioner’s
presentation at the hearing of this matter would be limited to evidence and arguments
properly before me pursuant to the terms of sections 1866(b)(2) and 1866(h)(1) of the
Social Security Act (Act), 42 U.S.C. §§ 1395cce(b)(2) and 1395cc(h)(1), and 42 C.F.R.
Part 498. Petitioner has failed to plead its case in conformity with that Order in Limine
and my subsequent Notice and Order to Show Cause, in spite of having been repeatedly
offered opportunities to do so. In particular, Petitioner has failed to identify the specific
justiciable issues, findings of fact, and conclusions of law in CMS’s initial determination
of April 13, 2006 with which it disagrees, and has failed to specify its basis for
contending that the findings and conclusions of that initial determination are incorrect.!

' The “initial determination” to which this Decision refers is incorporated in two
letters from CMS to Petitioner. The first is dated March 23, 2006, and it charges
Petitioner’s noncompliance with three conditions of Medicare program participation: 42
C.F.R. § 484.24 (Organization Services and Administration), 42 C.F.R. § 484.18
(Acceptance of Patients, Plan of Care, and Medical Supervision), and 42 C.F.R. § 484.30
(Skilled Nursing Services). This first letter notifies Petitioner of its termination as a
2

Petitioner is therefore not in compliance with 42 C.F.R. §§ 498.40(b)(1) and (b)(2).
Because its noncompliance is manifestly a matter of choice, it is apparent that Petitioner
has abandoned its right to a hearing, and that this appeal must be dismissed pursuant to 42
C.F.R. § 498.69(b). Moreover, Petitioner has no right to a hearing on those issues it does
purport to appeal. This matter must, for that additional reason, be dismissed pursuant to
42 CER. § 498.70(b).

I

CMS’s Motion in Limine was precipitated by Petitioner’s Prehearing Memorandum filed
on December 22, 2006. Petitioner’s Prehearing Memorandum began: “It is important for
this Appeals Board to understand just how historically awful CMS, HCFA (‘Health Care
Finance Administration’), and AHCA (‘Florida’s Agency for Healthcare Administration’)
have been in managing and regulating the Medicare home health program in Florida and
the United States for the past twenty years.” Petitioner’s Prehearing Memorandum
concluded its introductory section by asserting that “the Medicare data base over time is
relevant and material to this case, and access to that database is a primary objective of this
litigation, both at this Departmental Appeals Board level and on appeal to federal district
court.” Petitioner thereafter set out five “Counts” it proposed to litigate: they were
entitled, respectively, “Wasting of Federal Funds,” “Mass Felony Murder,” “Breach of
Contract,” “CMS Improperly Used the Survey Process,” and “HIGH TECH Is Not a
Threat to Patients.”

My Order in Limine made it clear that the issues to be considered in this appeal are
limited to those over which the Administrative Law Judges (ALJs) of this forum have
been granted jurisdiction by the provisions of sections 1866(b)(2) and 1866(h)(1) of the
Act. That grant of jurisdiction includes the authority to review certain “initial
determinations” made by CMS. The term “initial determinations” is defined exhaustively
and comprehensively at 42 C.F.R. § 498.3(b), and CMS has taken the position that its

program participant effective March 26, 2006. The second letter is dated April 13, 2006,
and confirms that Petitioner’s termination became effective on March 26, 2006. Because
Petitioner’s May 4, 2006 hearing request was timely with reference to either of the two
CMS letters, I have treated the April 13, 2006 CMS letter as the “initial determination” in
this case.

> My Orders of January 17, 2007 and February 12, 2007 incorrectly characterized
Petitioner’s Prehearing Memorandum as framed in four “Counts.” My characterization
failed to mention Petitioner’s additional “Count” entitled “CMS Improperly Used the
Survey Process,” which “Count” was set out as the fourth in the full sequence of five.
3

“initial determination” in this case is its termination of Petitioner’s Medicare provider
agreement, listed at 42 C.F.R. § 498.3(b)(8). Individuals or entities may appeal only
“initial determinations” and have no right to appeal other questions. Mira Vista Care
Center, Inc., DAB No. 1789 (2001); Comprehensive Mental Health Center of Baton
Rouge, et al., DAB No. 1774 (2001); Specialty Hospital of Southern California-La
Mirada, DAB No. 1730 (2000); Metropolitan Methodist Hospital, DAB No. 1694 (1999);
Mira Vista Care Center, Inc., DAB CR1459 (2006); but see Mira Vista Care Center, Inc.,
DAB App. Div. Docket No. A-06-114 (August 10, 2006).

The comprehensive and exhaustive list of “initial determinations” set out at 42 C.F.R.

§ 498.3(b) does not include any of the five “Counts” that Petitioner proposed to litigate in
this appeal. Those five “Counts” simply and categorically are not subject to consideration
in this appeal because they are not “initial determinations” by CMS.

My Order in Limine made that point unambiguously, and extended Petitioner an
opportunity to amend its Prehearing Memorandum so as to identify and address each
deficiency for which it had been cited and sanctioned by CMS, and to specify the exhibits
and witnesses on which Petitioner would rely in challenging each specific deficiency it
might dispute. The amended Prehearing Memorandum was required to specify the
exhibits and witnesses on which Petitioner would rely to support any affirmative defenses
it intended to assert. Petitioner was explicitly cautioned that exhibits not fully described
in its amended Prehearing Memorandum would not be admitted into evidence, and
witnesses whose testimony was not fully described in its amended Prehearing
Memorandum would not be permitted to testify. Petitioner was allowed 10 days to file an
amended Prehearing Memorandum.

Petitioner did not file an amended Prehearing Memorandum or any other pleading having
or purporting to have that effect. It therefore appeared by February 12, 2007 that
Petitioner might have abandoned its request for hearing and this appeal, and that its
request for hearing might thus be subject to dismissal pursuant to 42 C.F.R. § 498.69.
Moreover, the most generous reading of Petitioner’s pleadings before me at that point
simply did not reflect the specific justiciable issues, findings of fact, and conclusions of
law in CMS’s initial determination with which Petitioner disagreed, and did not specify
Petitioner’s basis for contending that the findings and conclusions were incorrect. See 42
C.F.R. §§ 498.40(b)(1) and (b)(2). A request for hearing deficient in those particulars is
subject to dismissal if the deficiencies remain uncorrected after notice and a reasonable
opportunity to amend. Care Inn of Gladewater, DAB No. 1680 (1999); Regency Manor
Healthcare Center, et. al., DAB No. 1672 (1998); Birchwood Manor Nursing Center,
DAB No. 1669 (1998).
4

In order to provide Petitioner with every possible opportunity to amend its pleadings so as
to raise justiciable issues within the terms of sections 1866(b)(2) and 1866(h)(1) of the
Act and 42 C.F.R. Part 498, and to allow Petitioner a further opportunity to comply with
the specific requirements of 42 C.F.R. §§ 498.40(b)(1) and (b)(2), on February 12, 2007, I
issued a Notice and Order to Show Cause requiring Petitioner to show cause why its
request for hearing in this matter should not be dismissed as abandoned. I ordered that
any such showing must include, as a specific demonstration that Petitioner had not
abandoned its request for hearing, an amended Prehearing Memorandum in full
compliance with the Order in Limine and 42 C.F.R. §§ 498.40(b)(1) and (b)(2). The
importance of Petitioner’s compliance with 42 C.F.R. §§ 498.40(b)(1) and (b)(2) was
conspicuous in my February 12, 2007 Notice and Order to Show Cause: Petitioner’s
litigating strategy had up to that point resisted pleading a case over which I could exercise
jurisdiction, a strategy which up to that point had deliberately and unmistakably forfeited
its right to appeal legal and factual issues that I might hear and decide. By the terms of
my Notice and Order to Show Cause, Petitioner was clearly on notice that unless it
brought its appeal within the ambit of this forum’s jurisdiction by complying with 42
C.F.R. §§ 498.40(b)(1) and (b)(2), its failure to do so would be treated as an abandonment
of its May 4, 2006 request for hearing and of the appeal based on it. Both my Order in
Limine and my Notice and Order to Show Cause were obedient to the doctrine of The
Carlton at the Lake, DAB No. 1829 (2002) and Alden Nursing Center-Morrow, DAB No.
1825 (2002) in permitting — indeed, by requiring — Petitioner to correct the deficiencies
in its invocation of this forum’s jurisdiction.

Petitioner filed its Response to the Notice and Order on February 20, 2007. CMS was
given the opportunity to reply to Petitioner’s Response not later than March 16, 2007, and
did so in its letter of March 15, 2007. Those pleadings represent the final statements of
both parties to this litigation.

I

From the very beginning of this litigation, Petitioner has argued propositions and has
offered proof of facts not cognizable in this forum within the terms of sections 1866(b)(2)
and 1866(h)(1) of the Act and 42 C.F.R. Part 498. It is true that part of Petitioner’s
request for hearing could, if read broadly in the spirit of Carlton and Alden-Morrow, be
understood to adumbrate challenges to the deficiencies cited against it and to CMS’s
determination to end Petitioner’s participation in the Medicare program. P. Req. Hrg., at
1, paragraph 1. It is now plain, however, that Petitioner’s exclusive objective was then
what it is now: the litigation of matters far beyond the jurisdictional boundaries of this
forum. P. Req. Hrg., at page 1, paragraph 2 through page 3, paragraph 2, and attached
exhibits.
5

In the earliest stages of this litigation, CMS did not move to strike the objectionable
portions of Petitioner’s request for hearing, but it did react vigorously to Petitioner’s June
27, 2006 Motion to Revise Order to Allow Discovery. By that Motion Petitioner sought
permission to conduct discovery through interrogatories to CMS. The subjects of those
interrogatories appeared to be matters related only to the objectionable portions of the
request for hearing. None of the proposed interrogatories appeared reasonably calculated
to lead to the discovery of evidence relevant to any of the arguably-legitimate issues
implicit in the first paragraph of its request for hearing. CMS responded to Petitioner’s
Motion on July 10, 2006, noting that Civil Remedies Division procedures normally do not
contemplate discovery through interrogatories, and that the topics Petitioner sought to
explore through interrogatories were not “initial determinations” properly before me in
this case.

CMS filed its Report of Readiness on July 17, 2006 in compliance with paragraph D of
the “60-Day” Order entered when this case was docketed on May 17, 2006. Petitioner
has never filed a Report of Readiness, although filing such a Report would have allowed
it an early opportunity to refine and clarify its legal and factual positions in this appeal.

While Petitioner’s Motion to Revise Order to Allow Discovery was pending, and after
CMS filed its Report of Readiness, Petitioner acted again: on August 2, 2006 it filed its
Motion for Temporary Injunction, by which it asked that “this Departmental Appeals
Board . . . grant a temporary injunction and order CMS, and its agent AHCA, to renew
HIGH TECH’s home health agency license and its Medicare certification.” On August 9,
2006, CMS replied by noting that there appeared to be “no authority for the proposition
that this tribunal may grant injunctive relief in any form... .”

I denied both of Petitioner’s Motions in my Ruling on Pending Motions of August 23,
2006. In doing so, I explained that the fundamental flaw in Petitioner’s two Motions was
their insistence on debating questions and demanding relief outside the proper scope of
litigation in this forum. Thus, at an early stage of these proceedings, Petitioner had ample
reason to understand that it would not be permitted to litigate such questions in this
appeal. That understanding was not reflected in the List of Exhibits and the List of
Witnesses filed by Petitioner on or about October 30, 2006.

Although six of Petitioner’s proffered exhibits are items of correspondence related to the
survey and revisit that led to the termination sanction (P. Exs. 1-5, and 13), and one
adopts a group of CMS exhibits (P. Ex. 14), the remaining eight (P. Exs. 6-12, and 15)
reveal no apparent relationship to the survey and revisit, to the deficiencies cited, or to
any facts properly at issue in this appeal. I can understand them only as addressing the
five “Counts” already discussed.
6

Petitioner’s final list of eight witnesses was non-compliant with Civil Remedies Division
Procedures paragraph 4, for it omitted entirely the witnesses’ addresses, provided no
information to identify their relationships to the case, and, most significantly, failed
completely to include brief summaries of the testimony expected from each. One named
witness, M. Larkin, is the facility’s administrator, but the other seven were identified only
by their names. One of the eight, L. Mullin, is described at page 7 of Petitioner’s
Response to Motion in Limine as a Registered Nurse engaged in caring for one of the
patients relevant to this case, but the nature of her proposed testimony is not described
there or in the witness list. I have been unable to find any of the six remaining names
anywhere in any of Petitioner’s pleadings, documents, or attachments filed during the
entire course of this litigation.

Thus, as sources of specific information about Petitioner’s position on any issue properly
before me, Petitioner’s List of Exhibits and List of Witnesses were all but worthless. The
Lists provided no assurance that Petitioner was prepared to place issues before me that |
could hear and decide, and strongly suggested that Petitioner had every intention of
persisting in its attempt to raise and argue issues that I have no authority to adjudicate. At
that point Petitioner had one last clear chance to plead its case in conformity with this
forum’s jurisdiction: that chance was its Prehearing Memorandum.

Petitioner failed to submit its Prehearing Memorandum by December 4, 2006, the date
originally ordered. An Order to Show Cause was issued on December 14, 2006 after
inquiries suggested that Petitioner might have abandoned its appeal, but Petitioner was
ultimately granted an extension of time to permit it to file its Prehearing Memorandum by
December 22, 2006. That Prehearing Memorandum, prepared in full awareness of my
Ruling of August 23, 2006, repeated Petitioner’s insistence on litigating only matters
beyond my jurisdiction and refused to identify which of its named witnesses would offer
relevant testimony and which of its proposed exhibits represented relevant items of
evidence. The Prehearing Memorandum made no effort to repeat, elucidate, preserve, or
adopt any of the arguably-legitimate issues of fact or law implicit in the first paragraph of
Petitioner’s request for hearing. It refused to specify exhibits or witnesses that might
address any of those arguably-legitimate issues. It was that Prehearing Memorandum that
precipitated CMS’s Motion in Limine and resulted in my Order in Limine; it was that
Prehearing Memorandum that my Notice and Order to Show Cause required Petitioner to
amend or suffer dismissal pursuant to 42 C.F.R. § 498.69(b)(2).
7

HL

What lies before me now is a record in which Petitioner denies that it has abandoned its
appeal, but in which Petitioner has refused to amend its Prehearing Memorandum and
plead its case in conformity with the jurisdictional limits of this forum and the Orders
issued in these proceedings. The first paragraph of Petitioner’s February 20, 2007
Response (P. Resp.) made that appreciation clear:

1. HIGH TECH is not abandoning its lawsuit. The Departmental Appeals
Board is a necessary precursor to get to federal district court, and probably
on to the 11th Circuit Court of Appeals. Under ordinary conditions, to
maintain an ongoing working relationship with CMS, a home health
provider must step lightly when appealing a CMS ruling. As HIGH TECH
has been destroyed by CMS, these are not ordinary conditions.

P. Resp., at 1.

Petitioner’s answer to the Notice and Order’s demand for specificity concerning its
witnesses and exhibits was unresponsive at best:

9. HIGH TECH intends to rely on both sets of exhibits and the testimony of
CMS witnesses. HIGH TECH will offer its witnesses.

P. Resp., at 4.

Finally, Petitioner declined to amend its December 22, 2006 Prehearing Memorandum,
although the Notice and Order made such an amendment an essential component of a
satisfactory showing of good cause in response to that Notice and Order:

12. HIGH TECH relies on its Pre-Hearing Memorandum and its
previously-submitted list of exhibits. Those exhibits are self-explanatory
and are more than 90% AHCA and HCFA documents.

P. Resp., at 5.

Petitioner’s Response to the Notice and Order to Show Cause was an intentional and
informed refusal to attempt a showing of cause why its request for hearing in this matter
should not be dismissed as abandoned. Thus, entirely as the result of its own choice,
Petitioner’s February 20, 2007 Response has failed to show such good cause. I so find
and conclude, and I repeat my finding and conclusion on this point below.
8

Petitioner’s intransigent refusal to plead a case that I can hear and decide places it ina
position functionally equivalent to any other petitioners whose requests for hearings fall
short of invoking the jurisdiction of this forum. Most of those appeals fall into two
classes.

Some of those appeals are based on requests for hearings defective because they do not
comply with the content requirements of 42 C.F.R. §§ 498.40(b)(1) and (b)(2). The
doctrine set out in The Carlton at the Lake, DAB No. 1829, and Alden Nursing Center-
Morrow, DAB No. 1825, demands that such petitioners be given a reasonable opportunity
to correct the shortcomings of their requests for hearings, or that the ALJ require more
definite statements of those petitioners’ substantive claims. But those ameliorative
measures do not invalidate the underlying rule: if material content deficiencies are not
corrected, the requests for hearing are to be dismissed. Care Inn of Gladewater, DAB
No. 1680; Regency Manor Healthcare Center, DAB No. 1672; Birchwood Manor
Nursing Center, DAB No. 1669. The ALJ is justified in evaluating a “petitioner’s
willingness and ability to identify the facts and legal interpretations in controversy” as a
means of ensuring that “the regulations’ reasonable expectation that litigation will be
initiated and maintained only for legitimate reasons.” Care Inn of Gladewater, DAB No.
1680, at 8. Put another way, when the ALJ offers a reasonable opportunity to amend a
request for hearing and the opportunity is spurned, then “strong reasons . . . such as
intransigency on the part of the petitioner . . . ” support dismissal. Alden Nursing Center-
Morrow, DAB No. 1825, at 12.

Another class of appeals includes requests for hearing that are defective because they
challenge various CMS actions other than “final determinations.” They are subject to
dismissal pursuant to 42 C.F.R. § 498.70(b), since those petitioners do not have a right to
a hearing on the issues they raise. Fountain Lake Health & Rehabilitation, Inc., DAB No.
1985 (2005); Premium Diagnostic Laboratory, Inc., DAB No. 1790 (2001); Mira Vista
Care Center, Inc., DAB No. 1789; Lakewood Plaza Nursing Center, DAB No. 1767
(2001); The Lutheran Home-Caledonia, DAB No. 1753 (2000).

As matters stand now, Petitioner’s appeal has fully qualified for classification in both
groups. It belongs in the first class because Petitioner has not complied with the content
requirements of 42 C.F.R. §§ 498.40(b)(1) and (b)(2), and has repeatedly shown itself
unable — or unwilling to the point of intransigence — to do so. Petitioner’s final fully-
volitional refusal to attempt compliance, while in full awareness of the consequences of
non-compliance, constitutes an abandonment of its appeal within the meaning of 42
C.F.R. § 498.69(b)(2). Iso find and conclude, and I repeat my findings and conclusions
on this point below. It belongs in the second class because none of the five “Counts”
Petitioner does propose to contest here is an “initial determination” and Petitioner has no
9

right to appeal any of them. On the case it has pleaded, Petitioner “does not... have a
right to a hearing” as that concept is understood at 42 C.F.R. § 498.70(b). I so find and
conclude, and I repeat my findings and conclusions on this point below.

IV

The terms of 42 C.F.R. § 498.74(a) require that this Decision recite “separate numbered
findings of fact and conclusions of law.” Accordingly, based on the entire record before
me in this case, I find and conclude as follows:

1. Petitioner’s February 20, 2007 Response to Order to Show Cause fails to comply with
the Order and Notice to Show Cause of February 12, 2007, and fails to show cause why
Petitioner’s request for hearing should not be dismissed as abandoned.

2. Petitioner has not satisfied the content requirements of 42 C.F.R. §§ 498.40(b)(1) and
(b)(2), and has abandoned its appeal within the meaning of 42 C.F.R. § 498.69(b)(2).

3. Because Petitioner has abandoned its appeal, its request for hearing is subject to
dismissal pursuant to 42 C.F.R. § 498.69(b)(2).

4. Petitioner does not propose in these proceedings to contest an “initial determination”
within the meaning of 42 C.F.R. § 498.3(b), and therefore does not have a right toa
hearing within the meaning of 42 C.F.R. § 498.70(b).

5. Because Petitioner does not have a right to a hearing, its request for hearing is subject
to dismissal pursuant to 42 C.F.R. § 498.70(b).

For all of the reasons set forth above, and based on the findings of fact and conclusions of
law here recited, Petitioner’s May 4, 2006 request for hearing and this appeal must be,
and they are, DISMISSED, pursuant to 42 C.F.R. §§ 498.69(b)(2) and 70(b).

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Community Home Health, ) Date: March 30, 2007
)
Petitioner, )
)
-Vv.- ) Docket No. C-07-123
) Decision No. CR1582
Centers for Medicare & Medicaid )
Services. )
)
DECISION

Petitioner, Community Home Health (Petitioner or Community), is a home health agency
(HHA) that, until its termination on September 27, 2006, was certified to participate in
the Medicare program as a provider of services. Following surveys completed June 29,
2006, August 17, 2006, and September 20, 2006, the Centers for Medicare & Medicaid
Services (CMS) terminated Community’s Medicare participation because, according to
CMS, it failed to maintain substantial compliance with conditions of participation.
Petitioner here challenges its termination.

The parties have filed cross motions for summary judgment.

I agree that this case presents no material facts in dispute, and is appropriate for summary
judgment. For the reasons set forth below, I find that Community was not in substantial
compliance with Medicare conditions of participation in June 2006. The State Agency
afforded it a reasonable opportunity to achieve compliance, but, because it failed to
achieve and/or maintain substantial compliance, CMS was authorized to terminate its
provider agreement. I therefore deny Petitioner’s Motion and grant CMS’s Motion for
Summary Judgment.
I. Background

An HHA is a public agency or private organization that provides skilled nursing and other
health care services to patients in their homes. Social Security Act (Act), section 1861(o).
It may participate in the Medicare program if it mects the statutory definition and
complies with certain requirements, called conditions of participation. Act, sections

1861 (0), 1891; 42 C.F.R. Part 484; 42 C.F.R. § 488.3. A “condition of participation”
represents a broad category of home health services. Each condition is contained in a
single regulation, which is divided into subparts called standards.

CMS, on behalf of the Secretary, must determine whether a Medicare provider (including
an HHA) complies substantially with Medicare’s statutory and regulatory requirements.
Act, section 1866(b)(2). To monitor compliance, CMS contracts with state agencies that
conduct periodic surveys. Act, section 1864(a); 42 C.F.R. § 488.20. The regulations
require that each provider be surveyed once every twelve months, and more often, if
necessary, to ensure that identified deficiencies are corrected. 42 C.F.R. § 488.20.

Here, based on a survey completed June 29, 2006, the Alabama Department of Health
(State Agency) determined that Community was not in substantial compliance with two
conditions: 42 C.F.R. § 484.30 (Skilled Nursing Services) and 42 C.F.R. § 484.52
(Evaluation of the Agency’s Program). The surveyors also noted several standard-level
deficiencies: 42 C.F.R. §§ 484.18(a) (Plan of Care); 484.36(b)(3)(iii) (Competency
Evaluation & In-Service Training); and 484.36(c)(1) (Assignment & Duties of Home
Health Aide). P. Ex. 1; CMS Ex. 2. Ina letter dated July 7, 2006, the State Agency
notified Petitioner that it was not in compliance with the two conditions, and that
“regulations preclude the recertification” of a provider not in compliance with conditions.
The letter further advised Community that the State Agency would therefore recommend
that CMS terminate Community’s Medicare participation within 90 days (September 27,
2006). However, Community could avoid termination if it achieved substantial
compliance prior to its termination date. CMS Ex. 1.

Petitioner submitted a plan of correction (POC), promising to correct its deficiencies no
later than August 10, 2006. P. Ex. 2; CMS Ex. 3.
3

State Agency surveyors revisited Community on August 17, 2006, and determined that it
had not brought itself into substantial compliance, citing one condition-level deficiency,
42 C.F.R. § 484.36 (Home Health Aide Services),' and four standard-level deficiencies:
42 C.F.R. §§ 484.14(b) (Governing Body); 484.18(a) (Plan of Care); 484.30 (Skilled
Nursing Services); and 484.30(a) (Duties of the Registered Nurse). P. Ex. 2; CMS Ex. 4.

In a notice letter dated August 23, 2006, CMS advised Community that the follow-up
survey showed that it was out of compliance with the Home Health Aide Services
Condition. CMS included with the letter a copy of the survey report form (CMS-2567).
That document contains a list of all the deficiencies cited. CMS warned Community that
its provider agreement would terminate on September 27, 2006, if the deficiencies were
not corrected. The letter advised Petitioner of its appeal rights.

Petitioner did not immediately appeal, but submitted another plan of correction,
promising complete correction no later than August 29, 2006.” P. Exs. 3, 5; CMS Ex. 6.
The State Agency conducted another survey on September 20, 2006, but again found that
Community was not in substantial compliance, citing three conditions: 42 C.F.R.

§§ 484.14 (Organization, Services & Administration); 484.30 (Skilled Nursing Services);
and 484.48 (Clinical Records); and two standards: 42 C.F.R. § 484.18(a) (Plan of Care)
and 484.55(c) (Drug Regimen Review). P. Ex. 8; CMS Ex. 7. CMS sent Petitioner a
notice letter dated September 28, 2006, advising that it was out of compliance with the
three conditions, and that its Medicare agreement terminated effective September 27,
2006. The letter reminded Petitioner that its appeal rights had been explained in the
August 23, 2006 letter. CMS Ex. 8.

By letter dated November 22, 2006, Petitioner appealed its termination, and the matter has
been assigned to me. The parties have filed cross-motions for summary judgment with
accompanying briefs (P. Br., CMS Br.). With its motion, CMS submited ten exhibits
(CMS Exs. 1-10). With its motion, Petitioner submitted fifteen exhibits (P. Exs. 1-15).
Petitioner also filed a brief in opposition to CMS’s motion for summary judgment (P.
Reply), attaching ten additional exhibits (P. Exs. 16-25).

' Within the cited condition, the surveyors cited three deficient standards:
§§ 484.36(b)(3)(ii), 484.36(b)(3)(iii), 484.36(c)(1). CMS Ex. 4, at 11-17.

2 | discuss below Petitioner’s apparent failure to request timely review of the
August survey.
IE. Issues
7 I consider first whether summary judgment is appropriate.
. On the merits, the issue is whether, based on all of the survey findings, CMS was

authorized to terminate Petitioner’s Medicare provider agreement.
III. Discussion

A, Summary Judgment is appropriate because no material facts are in
dispute and CMS is entitled to judgment as a matter of law.

Summary judgment is appropriate if a case presents no genuine issue of material fact, and
one party is entitled to judgment as a matter of law. The moving party may show the
absence of a genuine factual dispute by presenting evidence so one-sided that it must
prevail as a matter of law, or by showing that the non-moving party has presented no
evidence “sufficient to establish the existence of an element essential to [that party’s]
case, and on which [that party] will bear the burden of proof at trial.” Livingston Care
Center v. U.S. Dept. of Health and Human Services, 388 F.3d 168, 173 (6" Cir. 2004)
(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). To avoid summary
judgment, the non-moving party must then act affirmatively by tendering evidence of
specific facts showing that a dispute exists. Matsushita Elec. Indus. Co., Ltd., v. Zenith
Radio Corp., 475 U.S. 574, 586 n.11 (1986); see also Vandalia Park, DAB No. 1939
(2004); Lebanon Nursing and Rehabilitation Center, DAB No. 1918 (2004). In
examining the evidence for purposes of determining the appropriateness of summary
judgment, I must draw all reasonable inferences in the light most favorable to the non-
moving party. Livingston Care Center, 388 F.3d at 172; Guardian Health Care Center,
DAB No. 1943, at 8 (2004). However, drawing factual inferences in the light most
favorable to the non-moving party does not require that I accept the non-moving party’s
legal conclusions. Cf Guardian Health Care Center, DAB No. 1942, at 11 (“A dispute
over the conclusion to be drawn from applying relevant legal criteria to undisputed facts
does not preclude summary judgment if the record is sufficiently developed and there is
only one reasonable conclusion that can be drawn from those facts.”)

As discussed below, no material facts are in dispute here. Petitioner has explicitly not
challenged the June 2006 survey findings (P. Motion at 2), and CMS does not suggest
that Community’s Medicare participation be terminated based on the June deficiencies.
Instead, the State Agency (with CMS’s apparent concurrence) afforded Community the

> | make Findings of Fact and Conclusions of Law (Findings) to support my
decision in this case. I set forth each Finding, in italics and bold, as a separate heading.
5

opportunity to correct, and the parties focus on whether, during the August and September
surveys, Community demonstrated that it had achieved substantial compliance. Asa
matter of law, CMS was authorized to terminate if, during either of these surveys,
Community was not in substantial compliance with even one single condition of
participation. And, even drawing every possible inference in Community’s favor, the
undisputed facts establish that, at the time of the September survey, it was not in
substantial compliance with the clinical records condition, 42 C.F.R. § 484.48.4

B. Because Community failed to maintain substantial compliance with
all Medicare Conditions of Participation, CMS may terminate its program
participation.

1. Community’s request for review of the August survey
was untimely, but, even if reviewable, the August survey
findings are not material if Community did not thereafter
maintain substantial compliance.

| note first that Petitioner is probably not entitled to review of the August survey, because
it failed to request review timely. The August 23 notice letter unambiguously states that
“[a] written request for hearing must be filed no later than sixty days after the date of this
letter... .” CMS Ex. 5, at 1. The regulations that govern these proceedings state that the
affected party “must file the request in writing within 60 days from receipt of the notice. .
..” 42 C.F.R. § 498.40; see also Act, sections 1866(h), 205(b) (hearing request must be

* Petitioner’s appeal seeks review of the August and September condition-level
deficiencies only, and not any of the separate standards. CMS argues, correctly, that
uncorrected deficiencies, even at the standard level, justify termination. 42 C.F.R.

§ 488.28. In CMS’s view, I should grant summary judgment because Community had a
standard-level deficiency (§ 484.18(a) — Plan of Care) in August that went uncorrected in
September. (In fact, the same standard was also cited as a deficiency in June). Because
Petitioner did not include this standard-level deficiency in its appeal, CMS argues that it
is entitled to summary judgment on the termination. I would find this argument
compelling but for the ambiguity of the August and September notice letters. Petitioner
complains — with some justification — that the language of these letters misled it into
believing that CMS based its termination solely on condition-level deficiencies. Had it
understood that CMS was considering uncorrected standard-level deficiencies as an
independent basis for termination, it might have appealed them as well. Petitioner’s
argument is somewhat weakened, however, because CMS accompanied the August letter
with a copy of the survey report form and warned that Community’s Medicare
participation would end “if the deficiencies are not corrected.” In any event, because I
decide the case on other issues, I need not and do not resolve the matter here.
6

filed within sixty days after receipt of the notice of CMS’s determination). Act, section
205(b);, Cary Health and Rehabilitation Center, DAB No. 1771, at 8-9 (2001).
Petitioner’s hearing request is dated November 22, 2006, well beyond the 60-day limit.
Although CMS has not moved for dismissal, the regulations authorize me, on my own
motion, to dismiss an untimely hearing request if the time for filing has not been
extended. 42 C.F.R. § 498.70(c). Upon receipt of a written request, | may extend the
period for filing based on a finding of good cause, but I have received no request for an
extension, and there has been no showing of good cause. 42 C.F.R. § 498.40(c). Given
the tardiness of its hearing request, and the absence of any showing of good cause for the
tardiness, I doubt very much that I have the authority to review the August survey.

Moreover, the August survey findings are not material to my ultimate conclusion here. I
reject Petitioner’s suggestion that the August survey results are in fact dispositive because
“if the erroneous finding of the August . . . survey. . . is reversed . . . then the September
survey should never have taken place.” P. Motion at 3. CMS (and the State Agency)
have the discretion to order surveys “as frequently as necessary to ascertain compliance
and confirm correction of deficiencies.” 42 C.F.R. § 488.20(b)(1). Their exercise of that
discretion is not reviewable. Even if Community were found in substantial compliance in
August, CMS was free to follow-up with an additional survey (or surveys) to insure that
the HHA maintained its substantial compliance. And unless Community demonstrated
that it had maintained compliance, CMS was authorized to terminate. Act, section
1866(b)(2)(A); 42 C.F.R. § 489.53(a)(3); Comprehensive Professional Home Visits, DAB
No. 1934, at 3, 13 (2004); see also Family Home Health Services, DAB No. 1716 (2000)
(CMS may terminate a provider agreement if the provider is not complying with the Act,
regulations, or the terms of its provider agreement).

I now consider whether Community was in compliance with all conditions at the time of
the September survey.

2. Community was not in substantial compliance with the

clinical records condition of participation, 42 C.F.R.

§ 484.48, because it failed to safeguard patient medical records against
loss and unauthorized use.

Among other requirements, the clinical records regulation requires the HHA to safeguard
clinical record information against loss or unauthorized use. Written procedures must
govern the use and removal of records, and the conditions for release of information. The
patient’s written consent is required for release of information not authorized by law. 42
C.F.R. § 484.48(b).
7

By its own admission, Petitioner failed to safeguard its patients’ medical records against
loss and unauthorized use. CMS alleges that one of Community’s employees removed
and photocopied confidential medical records, keeping them in her home. And an
undisclosed number of the original records were simply lost. P. Ex. 11. Community does
not dispute these allegations, and fills in a few (but very few) additional details.°
Originals of patient records were in an employee’s car when she was involved in an
automobile accident. According to an employee counseling notice, dated August 25,
2006, following the accident, the records “were given to spouse to maintain at home” but,
inexplicably, the records were lost. So instead of returning the original records, the
employee submitted copies that she had been maintaining in her home; hence the HHA
discovered that she had impermissibly copied and kept confidential medical records in her
home. P. Ex. 11. The employee maintained that she did not know that she was breaking
the law. /d.

Petitioner minimizes these record irregularities as an “isolated incident” (P. Br. at 12) that
was rapidly discovered and corrected. I disagree. That Community even discovered the
breach was pure serendipity. Unknown to Community, one of its employees — by all
accounts acting purely out of ignorance — was able to appropriate and hold original
medical documents for an indefinite period of time, to photocopy those documents, and,
eventually, to lose them. This breach seriously compromised patient privacy and suggests
serious problems with the HHA’s procedures for safeguarding its patients’ records. |
consider this a serious violation of the regulation, sufficient to render the condition out of
compliance.’ See 42 C.F.R. §§ 488.24(b), 488.26(b) (The manner and degree of a
provider’s satisfaction of the component standards determines whether an HHA complies
with a particular condition. Deficiencies in some standards may not sufficiently affect the
overall condition so as to put the condition out. On the other hand, one standard may be
so crucial that a deficiency in that area alone may put the condition out. Failure to

* For purposes of summary judgement, I have accepted Petitioner’s version of
these events. I note that, aside from an employee counseling note and a receipt for locks,
Petitioner submits virtually no evidence addressing the issue. Petitioner has not submitted
a declaration from the employee herself nor from anyone else familiar with these events.
Pursuant to my prehearing order, the parties were required to submit “all proposed
exhibits” and “the complete written direct testimony of any proposed witness.” It thus
appears that Petitioner has no additional evidence regarding this issue.

® Although the issue is not specifically before me, both the employee and
Community may also be subject to sanction under the Health Insurance Portability and
Accountability Act of 1996, P.L. 104-191, which requires a “covered entity” to maintain
reasonable and appropriate safeguards to prevent disclosure of protected health
information.
8

comply with a condition occurs where the deficiencies, individually or in combination,
are “of such character as to substantially limit the provider’s . . . capacity to furnish
adequate care or which adversely affect the health and safety of patients... .”)

Petitioner also asserts that, when it discovered the problem, it immediately obtained all
outstanding patient records, counseled the employee involved, further secured patient
records, and provided additional in-service training to all Community employees. P. Br.
at 12-13. Petitioner provides little specific evidence as to when it accomplished these
tasks, suggesting, without support, that it did so prior to the September survey. But, as
CMS points out, Petitioner did not even install locks to protect its records until September
25, 2006, after the time of the survey. P. Ex. 13. Moreover, the problems here were
systemic. Whatever procedures Community had in place to protect its records were not
working. To achieve substantial compliance, Community had to correct its problems,
demonstrate that no other instances had occurred, and implement a plan of correction
designed to assure that no incidents would occur in the future. Under Medicare rules,
Community has the burden of proving that it has done so, and its unsupported assertions
do not satisfy that burden. Hermina Traeye Memorial Nursing Home, DAB No. 1810, at
13 (2002). Further, to avoid summary judgment, Petitioner was required to act
affirmatively by tendering evidence of specific facts establishing a dispute on this issue.
Aside from the receipt for locks, which shows correction following the survey, Petitioner
has come forward with no such evidence. Matsushita Elec., 474 U.S. at 586 n.11.7

Finally, Petitioner points out that surveyors only discovered the violation because it “was
so thorough and chose to document the event in the employee’s personnel file,” and
argues that “Community should not be punished for being responsible and making
notations to the employee’s record.” P. Br. at 13. Of course, covering up the employee’s
illegal actions would itself have been illegal. That Petitioner did not violate the law in
this regard does not preclude CMS’s acting on the underlying deficiency.

7 A provider whose deficiency has the potential for more than minimal harm is
presumed out of compliance “from the date of completion of the survey in which [it was]
cited until the date of the resurvey in which substantial compliance was established.”
Lake City Extended Care Center, DAB No. 1658, at 14 (1998).
9
IV. Conclusion

Community was not in substantial compliance with program requirements in June 2006.
CMS afforded it an opportunity to correct its deficiencies, but the uncontroverted
evidence establishes that, at the time of the September 2006 survey, it was not in
compliance with at least one Medicare condition of participation. CMS is therefore
authorized to terminate its provider agreement.

/s/

Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)

Morrisons Cove Home, ) Date: March 23, 2007
)
Petitioner, )
)

-V.- ) Docket No. C-05-108

) Decision No. CR1581
Centers for Medicare )
& Medicaid Services. )
)

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
impose a per instance civil money penalty of $7,500 against Petitioner, Morrisons Cove
Home.

I. Background

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

On October 14, 2004, CMS notified Petitioner that it intended to impose a civil money
penalty of $7,500 against it based on Petitioner’s alleged failure to comply with Medicare
participation requirements. Petitioner requested a hearing and the case was assigned to an
administrative law judge for a hearing and a decision. The case was reassigned to me in
September 2006 when that judge retired.
2

exhibits from Petitioner that I identified as P. Ex. | - P. Ex. 95. Additionally, I received
the cross-examination and redirect testimony of witnesses whose written direct testimony
was in evidence as exhibits. Each party filed a pre-hearing brief and a post-hearing brief.

IL. Issues, findings of fact and conclusions of law
A. Issues
The issues in this case are whether:

1. Petitioner failed to comply substantially with a Medicare participation
requirement; and, if so;

2. A per-instance civil money penalty of $7,500 is reasonable.
B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this
case. I set forth each Finding below as a separate heading. I discuss each Finding in
detail.

I. Petitioner failed to comply substantially with a Medicare participation
requirement.

CMS alleges that Petitioner failed to comply substantially with the requirements of 42
C.F.R. § 483.25. The regulation requires that each resident of a participating facility
receive, and the facility must provide, the necessary care and services for the resident to
attain or maintain the highest practicable physical, mental, and psychosocial well-being,
in accordance with the resident’s comprehensive assessment and plan of care. Implicitly,
the regulation requires that a facility provide each resident with care of a quality that
meets professionally recognized standards of nursing care.

CMS asserts that Petitioner failed to comply with this regulation in providing care to a
resident who is identified as Resident # 2. CMS alleges that Petitioner failed to provide
the resident with necessary follow-up care after the resident was sent to Petitioner’s
facility for an anticipated brief stay following surgery to repair the resident’s fractured
right ankle. Petitioner’s derelictions, according to CMS, include a failure by Petitioner’s
staff to bring the resident to a post-surgical visit ordered by the orthopedic surgeon who
repaired the ankle and failure by the staff to monitor the resident’s surgical wound, after it
became infected, consistent with professionally recognized standards of nursing care.
3

CMS argues that, at the very least, the alleged derelictions by Petitioner’s staff posed a
high potential for very serious harm to the resident. Moreover, according to CMS, these
alleged derelictions establish that the overall quality of care at Petitioner’s facility was so
deficient as to put at risk the health and safety of residents other than Resident # 2.

The evidence offered by CMS in support of its contentions establishes a solid prima facie
case of noncompliance by Petitioner. The evidence that Petitioner offered in response
does not prove that Petitioner, in fact, complied. Consequently, I sustain CMS’s
allegations of noncompliance.

Resident # 2 was admitted to Petitioner’s facility on May 24, 2004, for short term
rehabilitation following surgery to repair her fractured right ankle. CMS Ex. 9, at 5, 24;
CMS Ex. 10, at 1. The surgeon who operated on the resident’s ankle, Dr. William
Tyndall, ordered that she be seen by him at a follow-up visit on June 2, 2004. CMS Ex. 9,
at 35. The purposes of the follow-up visit were to: change the dressing on the resident’s
wound; check the wound for satisfactory progress; remove staples if appropriate; and
apply a cast to the resident’s ankle. Jd. at 2, 30.

There is no dispute that Petitioner’s staff failed to bring Resident # 2 to the scheduled
follow-up visit. Petitioner did not contact Dr. Tyndall about the visit until at least June 8,
2004, and did not bring the resident in for the follow-up visit until June 11, 2004, the
earliest date Dr. Tyndall could schedule an appointment for Resident #2.

The failure by Petitioner’s staff to comply with Dr. Tyndall’s order that the resident be
brought in for a follow-up visit on June 2, 2004, is prima facie proof of a breach of a
professionally recognized standard of nursing care and a failure by Petitioner to comply
with regulatory requirements. CMS offered persuasive evidence that the standard of care
for a post-surgical wound such as Resident # 2’s wound is to examine the wound within
10 - 14 days after surgery and to provide whatever additional care is necessary as is
dictated by the wound’s appearance and condition. CMS Ex. 39, at 4. Petitioner made it
impossible for Dr. Tyndall to provide this necessary care to Resident # 2 by failing to
bring the resident to the scheduled follow-up visit on June 2.

Moreover, it is axiomatic that Petitioner was obligated to comply with Dr. Tyndall’s
orders. A nursing facility does not have discretion to disregard or ignore an order by a
resident’s treating physician. Here, Dr. Tyndall ordered that the resident be brought to
him for a follow-up examination on a specific date and Petitioner’s staff disregarded that
direction.
4

The prima facie evidence is that delaying the follow-up visit put Resident # 2 at risk for
post-surgical complications including infection. One purpose of conducting a follow-up
visit is to investigate for the possibility of post-surgical infection at the wound site. The
incision and the repair performed by Dr. Tyndall on Resident # 2 was potentially
vulnerable to post-surgical complications due to a tenuous blood supply to that region.
CMS Ex. 39, at 4. Consequently, it was important to check the wound within a 10 - 14
day post-surgical time frame. Jd. A delay in performing a follow-up examination might
not have prevented the development of a post-surgical infection in Resident # 2.
However, delayed follow-up potentially resulted in a delayed diagnosis of an infection.
That in turn raised the risks that necessary treatment of the resident’s wound would be
more difficult and the outcome less favorable. Jd.

When Dr. Tyndall finally saw the resident’s wound on June 11, 2004, he determined that
it was not healing satisfactorily. He referred Resident # 2 immediately to be seen by Dr.
Neil Kaneshiki, a specialist in wound care. CMS Ex. 40, at 2. Dr. Kaneshiki debrided
the wound. He ordered that the wound be cultured for a possible infection. The culture
revealed an infection consisting of a moderate growth of the organism pseudomonas
aeruginosa. CMS Ex. 11, at 3, 10. Based on Dr. Kaneshiki’s findings, the attending
physician at Petitioner’s facility ordered that the resident’s wound be monitored for
infection, that her wound be treated daily, and that she be treated with an antibiotic. CMS
Ex. 10, at 33 - 34.

The prima facie evidence is that professionally recognized standards of care mandate
daily documentation of a wound’s appearance. CMS Ex. 43, at 14. Moreover,
Petitioner’s internal policy mandated that Petitioner’s staff perform documentation of the
wound’s appearance when changing the wound’s dressing, which was required daily for
Resident #2. CMS Ex. 10, at 33 - 34; Tr. at 239. Mandatory documentation includes
accurate measurements of wound length, width, depth, and tunneling. Other essential
documentation includes: a description of the skin around the wound; the wound’s
surface; and, the drainage or exudate found in the wound. CMS Ex. 43, at 14-15.
Monitoring of a wound requires documentation of its appearance at regular intervals in
order to be able to compare the wound’s status from one point in time to another. CMS
Ex. 40, at 4.

CMS offered evidence to prove that, in providing wound care to Resident # 2 after June
11,-2004, Petitioner’s staff failed to document daily the appearance of the resident’s
wound or to perform detailed assessments of the wound’s day-to-day status. This is
proof that Petitioner breached professionally recognized standards of care and its wound
policy as well. CMS Ex. 41, at 2, 7. Such a breach is, consequently, a failure to comply
with the regulatory requirement that Petitioner provide care that meets professionally
5

recognized standards. Evidence introduced by CMS showed that the staff performed
assessments and documented closely the appearance of the wound on only two dates prior
to June 17, 2004, those dates being June 11 and June 15, 2004. CMS Ex. 10, at 12, 13.
Petitioner’s staff generated no documentation whatsoever on two dates, June 12 and June
16, 2004. See CMS Ex. 10, at 9, 11.

The evidence offered by CMS demonstrates that this failure by Petitioner to comply with
professionally recognized standards of care governing wound care, and regulatory
requirements, posed potentially extremely grave consequences for Resident #2. In the
absence of effective documentation of a wound’s appearance and status over time, there
is no way that a facility or a staff can determine whether the wound is healing or
deteriorating. CMS Ex. 41, at 6; Tr. at 155. Failure to document a wound’s appearance
and progression adequately deprives professional staff and physicians from potentially
critical evidence as to how a wound is progressing. It follows logically that staff can
misjudge the status of a wound or miss signs of a developing infection if it does not
regularly document a wound’s progress.

CMS argues, and I agree, that the evidence of Petitioner’s derelictions in providing care
to Resident # 2 is proof that Petitioner’s staff was committing more than isolated or
random practice errors. The evidence supports the conclusion that the care that Petitioner
gave to Resident # 2 was deficient from the inception of her stay until June 18, 2004,
when the resident was discharged to a hospital. It is reasonable to infer that Petitioner’s
staff — while not deliberately disregarding the needs of the resident — systematically failed
to provide the resident that which was ordered for her and which professionally
recognized standards of care required. From this systematic failure I draw the inference
that the staff was lacking in basic skills and an understanding of what was needed to
provide post-surgical wound care for all of its residents, not just Resident # 2.

I do not conclude from the evidence presented by CMS that failures by Petitioner’s staff
to provide necessary care to Resident # 2 caused the resident to experience a wound
infection or contributed to the worsening of that infection.' It is not necessary for me to
reach that conclusion in order to find from the prima facie evidence that Petitioner
contravened professionally recognized standards of care and regulatory requirements.
Under regulations which govern Medicare participation, the potential for harm is all that
is needed to establish a failure to comply with a participation requirement. 42 C.F.R.

' On June 17, 2004, the resident’s infection was found to have worsened greatly.
She was hospitalized and subsequently, an amputation was performed on her lower
extremity.
6

§ 488.301. Here, the evidence offered by CMS is overwhelming that Petitioner’s
noncompliance put Resident # 2 at great risk for harm.

Petitioner makes several arguments to support its assertion that it, in fact, complied with
participation requirements. I do not find them to be persuasive. Petitioner challenges the
credibility of CMS’s witnesses, and in particular its experts, and asserts that I should not
make findings based on these witnesses’ conclusions and opinions. I disagree with
Petitioner’s assertions that CMS’s witnesses were unqualified. I find that Dr. Tyndall and
Dr. Kaneshiki are both qualified to render opinions as to their respective specialties
(orthopedic surgery and wound care). In particular, Dr. Tyndall is qualified to testify as
to the standard of care for post-surgical follow-up visits. In addition, I find that CMS’s
third expert, Cathy Hess, R.N., is well-qualified to testify about her area of professional
expertise, nursing standards for wound care and for the documentation and assessment of
wound appearance. CMS Ex. 43.

Petitioner contends that the deterioration of Resident # 2’s wound while she stayed at
Petitioner’s facility was clinically unavoidable. Consequently, according to Petitioner, it
cannot be held accountable for such deterioration.

I do not find this contention to be persuasive because Petitioner was bound to provide
care to Resident # 2 that is consistent with professionally recognized standards of care
and regulatory requirements whether or not the bad outcome in her case was inevitable. I
do not find that the delay in bringing Resident # 2 for a follow-up visit caused her to
experience an infection nor do I find that failure by Petitioner’s staff to document the
wound’s appearance caused the wound to deteriorate. It is simply unnecessary for me to
conclude that there was a causal relationship between the care the resident received from
Petitioner’s staff and the outcome of her case in order to find that Petitioner’s care was
deficient. The standard for noncompliance, stated at 42 C.F.R. § 488.301, is a failure of
care that poses a potential for more than minimal harm. Here, and as I have discussed in
detail, above, Petitioner’s failures posed a potential for great harm to Resident # 2, and
moreover, showed an overall laxness of care at Petitioner’s facility that posed a potential
for harm to other residents as well.”

* Petitioner’s argument that the resident’s deterioration was inevitable would be
relevant had Petitioner shown that it was scrupulous in providing care to Resident # 2
consistent with professionally recognized standards of care. A bad outcome per se is not
a basis for finding that a facility is deficient. But, here, the evidence shows that
Petitioner’s care was deficient because Petitioner’s staff failed to provide care in accord
with professionally recognized standards. That evidence is a basis for a finding of
7

However, one of the contentions that Petitioner makes in support of its assertion that the
resident’s decline was inevitable actually undercuts Petitioner’s ultimate argument that it,
in fact, complied with participation requirements. Petitioner asserts that the decline in
Resident # 2’s condition was unavoidable due to the resident’s co-morbidities which,
according to Petitioner, included diabetes, malnourishment, vascular insufficiency, a
previously sustained stroke, and general frailty associated with the resident’s advanced
age of 84 years. Petitioner’s post-hearing brief at 3. But, these assertions underscore the
duty of care that Petitioner’s staff owed to the resident and make more glaring the staff's
failure to perform that duty. Petitioner’s staff knew or should have known about the
resident’s many infirmities when she entered the facility. That knowledge should have
alerted Petitioner’s staff that it owed the resident a high degree of diligence to ensure that
Dr. Tyndall’s orders were carried out scrupulously and to ensure that the resident’s wound
was watched carefully.

Petitioner seems to suggest at times that surgery never should have been performed on the
resident due to her age and poor condition and that any adverse consequences
subsequently experienced by her were a consequence of an ill-advised decision to operate
on her. Petitioner implies that it should not be held responsible for any lapse in judgment
on the part of the resident’s surgeon. However, the wisdom of deciding whether or not to
operate on Resident # 2 is irrelevant to my decision. The standards of care governing a
follow-up visit and documentation of wound appearance are applicable here even if the
decision to operate on the resident was ill-advised.

Petitioner asserts that the delay in bringing the resident to the follow-up visit to Dr.
Tyndall was clinically acceptable. Consequently, according to Petitioner, any error by its
staff in keeping the originally scheduled appointment was harmless. Petitioner’s post-
hearing brief at 4 - 6.

As principal support for this contention Petitioner relies on the testimony. of Stephen F.
Conti, M.D., an orthopedic surgeon. Dr. Conti is the director of the Division of Foot and
Ankle Surgery at the Human Motion Center, in Pittsburgh, Pennsylvania, and is also
director of the Allegheny Hospital Advanced Wound Healing and Lymphedema Center.
P. Ex. 79, at 1. Petitioner asserts that, in his direct testimony, Dr. Conti opined that
Resident # 2’s post-operative appointment was scheduled within a clinically acceptable
time frame and that any delay in the appointment did not cause harm or have the potential
for causing harm to the resident. Petitioner’s post-hearing brief at 5.

noncompliance, for the reasons I have discussed, regardless whether the outcome was
inevitable.
8

But, Dr. Conti’s testimony actually reinforces CMS’s assertion concerning the applicable
standard of care. He agreed with CMS’s experts that the standard of care for a post-
operative follow-up visit on a a patient such as Resident # 2 is for the patient to be seen
within 10 - 14 days of surgery (Dr. Tyndall had ordered that the resident be seen 13 days
post-surgery). P. Ex. 79, at 6.

Furthermore, and notwithstanding Petitioner’s assertions, I can find nothing in Dr. Conti’s
testimony in which he asserts that delaying a post-surgical follow-up visit beyond a 10 -
14 day period poses no potential of harm to a patient. Dr. Conti agreed with Dr. Tyndall
that the purpose of scheduling a follow-up within 10 - 14 days is to check a wound for
satisfactory healing. And, obviously, the reason for the professionally recognized time
frame within which to conduct a follow-up exam is that a delay beyond that period poses
a potential for harm and complications arising from unsatisfactory healing. Dr. Conti said
nothing in his testimony to refute that general principle. Indeed, he agreed with CMS
that “if a wound is infected the sooner the staff knows about it, the sooner they can begin
appropriate therapy.” Tr. at 171.

The thrust of Dr. Conti’s testimony focuses on Resident # 2’s condition. In his opinion
the resident’s post-surgical complications were the consequence of her underlying
condition and were thus unavoidable. As I discuss above, whether the delay in providing
care to the resident caused her to experience actual harm is an issue that I do not decide. I
find Dr. Tyndall’s and Dr. Kaneshiki’s conclusions to be persuasive on the issue of
whether delaying a post-surgical follow-up posed the potential for harm to the resident.
The potential for harm resulting from a delayed follow-up is axiomatic and is
acknowledged by Dr. Conti. There would be no need for a standard of care that requires
a follow-up within 10 - 14 days post-surgery if delays in scheduling follow-ups beyond
the 10 - 14 day period are, as a rule, benign.

Petitioner asserts that it provided adequate documentation of the characteristics of
Resident # 2’s wound in the period after the June 11, 2004 follow-up visit and the
resident’s visit to Dr. Kaneshiki. Petitioner’s post-hearing brief at 6 - 9. In support of
this argument Petitioner contends that there is adequate documentation in the resident’s
treatment record to establish that Petitioner’s staff provided wound care to the resident
between June 11 and June 18, 2004, in accordance with physicians’ orders. /d. at 6. In
making this argument Petitioner focuses on its staff’s diligence in changing the resident’s
wound dressing, administering antibiotics, and monitoring her overall condition.
Petitioner’s argument is that the care that the resident’s attending physician directed be
given to the resident, consisting of daily treatment and administration of an antibiotic, was
provided whether or not the wound’s appearance was documented.
9

Petitioner’s argument confuses apples with oranges. There is no question that Petitioner’s
staff was obligated to document the treatment and care that it provided to Resident # 2.
But, even if it did that, it had an additional documentation duty. That consisted of a
professionally recognized requirement that the staff document and assess, at least daily,
the appearance of the resident’s wound. Asserting that the staff documented the care that
it gave to the resident simply begs the question of whether the staff met the additional
requirement that it document and assess the resident’s wound’s appearance daily.

Petitioner notes, in support of its argument that it adequately documented the care that it
provided to Resident # 2, that the appearance of the resident’s wound was documented by
Petitioner’s staff on June 11 and 15, 2004. It asserts that, as of June 15, there was no
clinically significant change in the resident’s wound or general condition warranting
additional interventions. Petitioner’s post-hearing brief at 7. From these assertions
Petitioner evidently argues that no harm resulted to the resident from the staff's failure to
document the resident’s wound between the 11" and 15" of June. But, whether harm
occurred during that period (and, for the reasons I discuss above, I make no finding
whether harm occurred), the potential for grave harm resulting from failure of the staff to
document and assess the wound’s appearance was obvious.

Indeed, Petitioner’s principal argument concerning its failure to document and assess the
appearance of Resident # 2’s wound daily is that its staff's contravention of
professionally recognized standards of care and Petitioner’s internal policy governing
wound care posed no threat of harm to the resident. It asserts that week/y documentation
of the resident’s wound appearance would have sufficed to meet the needs of Resident
#2. Petitioner’s post-hearing brief at 8. I find this argument to be unpersuasive.

As support for this argument, Petitioner relies on the testimony of Stephen Michael
Colodny, M.D., a specialist in wound care. Dr. Colodny testified that he would not
expect, as a general matter, that nurses performing wound care document the appearance
of a wound daily “because they just don’t change all that quickly.” Tr. at 121. But, Dr.
Colodny undercut his opinion by admitting that it would be appropriate to document the
appearance of a wound daily where — as was true in this case — the dressing is ordered to
be changed daily. Jd. at 124. In effect, all that Dr. Colodny said was that a nursing staff
is not obliged to remove a resident’s dressing daily and assess the appearance of a wound
in the circumstance where a physician does not order that the dressing be removed and
changed daily. That has nothing to do with what was ordered here. Given that, I do not
find that Dr. Colodny’s testimony rebutted CMS’s prima facie proof as to the standard of
care for documentation of wound appearance.
10

Petitioner also relies on Dr. Conti’s testimony to support its assertion that it was
unnecessary to document the appearance of Resident # 2’s wound daily. Tr. at 166. Dr.
Conti premised that assertion on his conclusion that daily wound appearance monitoring
is generally not needed because surgical wounds are not all that likely to change in size
from day to day. Jd. at 166 - 167. But, he admitted also that an increase in wound size of
more than a centimeter over a period of a few days would be significant. /d. at 167. In
fact, the resident’s wound increased in size by at least that much over a period of a few
days between June | 1 and June 15, 2004. The change in wound size exhibited by
Resident # 2 thus weakens Dr. Conti’s conclusion that daily wound monitoring is not
needed because surgical wounds do not change that much from day to day.

In arguing that its staff documented the appearance of Resident # 2’s wound adequately,
Petitioner seems to be saying that, even if the staff failed to generate a specific daily
report and assessment of the wound’s appearance, it generated other records in which one
may find adequate documentation of wound characteristics. In particular, Petitioner
seems to suggest that its record of treatments administered to Resident # 2 suffice as
adequate documentation. However, the treatment administration record that the staff
generated for the resident fails to contain any of the information that is required to
document adequately and assess a wound’s appearance. CMS Ex. 10, at 40; CMS Ex. 43,
at 14-153

Petitioner also asserts that its staff monitored Resident # 2’s wound daily even if staff
members did not record their observations of the wound’s condition. Petitioner’s post-
hearing brief at 8. I find this argument to be unpersuasive.

Petitioner does not explain precisely what it means when it contends that its staff
monitored the resident’s wound. Petitioner does not explain how its staff monitored the
wound and yet failed to document the wound’s appearance or assess it on several days
between the 11" and 17" of June. What Petitioner may be contending is that its staff
looked at the wound and was aware of the wound’s condition on a daily basis even if it
failed to document and assess in writing the wound’s appearance. Such “monitoring”
does not comport with professionally recognized standards of care or Petitioner’s internal
policy governing wound care. As I discuss above, there is a distinct need to document a

} There are reasons to conclude that the treatment administration record for
Resident # 2 is not a credible record of the care that Petitioner’s staff provided to the
resident. Petitioner suspended one of its staff for falsifying a nurse’s initials on the
treatment record. P. Ex. 87, at 1 - 3.
Il

wound’s appearance at least daily. “Monitoring” includes such documentation. As Dr.
Kaneshiki testified:

A basic component of monitoring includes adequate documentation in the
nurses notes or an acceptable form in a patient or resident’s medical record.
Monitoring requires documentation at regular intervals to compare
conditions from one point in time to another.

CMS Ex. 40, at 4.4

It appears that Petitioner may also be asserting that its staff adequately monitored the
resident’s wound because it faithfully carried out physicians’ orders to change the
resident’s dressing and to administer antibiotics to the resident. That Petitioner’s staff
arguably may have done a good job performing these duties does not alter the fact that the
staff failed, in contravention of the applicable standard of care, to document the wound’s
appearance systematically.

2. A civil money penalty of $7,500 is reasonable.

CMS determined to impose a per-instance civil money penalty against Petitioner of
$7,500. Under regulations governing the imposition of civil money penalties, a per-
instance penalty must fall within a range of from $1,000 to $10,000. 42 C.F.R.

§ 488.438(a)(2).

Civil money penalty amounts are governed by criteria contained in regulations. These
criteria include: the seriousness of a facility’s deficiency or deficiencies; its culpability;
its compliance history; and its financial condition. 42 C.F.R. §§ 488.438(f(1) - (4);
488.404 (incorporated by reference into 42 C.F.R. § 488.438(f)(3)).

At the hearing | invited the parties to brief the issue of whether the penalty amount
proposed by CMS was reasonable. I told the parties that I was interested in whether a
civil money penalty of $7,500 was reasonable if Petitioner’s noncompliance posed a
potential of serious injury or harm to Resident # 2 or other residents but where I did not

* Moreover, Petitioner tacitly admits that its staff failed to perform its obligations
to document and assess the appearance of Resident # 2’s wound. It disciplined two of its
staff members for failing to document adequately the appearance and characteristics of
the wound. P. Ex. 66.
12

conclude that the noncompliance actually caused Resident # 2’s condition to deteriorate.
Tr. at9-11. However, neither CMS nor Petitioner provided meaningful analysis of the
issue of penalty amount in their post-hearing briefs.”

In the absence of meaningful argument or analysis from the parties on the issue of penalty
amount, I decide that issue based on my review of the entire record of this case in light of
applicable regulatory factors. I sustain CMS’s determination to impose a per-instance
penalty of $7,500. I do so based on evidence relating to the seriousness of Petitioner’s
noncompliance and in the absence of evidence that is relevant to other regulatory factors.

Neither CMS nor Petitioner offered any evidence as to Petitioner’s compliance history or
its financial condition. Nor have the parties argued that Petitioner’s culpability for its
deficiency is a basis for increasing the penalty amount. That leaves only the question of
how serious Petitioner’s noncompliance was as a criterion for deciding on the amount of
the penalty. See 42 C.F.R. §§ 488.438(f)(1) - (4); 488.404 (incorporated by reference into
42 C.F.R. § 488.438(f)(3)).

I decide that Petitioner’s noncompliance was extremely serious. The requirement that a
post-surgical wound such as the one sustained by Resident # 2 be checked at a follow-up
exam within 10 - 14 days of surgery is based on concern that such a wound may become
infected with potentially dire consequences. Potentially, failure to spot an infection in its
early stages may cause serious, even life-threatening complications. Petitioner’s failure to
bring Resident # 2 timely to her follow-up examination potentially brought into play all of
the possible adverse consequences that might ensue from failure to follow up on the
surgery. The requirement that a wound’s progress be documented and assessed at daily
intervals is based on concerns that are similar to the requirement for a timely post-surgery
follow-up visit. It is critical that a wound’s appearance be documented and assessed
often in order to ensure that there is no ongoing deterioration. Failure to do so raises the
tisk that undetected infection may progress.

Here, Petitioner’s noncompliance was particularly egregious. The staff knew that
Resident # 2 was frail and in a very deteriorated state. The staff knew also that the
resident had an illness (diabetes) that compromised, potentially, her vascular system.

> Petitioner’s brief was silent on the issue of penalty amount. CMS asserted only
that it “considered all regulatory factors” in determining to impose a penalty of $7,500.
CMS’s post-hearing brief at 43. However, my authority to decide on a penalty amount is
not an appellate review of whether CMS considered any or all regulatory factors. | am
charged with the responsibility of deciding de novo what is reasonable.
13

That information made it imperative that the staff be ultra-diligent in caring for the
resident’s wound. But, in spite of that, Petitioner’s staff failed to take basic measures that
were mandated to protect the resident from developing serious complications.
Particularly egregious is that Petitioner’s staff continued to fail to provide the resident
with mandated care even after it delayed bringing the resident to a follow-up visit and
even after they were put on notice that the resident’s wound had become infected.

Moreover, the serious deficiencies manifested by Petitioner’s staff in providing care to
Resident # 2 lead me to conclude that there was something more going on generally at
Petitioner’s facility than simple random error. I infer a more general problem than just
failing to provide required care to only one resident. The failures manifested by
Petitioner’s staff in providing care to Resident # 2 were so egregious as to support my
conclusion that there was an overall failure by Petitioner’s staff to understand its
obligation to treat residents’ wounds in accord with professionally recognized standards
of care and Petitioner’s own policy. Other residents, not just Resident # 2, were at risk.

The seriousness of Petitioner’s noncompliance supports a penalty of $7,500. I recognize
that this penalty is relatively substantial when measured against the range of permissible
per-instance penalties (between $1,000 and $10,000). But it is not a significant penalty
when measured against the risk to Resident # 2 and to other residents created by
Petitioner’s failure to provide care that met professionally recognized standards of care.

/s/

Steven T. Kessel
Administrative Law Judge