Department of Health and Human Service
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

John E. Roberts, P.A. (PTAN: 0M98680) Date: November 23, 2009
Petitioner,
Docket No. C-09-602
v. Decision No. CR2034

Centers for Medicare & Medicaid Services.

emer rH HS HS YS

DECISION

The application to participate in Medicare of Petitioner, John E. Roberts, P.A. was
properly denied and his billing privileges were properly revoked, effective April 24,
2008.

I. Background

The Medicare contractor for the Centers for Medicare and Medicaid Services (CMS),
Wisconsin Physicians Service Insurance Corporation (WPS), notified Petitioner by letter
dated December 29, 2008, that his Medicare Provider Transaction Access Number
(PTAN)' was being revoked effective April 24, 2008. The regulatory authority cited for
the revocation was 42 C.F.R. § 424.535 based upon Petitioner’s felony conviction on
April 24, 2008. CMS Exhibit (CMS Ex.) 3. Petitioner requested reconsideration by a
contractor hearing officer who issued a decision in the form of a letter dated May 21,
2009. The hearing officer upheld denial of Petitioner’s enrollment in Medicare and
sustained the revocation of Petitioner’s billing privileges pursuant to 42 C.F.R. § 424.535
based upon Petitioner’s felony conviction. CMS Ex. 1, at 1-2.

" The PTAN represents the billing privileges of the supplier and revocation of the

PTAN was revocation of billing privileges.
Petitioner requested a hearing before an administrative law judge (ALJ) by letter dated
July 19, 2009. The case was assigned to me for hearing and decision on July 24, 2009,
and an Acknowledgement and Prehearing Order (Prehearing Order) was issued at my
direction on that date. On August 19, 2009, CMS filed a motion with the title “Centers
for Medicare and Medicaid Services’ Combined Motion and Memorandum of Law in
Support of Summary Affirmance,” which I treat as a motion for summary judgment”
(CMS Brief) and exhibits 1 through 6. Petitioner filed a response (P. Brief) with exhibits
(P. Ex.) 1 through 4 on September 19, 2009. CMS filed its reply on September 29, 2009.
The parties have not objected to my consideration of the offered exhibits. Therefore,
CMS exhibits 1 through 6 and Petitioner’s exhibits 1 through 4 are admitted.

II. Discussion
A. Applicable Law

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

§§ 1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395(u)(h)(1)).
Administration of the Part B program is through contractors. Act § 1842(a) (42 U.S.C.

§ 1395u(a)). The Act requires the Secretary of Health and Human Services (the
Secretary) to issue regulations that establish a process for the enrollment of providers and
suppliers, including the right to a hearing and judicial review in the event of denial or
non-renewal. Act § 1866(j) (42 U.S.C. § 1395cc(j)).

Pursuant to 42 C.F.R. § 424.505, a provider or supplier must be enrolled in the Medicare
program and be issued a billing number to have billing privileges and to be eligible to
receive payment for services rendered to a Medicare eligible beneficiary. If enrollment is

Summary judgment procedures are established by paragraph II. 7 of the
Prehearing Order.

> A “supplier” furnishes services under Medicare and includes physicians or
other practitioners and facilities that are not included within the definition of the phrase
“provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,”
commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) and 1835(e) of
the Act. Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction between providers and
suppliers is important because they are treated differently under the Act for some
purposes.
approved, a supplier is issued a National Provider Identifier (NPI) to use for billing
Medicare and a PTAN, an identifier for the supplier for inquiries. Medicare Program
Integrity Manual (MPIM), Chapter 10, Healthcare Provider/Supplier Enrollment, § 6.1.1.
Qualified physician services are covered by the program for those enrolled, subject to
some limitations. Act §§ 1832(a) (42 U.S.C. § 1395k(a)); 1861(s)(1) (42 U.S.C.

§ 1395x(s)(1)).

“Physician’s Services” means professional services performed by physicians, including
surgery, consultation, and home, office, and institutional calls (with certain exceptions).
Act § 1861(q) (42 U.S.C. § 1395x(q)). The term “physician,” when used in connection
with the performance of any function or action, means, in part, a doctor of medicine or
osteopathy legally authorized to practice medicine and surgery by the state in which he or
she performs such function or action. Act § 1861(r) (42 U.S.C. § 1395x(r)); 42 C.F.R.

§ 410.20(b). The phrases “physician’s assistant” and “nurse practitioner” are defined by
section 1861(aa)(5) of the Act and their services and related supplies may be covered to
the same extent as physicians services pursuant to section 1861(s)(2)(H) and (K) of the
Act. The Medicare program authorizes Medicare Part B payments for services provided
by physicians (42 C.F.R. § 410.20) and physician assistants (42 C.F.R. § 410.74). A
physician’s assistant who wants to bill Medicare or its beneficiaries for Medicare-covered
services or supplies must enroll in the Medicare program. 42 C.F.R. § 424.505.

Medicare pays a supplier directly for covered services if the beneficiary assigns the claim
to the supplier and the supplier accepts it. Medicare may pay a supplier’s employer if the
supplier is required, as a condition of employment, to turn over the fees for the supplier’s
services. Medicare will also pay an entity billing for a supplier’s services if the entity is
enrolled in Medicare and there is a contractual arrangement between the entity and the
supplier. Act § 1842(b)(6); 42 C.F.R. §§ 424.55(a), 424.80(a) and (b).

CMS may deny a supplier’s enrollment application if a supplier is not in compliance with
Medicare enrollment requirements. 42 C.F.R. § 424.530(a)(1). A supplier enrollment is
considered denied when a supplier is determined to be “ineligible to receive Medicare
billing privileges for Medicare covered items or services provided to Medicare
beneficiaries” for one or more of the reasons listed in 42 C.F.R. § 424.530. 42 C.F.R.

§ 424.502. CMS’s contractor notifies a supplier in writing when it denies enrollment and
explains the reasons for the determination and information regarding the supplier’s right
to appeal. 42 C.F.R. § 498.20(a); MPIM Ch. 10, §§ 6.2, 13.2. The supplier may submit a
written request for reconsideration to CMS. 42 C.F.R. § 498.22(a). CMS must give
notice of its reconsidered determination to the supplier, giving the reasons for its
determination and specifying the conditions or requirements the supplier failed to meet.
42 C.F.R. § 498.25. If the CMS decision on reconsideration is unfavorable to the
supplier, the Act provides for a hearing by an ALJ and judicial review. Act § 1866(j)(2).

Ifa provider or supplier is accepted for enrollment and granted billing privileges, the
enrollee is subject to revalidation every five years. Every five years, the enrollee is
required to resubmit and recertify the accuracy of its enrollment information and the
information is reverified by the CMS contractor. CMS is also permitted to conduct “off-
cycle” revalidation that may be conducted at any time and which may be triggered by
random checks, adverse information, national initiatives, complaints, or other reasons that
cause CMS to question whether the provider or supplier continues to meet enrollment
requirements. 42 C.F.R. § 424.515.

CMS may revoke an enrolled provider’s or supplier’s Medicare billing privileges and any
provider or supplier agreement for any of the reasons listed in 42 C.F.R. § 424.535.
Pursuant to 42 C.F.R. § 424.535(a)(3), if'a provider or supplier or the owner of a provider
or supplier is convicted of a federal or state felony that the Secretary has determined is
detrimental to the program or its beneficiaries, CMS may revoke billing privileges. See
Act § 1866(b)(2)(D) (42 U.S.C. § 1395cc(b)(2)(D)). The regulation specifies that the
conviction must have occurred within the 10 years preceding enrollment or revalidation
of enrollment in Medicare. The regulation lists offenses that CMS has found detrimental
to the program or its beneficiaries. 42 C.F.R. § 424.535(a)(3)(i). The Act provides for a
hearing by an ALJ and judicial review of the determination to deny enrollment or re-
enrollment or to revoke billing privileges. Act § 1866(j)(2).

B. Issue

Whether there was a basis for denial of Petitioner’s enrollment as a supplier
and for revocation of his billing privileges.

C. Findings of Fact, Conclusions of Law, and Analysis
1. Summary judgment is appropriate.

CMS filed a motion for summary judgment to which Petitioner filed a response.
Petitioner does not argue that summary judgment is inappropriate but argues the merits of
his case and offers evidence in support of his arguments. There are no genuine issues of
material fact in dispute in this case and summary judgment is appropriate. Petitioner
does not deny that he was convicted of the felony cited by CMS as the basis for its
actions.

P. Brief at 2.

Summary judgment is appropriate and no hearing is required where either: there are no
disputed issues of material fact and the only questions that must be decided involve
application of law to the undisputed facts; or, the moving party must prevail as a matter
of law even if all disputed facts are resolved in favor of the party against whom the
motion is made. See Illinois Knights Templar Home, DAB No. 2274, at 3-4, 8 (2009);
Kingsville Nursing and Rehabilitation Center, DAB No. 2234, at 3-4 (2009); White Lake
Family Medicine, P.C., DAB No. 1951 (2004); Lebanon Nursing and Rehabilitation
Center, DAB No. 1918 (2004). A party opposing summary judgment must allege facts
which, if true, would refute the facts relied upon by the moving party. See, e.g., Fed. R.
Civ. P. 56(c); Garden City Medical Clinic, DAB No. 1763 (2001); Everett Rehabilitation
and Medical Center, DAB No. 1628, at 3 (1997) (in-person hearing required where non-
movant shows there are material facts in dispute that require testimony); Thelma Walley,
DAB No. 1367 (1992); see also New Millennium CMHC, Inc., DAB CR672 (2000); New
Life Plus Center, CMHC, DAB CR700 (2000).

This case requires an application of the law to the undisputed facts. The issues in this
case turn on the legal interpretation of the regulations, 42 C.F.R. §§ 424.530 and 424.535,
and other regulatory provisions that govern denial of enrollment and revocation of billing
privileges, as discussed hereafter. Petitioner does not dispute that he was convicted of a
felony as alleged by CMS. Neither party asserts that there is a genuine dispute as to a
material fact and the evidence does not show such a dispute. Interpretation of the
regulations and application of the regulations to the undisputed facts are required to
resolve this case. Accordingly, summary judgment is appropriate.

2. The CMS notice to Petitioner of the basis for its action was
sufficient in this case.

The CMS contractor, WPS, sent Petitioner a letter dated December 29, 2008. The letter
advised Petitioner that his PTAN, 0M98680, was being revoked “based on 42 CFR
§424.535” effective April 24, 2008. The letter advised that the revocation was based on
the fact that on April 24, 2008, Petitioner was convicted of a felony offense of tampering
with evidence. The letter advised Petitioner of the right to request reconsideration. CMS
Ex. 3.

The WPS hearing officer sent Petitioner a letter dated May 21, 2009. The letter advised
Petitioner that the hearing officer decided to deny Petitioner’s request for reconsideration.
The hearing officer based his decision upon Petitioner’s conviction and cited 42 C.F.R. §
424.535(3), though it is apparent from the quoted language that the correct cite should
have been 42 C.F.R. § 424.535(a)(3). CMS Ex. 1, at 1.

Although not raised as an issue by Petitioner, the lack of clarity of both the notice of the
initial determination and the reconsideration determination are a concern in this case.
CMS is required to notify an affected party of an initial determination and the notice is
required to set forth the basis or reasons for the initial determination, the effect of the
determination, and the affected party’s right to request reconsideration or a hearing.

42 C.F.R. § 498.20(a). The notice of a reconsidered determination to an affected party
must state: the reason for the determination, what conditions or requirements of law were
not satisfied by the affected party; and the right to a hearing. 42 C.F.R. § 498.25.
The notice of initial determination dated December 29, 2008 cited 42 C.F.R. § 424.535 as
the basis for the adverse action against Petitioner. The hearing officer notice was little
more specific with its incorrect reference to 42 C.F.R. § 424.535(3). The regulation cited
in both determinations actually lists eight grounds for revocation of enrollment and
billing privileges: (1) noncompliance with participation requirements; (2) misconduct
including prior exclusion from Medicare, Medicaid, or other federal health care programs
and suspension or debarment from any federal program; (3) conviction of a felony that
CMS determined detrimental to the best interests of Medicare and its beneficiaries; (4)
provision of false or misleading misinformation on the enrollment application; (5) a
failed on-site review; (6) inadequate reverification information; (7) misuse of billing
number; and (8) abuse of billing privileges. 42 C.F.R. § 424.535(a). The notice of initial
determination did not specify which of the eight bases for revocation applied in
Petitioner’s case. The notice of the reconsideration decision did not accurately cite the
regulation but did indicate that subsection 3 applied. However, the reconsideration
decision did not specify which of the four subsections of 42 C.F.R. § 424.535(a)(3)
actually applied.

The issue regarding adequacy of the notices is whether Petitioner had sufficient notice so
that he could prepare to defend against the adverse action. I conclude Petitioner had
sufficient notice. Both notices specifically cite Petitioner’s April 24, 2008, felony-
conviction of tampering with evidence. While the exact legal basis for revocation of
Petitioner’s billing privileges is not correctly cited in either notice, Petitioner’s response
reflects that he understood that the basis for revocation was 42 C.F.R. § 424.535(a)(3).
P. Brief at 3-4. Further, Petitioner’s two arguments, i.e., his offense is not specifically
enumerated and he is a person of honesty and integrity who has provided years of
excellent care, are not dependent upon which subsection of 42 C.F.R. § 424.535(a)(3) is
the basis for his exclusion. Accordingly, I conclude that Petitioner had adequate
information to prepare his defense and any defect in the notices of the initial and
reconsideration determinations were not prejudicial.

3. Petitioner was convicted of an offense for which his exclusion is
required by section 1128(a)(4) of the Act (42 U.S.C. § 1320a-7(a)(4)).

4. The issue for hearing and decision is whether there is a basis for
denial of Petitioner’s enrollment and revocation of Petitioner’s billing
privileges and my jurisdiction does not extend to review the issue of
whether CMS properly exercised its discretion to revoke Petitioner’s
Medicare enrollment and billing privileges if I find there was a basis
for such action.
5. There is a basis for denial of Petitioner’s application for enrollment
in Medicare and revocation of his billing privileges pursuant to
42 C.F.R. §§ 424.530(a)(3)(i)(D) and 424.535(a)(3)(i)(D).

a. Facts

Petitioner signed an application for enrollment to participate in Medicare, a CMS form
CMS-855I, on December 11, 2008, in which he indicated that he was changing his
Medicare information. Petitioner stated in the application that he had been subject to an
adverse legal action in the form of license suspension on April 28, 2008, based upon a
charge of tampering with evidence. CMS Ex. 1, at 3-15.

Petitioner stated in a letter dated January 15, 2009, that he was convicted in April 2008,
in Gladwin, Michigan, of the offense of tampering with evidence. Petitioner stated in his
letter that he wrote two prescriptions for narcotics for his former office manager; that
both prescriptions had medical justification as he had seen the patient and she was doing
physical therapy for her medical condition; that he failed to document the examinations
other than to record the prescriptions on her charts; that the patient was caught selling the
narcotic medication he prescribed; and he panicked and created documentation of his
examinations that he gave to the police; and subsequently he admitted to creating the
documents. He admits that he pled guilty to the offense of tampering with evidence.
CMS Ex. 1, at 36-38; P. Ex. 4.

A felony information filed in the 80th Judicial District, 55th Judicial Circuit, State of
Michigan, shows that Petitioner was charged with the following violations of Michigan
law: Count 1, tampering with evidence by knowingly and intentionally removing,
altering, concealing destroying, or otherwise tampering with evidence to be offered in an
official proceeding; Counts 2 and 3, intentionally placing false information on a chart in a
medical record by intentionally or willfully placing or directing another to place in a
patient’s medical record or chart information that he knew was misleading or inaccurate
in regard to the diagnosis, treatment, or cause of the patient’s condition; and Counts 4 and
5, delivery or manufacture of a narcotic, specifically hydrocodone. CMS Ex. 2, at 11-12.
On April 29, 2008, Petitioner pled guilty to Count 1, tampering with evidence, a felony,
in exchange for no jail but four years probation. CMS Ex. 2, at 10, 13-14.

An Administrative Complaint before the State of Michigan, Department of Community
Health Bureau of Health Professions Task Force on Physician’s Assistants Disciplinary
Subcommittee was offered as evidence by CMS. Petitioner does not dispute the facts
alleged in the Administrative Complaint (the Complaint). According to the Complaint,
Petitioner was employed as a physician’s assistant at the Beaverton Medical Clinic
(Clinic) in Gladwin, Michigan. A former employee of the Clinic referred to as MR, told
law enforcement that she obtained prescriptions for Vicodin (a combination of
acetaminophen and the narcotic hydrocodone) from Petitioner and that Petitioner gave

her the prescriptions because they were friends. Law enforcement subpoenaed MR’s
records from Petitioner and also obtained a Michigan Automated Prescription System
report that showed Petitioner had prescribed 400 tablets of Vicodin for MR from June 27,
2006 through August 6, 2007. After receiving the subpoena, Petitioner enlisted a medical
assistant at the clinic and created fraudulent medical records indicating that Petitioner
examined MR on March 13 and June 18, 2007 for low back pain. Clinic staff
subsequently gave MR’s medical record to law enforcement. A Clinic staff member
subsequently told law enforcement that Petitioner attempted to have her assist him create
a false medical record for MR but she refused; that Petitioner never performed a physical
examination for MR; that Petitioner was aware that MR had obtained at least one
prescription for Vicodin under false pretenses in the past; and that she told Petitioner she
believed that MR was selling the Vicodin that Petitioner prescribed. Subsequently, the
staff member that did assist Petitioner with creating the false medical record entries,
confessed to law enforcement admitting to assisting with the falsification and that the
false records were released pursuant to the subpoena. On September 21, 2007, Petitioner
admitted to law enforcement that he created false records to indicate that he physically
examined MR on March 13 and June 18, 2007, but he denied that he knew MR was
selling the Vicodin he prescribed for her. However, the Complaint alleges that law
enforcement searched Petitioner’s office on September 21, 2007 and found letters that
indicated he knew MR was selling the Vicodin that he prescribed for her. CMS Ex. 2, at
2-4.

Petitioner’s enrollment application was denied and his billing privileges were revoked by
WPS, as discussed above.

Hydrocodone is a Schedule II controlled substance. 21 C.F.R. § 1308.12(b)(1)(vi).
Vicodin is a Schedule III controlled substance. 21 C.F.R. § 1308.13(e)(1)(iii)-(v).

b. Analysis

Denial of a provider’s or supplier’s enrollment application based upon conviction of a
felony is provided for by 42 C.F.R. § 424.530(a)(3) as follows:

(a) Reasons for denial. CMS may deny a provider's or
supplier's enrollment in the Medicare program for the
following reasons:

oR

(3) Felonies. If within the 10 years preceding enrollment
or revalidation of enrollment, the provider, supplier, or
any owner of the provider or supplier, was convicted of
a Federal or State felony offense that CMS has
determined to be detrimental to the best interests of the
program and its beneficiaries. CMS considers the
severity of the underlying offense.
(i) Offenses include--(A) Felony crimes against
persons, such as murder, rape, or assault, and other
similar crimes for which the individual was
convicted, including guilty pleas and adjudicated
pretrial diversions.
(B) Financial crimes, such as extortion,
embezzlement, income tax evasion, insurance fraud
and other similar crimes for which the individual was
convicted, including guilty pleas and adjudicated
pretrial diversions.
(C) Any felony that placed the Medicare program or
its beneficiaries at immediate risk (such as a
malpractice suit that results in a conviction of
criminal neglect or misconduct).
(D) Any felonies outlined in section 1128 of the Act.

Revocation of a currently enrolled provider’s or supplier’s billing privileges and any
corresponding provider or supplier agreement based upon conviction of a felony is
authorized by 42 C.F.R. § 424.535(a)(3) as follows:

(a) Reasons for revocation. CMS may revoke a currently
enrolled provider or supplier's Medicare billing privileges and
any corresponding provider agreement or supplier agreement
for the following reasons:

oR

(3) Felonies. The provider, supplier, or any owner of the
provider or supplier, within the 10 years preceding
enrollment or revalidation of enrollment, was convicted
of a Federal or State felony offense that CMS has
determined to be detrimental to the best interests of the
program and its beneficiaries.

(i) Offenses include--

(A) Felony crimes against persons, such as murder,

rape, assault, and other similar crimes for which the

individual was convicted, including guilty pleas and

adjudicated pretrial diversions.

(B) Financial crimes, such as extortion,

embezzlement, income tax evasion, insurance fraud

and other similar crimes for which the individual was
10

convicted, including guilty pleas and adjudicated
pretrial diversions.

(C) Any felony that placed the Medicare program or
its beneficiaries at immediate risk, such as a
malpractice suit that results in a conviction of
criminal neglect or misconduct.

(D) Any felonies that would result in mandatory
exclusion under section 1128(a) of the Act.

Neither the notice of initial determination dated December 29, 2008, nor the notice of
reconsideration dated May 21, 2009, accurately cited the regulatory basis for the denial of
Petitioner’s application or the revocation of his billing privileges. However, it is clear
from both notices that the basis for the adverse action was Petitioner’s felony conviction
of the offense of tampering with evidence. I have concluded that Petitioner had adequate
notice of the basis for the denial and revocation to effectively exercise his right to review.

Based upon my review of all the evidence, I conclude that there is a basis for denial of
Petitioner’s application pursuant to 42 C.F.R. § 424.530(a)(3)(i)(D) and for revocation of
his billing privileges pursuant to 42 C.F.R. § 424.535(a)(3)(i)(D).* I conclude that the
bases for revocation established by 42 C.F.R. § 424.535(a)(3)(i)(A), (B), and (C) have no
application in this case. The facts do not establish that Petitioner’s offense was a crime
against a person such as murder, rape, assault, and other similar crimes as required by 42
C.F.R. § 424.535(a)(3)(i)(A). The facts do not show that Petitioner’s offense placed
either the Medicare program or a Medicare beneficiary at immediate risk for harm as
required by 42 C.F.R. § 424.535(a)(3)(i)(C). I further conclude that Petitioner’s offense
was not a financial crime within the meaning of 42 C.F.R. § 424.535(a)(3)(i)(B). The
evidence shows no financial motive’ and the crime for which Petitioner was convicted,

* T note that for denial of enrollment it is sufficient for the prospective provider or
supplier to have been convicted of any felony listed in section 1128 of the Act. However,
for revocation of billing privileges, there is the more specific requirement that the
provider or supplier have been convicted of a felony for which the Secretary is required
to exclude the provider or supplier from participation in all federal health care programs
by section 1128(a) of the Act. Because I conclude that the more specific requirement of
42 C.F.R. § 424.535(a)(3)(i)(D) is met in this case and is a sufficient basis for both denial
of enrollment and revocation of billing privileges, I conclude it is not necessary to further
discuss 42 C.F.R. § 424.530(a)(3)(i)(D).

> Ido not mean to suggest that a financial motive is required for the application
of 42 C.F.R. § 424.535(a)(3)(i)(D). However, evidence of a financial motive may help
identify an offense as an offense similar to the example financial crimes listed in that
regulatory provision.
11

given the underlying facts, was not a crime similar to embezzlement, income tax evasion,
or insurance fraud. Mich. Comp. Laws § 750.483a(5) and (6) (2001); CMS Ex. 6.

Revocation is permitted under 42 C.F.R. § 424.535(a)(3)(i)(D) based upon any felonies
that would result in mandatory exclusion pursuant to section 1128(a) of the Act. Section
1128(a) of the Act requires that the Secretary exclude from participation in any federal
health care program an individual or entity convicted of: (1) a program related crime; (2)
patient neglect or abuse; (3) a felony related to health care fraud; or (4) a felony
conviction related to a controlled substance. The evidence does not show that
Petitioner’s felony conviction was a program related crime, involved patient neglect or
abuse, or involved health care fraud. However, section 1128(a)(4) of the Act mandates
that the Secretary exclude from participation in any federal health care program an
individual convicted in a federal or state court for “an offense which occurred after the
late of the enactment of the Health Insurance Portability and Accountability Act of 1996
[August 21, 1996], ...., of a criminal offense consisting of a felony relating to the
unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”
The facts in this case satisfy the requirement of section 1128(a)(4) in that they show that
Petitioner was convicted of a felony relating to the unlawful prescription of a controlled
substance. Hydrocodone and Vicodin are both controlled substances. Petitioner was
convicted of the offense of tampering with evidence and the facts show that he committed
the offense by creating false medical records to make it appear that prescriptions for
narcotic pain medication that he provided a friend were legitimately written. Therefore,
there is the required nexus or common sense connection between Petitioner’s conduct and
the offense of which he was convicted to support the conclusion that his felony
conviction was related to the unlawful prescription of a controlled substance. See e.g.,
Paul D. Goldenheim, M.D., Howard R. Udell, Michael Friedman, DAB No. 2268 at 11
(2009); Muhamad Salah Zobi, DAB CR1324 (2005). I conclude that Petitioner’s felony
conviction subjects him to mandatory exclusion pursuant to section 1128(a)(4) of the Act.
There is no dispute that his conviction occurred within the ten years preceding the
enrollment application he signed on December 11, 2008. Accordingly, I conclude that
there is a basis for revocation of his billing privileges pursuant to 42 C.F.R. §
424.535(a)(3)(i)(D).

Petitioner argues that tampering with the evidence is not a crime enumerated in either

42 C.F.R. §§ 424.530(a)(3) or 424.535(a)(3) and that CMS has no authority to deny
Petitioner enrollment or revoke his billing privileges. P. Brief at 3-4; P. Ex. 3, at 2. This
argument has no merit. Revocation of Petitioner’s billing privileges is authorized under
42 C.F.R. § 424.535(a)(3)(i)(D), which encompasses any “felonies that would result in
mandatory exclusion under section 1128(a) of the Act.” There is no specific enumeration
of felony offenses under either 42 C.F.R. §§ 424.530(a)(3)(i)(D) or 424.535(a)(3)(i)(D),
rather a class of offenses are described in those regulations that the Secretary has
specified are per se detrimental to Medicare and its beneficiaries, and Petitioner’s
argument is inapposite.
12

In his request for reconsideration, Petitioner argued that his offense should not be treated
by CMS as being detrimental to the best interest of the program or its beneficiaries. This
argument is also without merit. The regulation establishes that a felony offense that
subjects one to mandatory exclusion pursuant to section 1128(a) of the Act is detrimental.
42 C.F.R. § 424.535(a)(3)(i)(D). Because the regulation establishes that a felony offense
that subjects one to mandatory exclusion pursuant to section 1128(a) of the Act is per se
detrimental, CMS has the discretion to decide whether or not to revoke enrollment and
billing privileges on that basis. CMS is otherwise bound by the regulation, which grants
no discretion to conclude that an offense described by 42 C.F.R. § 424.535(a)(3)(i)(D) is
not detrimental. Petitioner submitted with his request for reconsideration and with his
brief to me numerous letters attesting to his excellent service to the community among
other things. CMS Ex. 1, at 39-89, 97-143; P. Ex. 1. Petitioner also submitted the
consent order of the Michigan licensing authority suspending Petitioner’s physician
assistant license for a period of six months from June 26, 2008 through December 28,
2008, with provision for automatic reinstatement of his license with specified limitations.
P. Ex. 2. Petitioner misunderstands the limited scope of my review. CMS is authorized
by the Secretary to revoke billing privileges if a supplier was convicted of a felony
offense that CMS has determined is detrimental to Medicare or its beneficiaries, if the
conviction occurred within 10 years preceding enrollment or revalidation of enrollment.
The elements are satisfied in this case and I must sustain the revocation and denial of
enrollment. Once I have found that there is a basis to deny enrollment or revoke billing
privileges, I have no authority to review the judgment of CMS to exercise its authority
deny or revoke. Abdul Razzaque Ahmed, M.D., DAB No 2261 at 19 (2009).

Il. Conclusion

Petitioner’s supplier numbers and his billing privileges were properly revoked effective
April 24, 2008, the date of his conviction. Petitioner was properly denied enrollment or
reenrollment in Medicare.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Miami Shores of Moraine, ) Date: November 20, 2009

(CCN: 36-5515), )
)
Petitioner, )
)

-V.- ) Docket No. C-09-157

) Decision No. CR2033
Centers for Medicare & Medicaid )
Services. )
)

DECISION

Petitioner, Miami Shores of Moraine (Petitioner or facility), now known as Pinnacle
Pointe, is a long term care facility located in Dayton, Ohio, that participates in the
Medicare program. After a series of health and Life Safety Code (LSC) surveys,
conducted between May 19, 2008, and October 23, 2008, inclusive, the Centers for
Medicare and Medicaid Services (CMS) determined that the facility was not in
substantial compliance with Medicare program requirements, and imposed a denial of
payment for new admissions (DPNA) from August 19, 2008 through October 22, 2008.
This appeal is limited to an August 28, 2008 LSC revisit survey, which cited one
deficiency — failure to test the facility’s generators as required by the LSC — and resulted
in CMS’s extending the DPNA.

The parties agree that this matter may be decided on the written record, without an in-
person hearing. For the reasons discussed below, I find that the facility was not in
substantial compliance with the LSC as of August 28, 2008, and CMS was therefore
authorized to continue the DPNA until the facility corrected the deficiency.

I. Background

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

The Secretary contracts with state survey agencies to conduct periodic surveys to
determine whether skilled nursing facilities are in substantial compliance. Act §1864(a);
42 C.F.R. § 488.20. The regulations require that each facility be surveyed once every
twelve months, and more often, if necessary, to ensure that identified deficiencies are
corrected. Act, § 1819(g)(2)(A); 42 C.F.R. §§ 488.20(a), 499.308.

The surveys. Altogether, this facility underwent five surveys from May through October
2008:

e On May 19, 2008, the Ohio Department of Health (state agency) conducted a
complaint investigation/survey, and found that the facility was not in substantial
compliance with program requirements. Although no remedies were imposed at that
time, in a letter dated May 28, 2008, the state agency warned that it would
recommend that CMS impose remedies unless the facility achieved substantial
compliance before July 8, 2008. CMS Ex. 2.

e On July 7, 2008, the state agency conducted the facility’s annual LSC survey, citing
deficiencies, including failure to test and inspect facility generators (Tag K144), but,
again, no remedies were imposed. CMS Ex. 1.

e On July 10, 2008, the state agency conducted the facility’s annual health survey,
concluding that the facility was still not in substantial compliance. By letter dated
July 28, 2008, the state agency advised the facility of its conclusion and that CMS had
authorized the imposition of a remedy, a DPNA, effective August 19, 2008, to remain
in effect until the facility achieved substantial compliance. The letter specifically
advised the facility of its appeal rights, warning that a request for hearing “must be
filed no later than 60 days from the date of receipt” of the notice letter. CMS Ex. 2.
Petitioner did not file a hearing request.

e Surveyors re-visited the facility on August 28, 2008. They concluded that the facility
remained out of substantial compliance because of a LSC deficiency: the facility
could not show that it inspected and tested its generators under load conditions for a
minimum of 30 minutes each month, as required by the LSC. CMS Ex. 3, at 2. Ina
letter dated September 10, 2008, the state agency advised the facility of its
determination, and that it was recommending to CMS that the DPNA (effective
August 19, 2008) remain in effect. In addition, the letter advised that the state agency
would recommend termination of the facility’s provider agreement, effective no later
than November 19, 2008. CMS Ex. 7.

© On October 23, 2008, the state agency surveyors conducted a follow-up LSC survey
and determined that the facility had achieved substantial compliance. CMS Ex. 13.

In a notice letter dated October 28, 2008, CMS advised the facility that, based on the
October 23 survey, the facility’s program participation would not be terminated and, as of
October 23, 2008, the DPNA was no longer in effect. The letter reminded the facility
that the state agency had earlier provided notice of its right to appeal the noncompliance
that resulted in the imposition of the remedy, but “[a]s of this date, we have not received
a request for a hearing.” CMS Ex. 14. With respect to the continuation of the DPNA,
which was based on the August 28 survey findings, the letter advised the facility of its
appeal rights, again cautioning that “‘a written request for a hearing must be filed no
later than 60 days from the date of receipt of this notice.” (Emphasis in original).
CMS Ex. 14.

In a letter dated December 4, 2008 (postmarked December 15), Petitioner requested a
hearing.'

The parties have filed pre-hearing briefs (CMS Br.; P. Br.).” With its brief, CMS submits
22 exhibits. Petitioner has submitted no additional exhibits. In the absence of any
objections, I admit into evidence CMS Exs. 1-22.

I held a prehearing conference in this case on June 18, 2009, during which the parties
agreed that this matter presents no factual disputes, but presents a legal question
regarding the requirements of the LSC. They also agreed that this matter required no
additional briefing, and could be decided based on their initial submissions. Order
Summarizing Prehearing Conference (June 24, 2009).

' After the hearing request was filed, the facility changed ownership, and the
facility’s name changed to Pinnacle Pointe. CMS Ex. 19. When a facility’s ownership
changes, the existing provider agreement (and provider number) automatically transfer to
the new owner, subject to all applicable statutes and regulations and to the terms and
conditions under which the agreement was originally issued. 42 C.F.R. § 489.18(c), (d).
Those terms and conditions include compliance issues. A facility’s new owner thus
necessarily “acquires the relevant compliance history/issues of the facility if it undertakes
to assume the facility’s provider number.” Kenton Healthcare, LLC, DAB No. 2186 at
31 (2008); See Order Summarizing Prehearing Conference at 1 (June 24, 2009).

> Petitioner mistakenly titled its submissions as CMS documents; however, we
have treated the submissions as Petitioner’s. See June 10, 2009 letter.
IL. Issue

No penalties were imposed following the May 19 and July 7 surveys, so Petitioner is not
entitled to review of those survey findings. 42 C.F.R. §§ 498.3(b)(13), 498.3(d)(10)(ii);
Schowalter Villa, DAB No. 1688 (1999). A penalty was imposed following the July 10
survey, but, because Petitioner did not timely appeal, CMS’s determination that the
facility was not then in substantial compliance is final and its imposition of the DPNA
from August 19 through August 27, 2008, are now final and non-reviewable. Act §§
1819(h), 1866(h), 205(b); 42 C.F.R. §§ 488.400, 488.402, 488.406, 498.20(b),
498.40(a).°

Thus, the sole issue before me is whether, at the time of the August 28, 2008 LSC revisit
survey, the facility was in substantial compliance with 42 C.F.R. § 483.70 and the LSC.
See Order Summarizing Prehearing Conference at 2 (June 24, 2009).

II. Discussion

At the time of the August 28, 2008 survey, the facility was not in substantial
compliance with the LSC and 42 C.F.R. § 483.70 because it could not show that it
tested its generators under load for a minimum of 30 minutes each month.*

A facility must be designed, constructed, equipped, and maintained to protect the health
and safety of its personnel and the public. 42 C.F.R. § 483.70. It must maintain “all
essential mechanical, electrical and patient care equipment in safe operating condition.”
42 C.F.R. § 483.70(c)(2). The LSC of the National Fire Protection Association (NFPA)
is a set of fire protection requirements designed to provide a reasonable degree of safety
from fires. By statute and regulation, its applicable provisions have been incorporated
into the program participation requirements. Act § 1819(d)(2)(B); 42 C.F.R.

§ 483.70(a)(1).

The facility must have in place an emergency electrical power system that, in the event
the normal electrical supply is interrupted, is at least capable of lighting all entrances and
exists, and supplying power to fire detection, alarm and extinguishing systems, as well as
life support systems. Where the facility provides life support systems, it “must provide
emergency electrical power with an emergency generator (as defined in NFPA 99, Health
Care Facilities), that is located on the premises. The parties agree that, because the

> CMS is also correct that the imposition of a DPNA necessarily triggers a two-
year prohibition of the facility’s conducting its own nurse aide training and competency
evaluation programs. CMS Br. at 3, citing Act § 1819(£)(2)(B).

+ T make this one finding of fact/conclusion of law.
facility had residents who were dependent on ventilators, it was required to have such
emergency generators. CMS Ex. 18, at 2 (Perry Decl. 4 5); P. Br. at 4-5.

To ensure that its generators function during an emergency, the facility must test them at
least monthly. The testing must be performed “under load” (i.e., demands must be placed
on the system) for a minimum of 30 minutes. NFPA 110 (Standard for Emergency and
Standby Power Systems) 6-4.1; 6-4.2 (CMS Ex. 22, at 5).° A “written record of
inspection, performance, exercising period, and repairs shall be regularly maintained and
available for inspection. .. .” NFPA 99 (Health Care Facilities) 3-4.4.2; 3-5.4.2; 3-6.4.2
(CMS Ex. 21, at 7-8). See also, NFPA 99, C-3.2 (“[p]ermanently record all available
instrument readings during the monthly test”). CMS Ex. 21, at 13; NFPA 110 6-4.1
(“[rJecord running time meter reading at start and end of test”) CMS Ex. 22, at 7.

Here, the facility had two emergency generators, each equipped with an “hour meter,”
which records the length of time a generator has run. CMS Ex. 18, at 2-3 (Perry Decl.
99 4, 7); see CMS Ex. 12, at 4-7. But the facility could not show that each generator was
tested under load for at least 30 minutes every month. The surveyor, Perry Washburn,
testified that the facility used a documentation form that said nothing about whether or
how long the generator was run while being tested. CMS Exs. 6, 8; CMS Ex. 18, at 3
(Perry Decl. § 8). According to the survey report form, the facility’s maintenance
director admitted that he did not use the hour meter to document how long the generator
was run, nor was he sure that the hour meter even worked. CMS Ex. 3, at 2, 3.

Petitioner has not come forward with any documentation to establish that it tested each of
its generators monthly under load for at least 30 minutes. Indeed, Petitioner has not even
produced a witness claiming to have performed the tests as required. Instead, Petitioner
declares, without support, that it performed the tests, and claims that the facility was not
required to use the hour meter in testing the generators. P. Br. at 16. Whether or not its
use is mandatory, the hour meter provides a useful means by which facility staff can
assure that they have run the generator for the requisite period of time. If the facility opts
not to use it, it must nevertheless have some other means for assuring that the testing is
performed as required, and must produce documentation establishing that it has been
done. Crestview Parke Center v. Thompson, 373 F.3d 743. 751 (6" Cir. 2004); Price Hill
Nursing Home, DAB No. 1781, at 18-19 (2001). Since the facility has not done so here,
it was not in substantial compliance with the LSC and 42 C.F.R. § 483.70.

* Operating a system for a shorter period of time can be harmful to the engine.
NFPA 99 appendix A, A-3-4.4.1(b)(1).
6

IV. Conclusion

As of August 28, 2008, the facility was not in substantial compliance with the Medicare
requirements for the LSC and CMS was therefore authorized to continue the DPNA from
August 28 until October 23, 2008.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )
)
Maysville Nursing & Rehabilitation ) Date: November 20, 2009

Facility (CCN: 18-5207), )
)

Petitioner, ) Docket No. C-08-230

) Decision No. CR2032
v. )
)
Centers for Medicare & Medicaid Services. )
)

DECISION

Petitioner, Maysville Nursing & Rehabilitation Facility, was not in substantial
compliance with program participation requirements from July 31, 2007 through
November 22, 2007, due to violations of 42 C.F.R. §§ 483.25(1) (Tag F329); 483.60(c)
(Tag F428); 483.15(a) (Tag F241); 483.25(d) (Tag F315); and 483.25(h) (Tag F323).! A
civil money penalty (CMP) of $3050 per day from July 31, 2007 through November 1,
2007, and $250 per day from November 2 through November 22, 2007, a total CMP of
$291,950; and a denial of payment for new admissions (DPNA) from November 17
through November 22, 2007, are reasonable enforcement remedies. The state agency was
required to withdraw approval of Petitioner to conduct a nurse aide training and
competency evaluation program (NATCEP) for a period of two years.

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

Petitioner, located in Maysville, Kentucky, is authorized to participate in the federal
Medicare program as a skilled nursing facility (SNF) and in the Kentucky Medicaid
program as a nursing facility (NF). A complaint investigation by the Kentucky State
Agency (state agency) began at Petitioner’s facility on October 30, 2007. On November
1, 2007, the facility was notified that state agency surveyors found deficiencies that posed
immediate jeopardy to Petitioner’s residents. The surveyors returned on November 6,
2007, to conduct a partial-extended survey. The complaint and partial-extended survey
concluded on November 7, 2007, and found that Petitioner was not in substantial
compliance with program participation requirements. A statement of deficiencies (SOD)
was issued dated November 7, 2007. CMS Exhibit (CMS Ex.). 46. CMS notified
Petitioner of the findings of substantial noncompliance and related remedies by letter
dated November 15, 2007. Request for Hearing; Joint Stipulation (Jt. Stip.) 1(b).

CMS notified Petitioner by letter dated November 15, 2007, that CMS was imposing a
CMP in the amount of $4550 per day effective July 31, 2007, and continuing until
immediate jeopardy was removed or Petitioner’s provider agreement was terminated; that
a discretionary DPNA would be imposed effective November 17, 2007, if Petitioner did
not return to substantial compliance before that date; and that Petitioner’s provider
agreement would be terminated on November 30, 2007, unless immediate jeopardy was
removed by that date. CMS further advised Petitioner that its authority to conduct a
NATCEP would be withdrawn by the state. Request for Hearing.

The state agency conducted a revisit survey on November 26 and 27, 2007, the results of
which are recorded in a SOD dated November 27, 2007. CMS Ex. 53. The state agency
determined that the immediate jeopardy was abated on November 2, 2007, but Petitioner
was not found to have returned to substantial compliance. CMS notified Petitioner by
letters dated December 3 and 4, 2007, that effective November 2, 2007, the CMP was
lowered to $250 per day and that it would continue to accrue at that rate until Petitioner
returned to substantial compliance or until further notice from CMS; that the
discretionary DPNA effective November 17, 2007, would continue; and that Petitioner
was subject to mandatory termination of its provider agreement on May 7, 2008. Request
for Hearing; Jt. Stip. 1(b).

On December 13, 2007, Petitioner submitted a plan of correction alleging substantial
compliance effective not later than November 23, 2007. CMS Ex. 53. A second revisit
survey was conducted on January 4, 2008. The state agency notified Petitioner by letter
dated February 15, 2008, that Petitioner’s plan of correction was accepted and that
Petitioner achieved compliance effective November 23, 2007. Petitioner’s Exhibit (P.
Ex.) 14. However, the state agency subsequently sent Petitioner a second letter dated
March 13, 2008, in which the state agency advised Petitioner that, based on the January
4, 2008 revisit survey, Petitioner achieved compliance on January 4, 2008. P. Ex. 15. A
letter from CMS dated March 13, 2008, advised Petitioner that, based on the January 4,
2008 revisit survey, Petitioner returned to substantial compliance on January 4, 2008; the
discretionary DPNA continued from November 17, 2007 through January 3, 2008; and
the termination action was rescinded. P. Ex. 16.

Petitioner requested a hearing by letter dated January 14, 2008. On January 28, 2008, the
case was assigned to me for hearing and decision. I convened a hearing in Covington,
Kentucky, on July 15 and 16, 2008, and a 251-page transcript (Tr.) was prepared. CMS
Exs. | through 56 were admitted as evidence. Tr. 9. P. Exs. 1 through 16 were also
admitted as evidence. Tr. 11. CMS elicited testimony from state agency surveyors:
Jackie Aitkin, R.D.; Paula Foster, R.N.; Martina Burton, R.N.; and Dudley Ellis, R.Ph.
Petitioner elicited testimony from its North Wing Charge Nurse Janet Bradford, R.N., and
Administrator Anita Kennedy.

The parties submitted post-hearing briefs (CMS Brief and P. Brief, respectively) and
Petitioner submitted a reply brief (P. Reply). CMS elected not to file a reply brief.

II. Discussion
A. 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.
B. Applicable Law

The statutory and regulatory requirements for participation by a long-term care facility
are found at sections 1819 (SNF) and 1919 (NF) of the Act and at 42 C.F.R. Part 483.
Section 1819(h)(2) of the Act vests the Secretary with authority to impose enforcement
remedies against a SNF for failure to comply substantially with the federal participation
requirements established by sections 1819(b), (c), and (d) of the Act.? Pursuant to
1819(h)(2)(C), the Secretary may continue Medicare payments to a SNF not longer than
six months after the date the facility is first found not in compliance with participation

“ Section 1919(h)(2) of the Act gives similar enforcement authority to the states
to ensure that NFs comply with their participation requirements established by section
1919(b), (c), and (d) of the Act.
requirements. Pursuant to 1819(h)(2)(D), if a SNF does not return to compliance with
participation requirements within three months, the Secretary must deny payments for all
individuals admitted to the facility after that date - commonly referred to as the
mandatory or statutory DPNA. In addition to the authority to terminate a noncompliant
SNF’s participation in Medicare, the Act grants the Secretary authority to impose other
enforcement remedies, including a discretionary DPNA, civil money penalties,
appointment of temporary management, and other remedies such as a directed plan of
correction. Act § 1819(h)(2)(B).

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

§ 488.301 (emphasis in original). A deficiency is a violation of a participation
requirement established by sections 1819(b), (c), and (d) of the Act or the Secretary’s
regulations at 42 C.F.R. Part 483, Subpart B. Facilities that participate in Medicare may
be surveyed on behalf of CMS by state survey agencies in order to determine whether the
acilities are complying with federal participation requirements. 42 C.F.R. §§ 488.10-
488.28, 488.300-488.335. The regulations specify the enforcement remedies that CMS
may impose if a facility is not in substantial compliance with Medicare requirements. 42
C.F.R. § 488.406.

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, $3050 per day to $10,000 per day, is reserved for deficiencies that pose
immediate jeopardy to a facility’s residents and, in some circumstances, for repeated
leficiencies. 42 C.F.R. §§ 488.438(a)(1)(i), (d)(2). 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.) The lower range of
CMP, $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).

In this case, the state agency was required to withdraw Petitioner’s approval to conduct a
NATCEP. Pursuant to sections 1819(b)(5) and 1919(b)(5) of the Act, SNFs and NFs
may only use nurse aides who have taken a training and competency evaluation program.
Sections 1819(e) and 1919(e) of the Act impose upon the states the requirement to
specify what NATCEPs they will approve that meet the requirements established by the
Secretary and a process for reviewing and reapproving those programs using criteria set
by the Secretary. Pursuant to sections 1819(f)(2) and 1919(f)(2) the Secretary was tasked
to develop requirements for approval of NATCEPs and the process for review of those
programs. The Secretary promulgated regulations at 42 C.F.R. Part 483, subpart D.
Pursuant to 42 C.F.R. § 483.151(b)(2) and (e)(1) a state may not approve and must
withdraw any prior approval of a NATCEP offered by a skilled nursing or nursing facility
that: (1) has been subject to an extended or partial extended survey under sections
1819(g)(2)(B)(i) or 1919(g)(2)(B)(i) of the Act; (2) has been assessed a CMP of not less
than $5000; or (3) has been subject to termination of its participation agreement, a
DPNA, or the appointment of temporary management. Extended and partial extended
surveys are triggered by a finding of “substandard quality of care” during a standard or
abbreviated standard survey and involve evaluating additional participation requirements.
“Substandard quality of care” is identified by the situation where surveyors identify one
or more deficiencies related to participation requirements established by 42 C.F.R.

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

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

The Act and regulations make a hearing before an administrative law judge (ALJ)
available to a long-term care facility against which CMS has determined to impose an
enforcement remedy. Act § 1128A(c)(2); 1866(h); 42 C.F.R. §§ 488.408(g);
498.3(b)(13). The hearing before an ALJ is a de novo proceeding. Anesthesiologists
Affiliated, et al, DAB CR65 (1990), aff'd, 941 F.2d 678 (8th 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 ifa
successful challenge would affect the range of the CMP that could be imposed by CMS
or impact the facility’s authority to conduct a nurse aide training and competency
evaluation program. 42 C.F.R. §§ 498.3(b)(14) and (d)(10)(i). The CMS determination
as to the level of noncompliance “must be upheld unless it is clearly erroneous” (42
C.F.R. § 498.60(c)(2)), including the finding of immediate jeopardy. Woodstock Care
Center, DAB No. 1726, at 9, 38 (2000), aff'd, Woodstock Care Center v. Thompson, 363
F.3d 583 (6th Cir. 2003). The Departmental Appeals Board (the Board) has long held
that the net effect of the regulations is that a provider has no right to challenge the scope
and severity level assigned to a noncompliance finding, except in the situation where that
finding was the basis for an immediate jeopardy determination. See e.g., Ridge Terrace,
DAB No. 1834 (2002); Koester Pavilion, DAB No. 1750 (2000). Review of a CMP by
an ALJ is subject to 42 C.F.R. § 488.438(e).

The standard of proof or quantum of evidence required is a preponderance of the
evidence. CMS has the burden of coming forward with the evidence and making a prima
facie showing of a basis for imposition of an enforcement remedy. Petitioner bears the
burden of persuasion to show by a preponderance of the evidence that it was in
substantial compliance with participation requirements or any affirmative defense. See
Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd, Hillman Rehabilitation Ctr.
v. United States Dep’t of Health and Human Services, Health Care Fin. Admin., No. 98-
3789 (GEB), slip op. at 25 (D.N.J. May 13, 1999); Cross Creek Health Care Center,
DAB No. 1665 (1998); Emerald Oaks, DAB No. 1800; Batavia Nursing and
Convalescent Center, DAB No. 1904 (2004), aff'd, Batavia Nursing & Convalescent Ctr.
v. Thompson, 129 F. App’x. 181 (6th Cir. 2005); Batavia Nursing and Convalescent Inn,
DAB No. 1911 (2004).

C. Analysis

My conclusions of law are set forth in bold text followed by my findings of fact and
analysis.

The SOD dated November 7, 2007 (CMS Ex. 46), cited the following deficiencies: 42
C.F.R. § 483.15(a) (Tag F241) at a scope and severity level G*; 42 C.F.R.

§ 483.20(k)(3)(ii) (Tag F282) at a scope and severity level K; 42 C.F.R. § 483.25 (Tag
F309) at a scope and severity level K; 42 C.F.R. § 483.25(d) (Tag F315) at a scope and
severity level G; 42 C.F.R. § 483.25(h) (Tag F323) at a scope and severity level D; 42

> This is a “Tag” designation as used in the State Operations Manual (SOM, Appendix
PP - Guidance to Surveyors for Long Term Care Facilities). The “Tag” refers to the specific
regulatory provision allegedly violated and CMS’s guidance to surveyors. Although the SOM
does not have the force and effect of law, the provisions of the Act and regulations interpreted do
have such force and effect. State of Indiana by the Indiana Department of Public Welfare v.
Sullivan, 934 F.2d 853 (7th Cir. 1991); Northwest Tissue Center v. Shalala, | F.3d 522 (7th Cir.
993). Thus, while the Secretary may not seek to enforce the provisions of the SOM, she may
seek to enforce the provisions of the Act or regulations as interpreted by the SOM. The cited
deficiency Tags are set forth in the SOD prepared by surveyors. Each deficiency indicates a
scope and severity level. A scope and severity level is designated by an alpha character, A
through L, selected by CMS or a state agency from the scope and severity matrix published in
the SOM at section 7400E. A scope and severity level of A, B, or C indicates a deficiency that
presents no actual harm, but has the potential for minimal harm. Facilities with deficiencies of a
level no greater than C remain in substantial compliance. A scope and severity level of D, E, or
F indicates a deficiency that presents no actual harm, but has the potential for more than minimal
harm that does not amount to immediate jeopardy. A scope and severity level of G, H, or I
indicates a deficiency that involves actual harm that does not amount to immediate jeopardy.
Scope and severity levels J, K, and L are deficiencies that constitute immediate jeopardy to
resident health or safety. Letters A, D, G, and J indicate an isolated occurrence; letters B, E,
H, and K indicate a pattern of occurrences; and letters C, F, I, and L indicate widespread
occurrences. The matrix, which is based on 42 C.F.R. § 488.408, specifies which
remedies are required and optional at each level based on the frequency of the deficiency.

C.F.R. § 483.25(1) (Tag F329) at a scope and severity level K; 42 C.F.R. § 483.60(c) (Tag
F428) at a scope and severity level J; 42 C.F.R. § 483.75 (Tag F490) at a scope and
severity level K; and 42 C.F.R. § 483.75(0)(1) (Tag F520) at a scope and severity level
K.

The SOD dated November 27, 2007 (CMS Ex. 53), reflects the results of the revisit
survey concluded on that date. The SOD cites Petitioner with the same deficiencies cited
by the SOD dated November 7, 2007. However, the revisit found that immediate
jeopardy had been abated on November 2, 2007, and the scope and severity findings of
some alleged deficiency citations were reduced as follows: Tags F282, F309, F329,
F490, and F520 were reduced from scope and severity K to scope and severity E, and Tag
F428 was reduced from scope and severity J to scope and severity D. CMS Ex. 53, at 2.

No SOD for the revisit survey completed on January 4, 2008 is in evidence, from which I
infer that no deficiencies were cited during that survey.

Petitioner requested Informal Dispute Resolution (IDR) from the state agency related to
the survey that concluded on November 7, 2007. The IDR was conducted on January 29,
2008. P. Ex. 3, at 1. During the hearing, CMS agreed that Petitioner was not notified
that CMS rejected any of the IDR results and that CMS accepted the results. CMS Ex.
49; P. Ex. 3, at 1; Tr. 23-24. CMS agreed that as a result of IDR the example of Resident
1 was deleted from the deficiency cited under Tag F309 and the scope and severity of that
deficiency citation was reduced from K to E. CMS also accepted the IDR result for Tag
F282 that lowered the scope and severity from K to E. Petitioner advised me at hearing
that the deficiencies cited under Tags F241 and F315 are not disputed, but Petitioner
disputes that the residents involved suffered actual harm. Tr. 23-30, 170-72. Petitioner
stated that the deficiency cited under Tag F323 is not disputed. Tr. 172.

The enforcement remedies at issue are a CMP of $4550 per day from July 31 through
November 1, 2007, and $250 per day from November 2, 2007 through January 3, 2008;
and a discretionary DPNA from November 17, 2007 through January 3, 2008. The state
agency should also have withdrawn approval for Petitioner to conduct a NATCEP for
two years, though I have no evidence it did so.

1. Petitioner violated 42 C.F.R. § 483.25(l) (Tag F329) and the
violation posed immediate jeopardy.

2. Petitioner violated 42 C.F.R. § 483.60(c) (Tag F428) and the
violation posed immediate jeopardy.
3. The finding of immediate jeopardy based upon the violations of 42
C.F.R. §§ 483.25(1) and 483.60(c) was not clearly erroneous.

The surveyors alleged in the SOD dated November 7, 2007, that Petitioner violated 42
C.F.R. § 483.20(k)(3)(1i) (Tag F282) because Petitioner failed to follow the care plan for
five residents, Residents 1, 7, 11, 14, and 22, related to Coumadin therapy monitoring and
laboratory testing as ordered by the residents’ physicians. CMS Ex. 46, at 7. The
surveyors alleged that Petitioner violated 42 C.F.R. § 483.25 (Tag F309) because
Petitioner failed to have an effective system to ensure that five residents, Residents 1, 7,
11, 14, and 22, received laboratory monitoring for their Coumadin therapy. CMS Ex. 46,
at 14. The surveyors alleged that Petitioner violated 42 C.F.R. § 483.25(1) (Tag F329)
because Petitioner failed to have an effective system to ensure Residents 1, 7, 11, and 14,
who were on Coumadin, received laboratory testing to ensure proper dosing of Coumadin
at a therapeutic-level. CMS Ex. 46, at 40. The surveyors alleged that Petitioner violated
42 C.F.R. § 483.60(c) (Tag F428) because the monthly pharmacy review failed to
identify that Resident 1 had no order for laboratory testing for Coumadin-level and when
the laboratory did advise Petitioner that there was no laboratory order, Petitioner failed to
act. CMS Ex. 46, at 48. CMS agreed at hearing that the alleged violation of 42 C.F.R.

§ 483.75 (Tag F490) was derivative of other alleged violations. Tr. 172. The surveyors
allege under Tag F490, that Petitioner failed to provide adequate medication monitoring
particularly related to Coumadin therapy; Petitioner failed to ensure residents with a
decline in bowel and bladder function were reassessed, monitored, and reevaluated; and
that Petitioner had a problem with staff responding to call-lights. CMS Ex. 46, at 52-54.
The surveyors allege that Petitioner violated 42 C.F.R. § 483.75(0)(1) (Tag F520)
because Petitioner did not have an effective Quality Assurance Committee (QAC),
evidenced by the alleged failure of the QAC to address issues related to Coumadin
laboratory monitoring, failure to evaluate incontinence as a possible factor in causing
falls, and failure to identify and address a problem with call-lights. CMS Ex. 46, at 55-
58.

The violations cited under Tags F282, F309, F329, and F428, are all related to an alleged
failure to monitor Coumadin therapy and all were cited as posing immediate jeopardy to
Petitioner’s residents. The violations cited under Tags 490 and 520 were also cited as
posing immediate jeopardy to the extent they related to Petitioner’s failure to monitor
Coumadin therapy. The IDR reduced the alleged scope and severity of Tags F282 and
F309 from posing immediate jeopardy to posing more than minimal harm but with no
actual harm. Having given careful consideration to all these alleged violations, I
conclude that Petitioner violated 42 C.F.R. § 483.25(1) (Tag F329) and 42 C.F.R.

§ 483.60(c) (Tag F428); that these violations amply show the deficiency related to
Coumadin therapy monitoring; that these violations show that immediate jeopardy was
posed; and that these two violations were a sufficient basis for the imposition of the daily
CMP at the low end of the range of CMPs reserved for deficiencies that are found to pose
immediate jeopardy. Accordingly, I find and conclude that it is unnecessary to discuss
and that it is in the interest of judicial economy not to discuss the violations cited under

Tags F282 and 309. | also find and conclude for purposes of this decision, that the
examples of Residents 1 and 7 alleged under Tags F329 and F428, demonstrate the
violations, and it is therefore not necessary to discuss the examples of the other residents
cited under those deficiency citations. Finally, I find and conclude that it is not necessary
to address the violations cited under Tags F490 and F520, as immediate jeopardy is
justified based on other violations and there is an adequate basis for the proposed
enforcement remedies without consideration of those deficiencies.

a. Facts

There is no dispute that Coumadin is an anticoagulant medication, often referred to as a
blood thinner.’ There is also no question that Coumadin dosage must be controlled by
periodic determinations of Prothrombin Time (PT) and International Normalized Ratio
(INR) (PT/INR). Failure to ensure that Coumadin is in a therapeutic range can lead to
hemorrhage, necrosis (tissue and cell death), death or permanent disability. According to
Petitioner’s consulting pharmacist, routine PT/INR testing should be done monthly at a
minimum, according to the Institute for Clinical Systems Improvement, Anticoagulation
Therapy Supplement (2001). CMS Ex. 45, at 22.

Residents 1 and 7 were both prescribed Coumadin and the deficiencies were cited
because the evidence reviewed by the surveyors did not show they received PT/INR
testing every month.

(1) Resident 1

Resident 1 was readmitted to Petitioner’s facility on May 8, 2007. His diagnoses
included dementia, respiratory failure with tracheostomy, cerebellar hemorrhage, high
blood pressure, coronary artery disease, deep-vein thrombosis (DVT), intraventricular
hematoma, COPD (chronic obstructive pulmonary disease), alcoholism, diabetes,
agitation, anxiety and pneumonia. Due to his history of DVT and cerebellar hemorrhage,
he had orders for Coumadin at a dosage of 5 mg per day. CMS Ex. 45, at 30; P. Ex. 1, at
80-81; Tr. 175-76; Petitioner’s Proposed Findings of Fact and Conclusions of Law, filed

*T advised the parties at hearing that I would take official notice of the Physician’s
Desk Reference (PDR) entry regarding Coumadin or its generic version, Warfarin. I also
invited counsel to provide other source material with their post-hearing briefs that would
provide a better understanding of Coumadin. Tr. 144, 240-41. Petitioner provided copies
of pages from the PDR related to Coumadin as Attachment | to Petitioner’s Reply Brief.
CMS provided copies of web pages from “Drugs.com” related to anticoagulants as
Attachment | to the CMS Post-Hearing Brief; and copies of web pages from
PDRhealth.com, the lay-person version of the PDR, related to Coumadin as Attachment 2
to the CMS Brief.
10

with Petitioner’s Reply Brief on October 15, 2008, Findings of Fact (P. Facts) 6. From
May 8 to July 31, 2007, Resident 1 received laboratory testing for PT/INR and his
Coumadin was adjusted. P. Facts 7; P. Ex. 1, at 78, 80-81, 150, 216, 218, 221-25; Tr. 40-
41. The PT/INR results from July 31, 2007, were sent to the Resident 1’s physician, and,
on August 1, 2007, Nurses’ Notes reflect that the physician called and advised there were
no new orders “R/T [related to] lab.” P. Ex. 1, at 150; P. Facts 8. Resident 1’s PT/INR
results from the July 31, 2007 laboratory report were PT 17.7 and INR 1.63 both of
which were above the laboratory reference range but, Petitioner concedes, below
therapeutic range for an individual with DVT. P. Ex. 1, at 215; CMS Ex. 30, at 2; Tr.
183-84; P. Fact 8. Surveyor Aitkin testified, and Petitioner does not disagree, that
Resident 1’s physician did not order and no PT/INR testing was done for Resident |
between July 31 and October 10, 2007. Tr. 41-45; P. Fact 10, 11. On August 22 and
September 19, 2007, Resident 1’s physician visited but gave no new orders for PT/INR
testing or for adjusting his Coumadin dosage. Tr. 185; P. Ex. 1, at 85-86; P. Fact 10.
Resident 1 remained on Coumadin at 8.5 mg until his hospitalization on October 10,
2007, for a subdural hematoma. P. Fact 10, 12; P. Ex. 1, at 217; CMS Ex. 45, at 15.

The facility had developed a care plan for Resident | related to Coumadin therapy, which
included monitoring for side effects by observing the resident for bleeding gums, the
appearance of blood in his stool/urine or bruising. P. Ex. 1, at 12-13; P. Fact 9. Staff
observed no adverse side-effects secondary to Coumadin therapy during August and
September 2007. Tr. 190-91; P. Fact 9.

As required by the regulations, Resident 1’s drug regimen was reviewed by Petitioner’s
pharmacist consultant in August and September 2007. During the August review, no
irregularities were found in Resident 1’s drug regimen. However, on September 28,
2007, the pharmacist consultant recommended PT/INR testing for Resident 1’s
Coumadin therapy. P. Ex. 1, at 226; CMS Ex. 45, at 20, 22; Tr. 186-87. The pharmacist
consultant reported to Petitioner that:

[Resident 1] is currently receiving warfarin 8.5mg qd. It is
recommended to check the protime/INR monthly at a
minimum. The last lab result for an INR was dated 7/31/07.
Please follow up on these lab reports.

CMS Ex. 45, at 22. Petitioner acknowledges that it failed to follow-up. P. Br. at 4; P.
Facts 11.

> Rather than issue a standing order for monthly laboratory testing, Resident 1’s
physician ordered tests on what appears to have been an ad hoc basis. For example, on
June 14, 2007, he ordered a recheck of PT/INR on July 9, 2007, but on July 24, 2007, he
ordered a PT/INR in one week, the test that was done on July 31, 2007. CMS Ex. 45, at
9.
11

On October 10, 2007, Resident 1 was hospitalized with a right subdural hematoma. His
PT/INR levels exceeded therapeutic ranges. Resident 1’s discharge summary states that
Coumadin was discontinued “for life because of his previous history of cerebellar
hematoma and this is his second subdural.” CMS Ex. 45, at 6; P. Facts 12.

(2) Resident 7

On August 10, 2007, Resident 7’s physician ordered a PT/INR draw to be done in three
days. CMS Ex. 43, at 11; P. Facts 13. Surveyor Aitkin testified that there is no evidence
of record that this was done. Tr. 53-54. On August 16, 2007, the resident received a skin
tear and was assessed by the charge nurse, RN Bradford. RN Bradford testified that she
noticed that the tear was bleeding more than a normal skin tear. She called the physician
to ask for an immediate PT/INR. The physician ordered the PT/INR. The results were
high and the physician ordered Coumadin held until further notice and requested another
PT/INR test in two days. CMS Ex. 43, at 4, 12; Tr. 212; P. Facts 13.

b. Analysis

Petitioner is obligated by its participation in Medicare to provide and ensure that each
resident receives the “necessary care and services to attain or maintain the highest
practicable physical, mental, and psychosocial well-being, in accordance with the
comprehensive assessment and plan of care.” 42 C.F.R. § 483.25. The facility, as part of
its obligation to deliver quality care, must ensure that a resident’s drug regimen is free of
unnecessary drugs, which includes any drug used without adequate monitoring.
Specifically, 42 C.F.R. § 483.25(1) requires that:

(1) Unnecessary drugs-(1) General. Each resident’s drug
regimen must be free from unnecessary drugs. An
unnecessary drug is any drug when used:

(i) In excessive dose (including duplicate drug therapy); or
(ii) For excessive duration; or

(iii) Without adequate monitoring; or

(iv) Without adequate indications for its use; or

(v) In the presence of adverse consequences which indicate
the dose should be reduced or discontinued; or

(vi) Any combinations of the reasons above.

Residents 1 and 7 were both receiving Coumadin therapy. Unmonitored Coumadin use
may result in serious injury or death. The evidence before me shows that periodic
monitoring of PT/INR by laboratory testing is a standard of care for those receiving
Coumadin therapy. According to Petitioner’s consulting pharmacist, laboratory testing
for PT/INR should be done monthly at a minimum, and I find that opinion credible.
Petitioner does not dispute that Resident 1 did not receive a PT/INR test from July 31 to
12

October 10, 2007, more than 30 days. Petitioner also does not dispute that it failed to act
upon the September 28, 2007 recommendation of its consulting pharmacist and
immediately obtain an order for PT/INR testing for Resident 1. Petitioner does not
dispute that Resident 7 did not receive a PT/INR test as prescribed by the resident’s
physician. I conclude that Residents 1 and 7 did not receive adequate monitoring of their
Coumadin therapy because they did not receive necessary PT/INR testing either no less
than monthly for Resident 1, or as prescribed by Resident 7’s physician. Accordingly,
CMS has made a prima facie showing of a violation of 42 C.F.R. § 483.25(1) (Tag F329).

The requirements established by 42 C.F.R. § 483.60(c) are that each resident’s drug
regimen be reviewed at least monthly by a licensed pharmacist, that any irregularities
must be reported to the attending physician and director of nursing, and the reported
irregularities must be acted upon.

In the case of Resident 1, it is undisputed that the pharmacist failed to identify the
irregularity that Resident 1 had no order for a PT/INR within 30 days of his last PT/INR
and no testing of PT/INR in nearly 30 days. It is also undisputed that the pharmacist did
identify the irregularity that Resident 1 had no order for PT/INR testing and received no
such testing in August and September 2007, but then Petitioner failed to act upon the
consulting pharmacist’s recommendation to obtain an order for testing. CMS Ex. 46, at
48. I conclude that each failure is a prima facie violation of 42 C.F.R. § 483.60(c) (Tag
F428).

I further conclude that Petitioner’s defenses are without merit.

Petitioner argues with respect to Resident | that staff followed the physician’s decision
not to order PT/INR laboratory testing. Petitioner asserts that CMS faults it for not
insisting that Resident 1’s physician take action to order additional laboratory tests.
Petitioner asserts that the Kentucky Board of Nursing does not place a duty upon nurses
to compel physicians to order tests, even if needed. Petitioner reasons that ordering
laboratory tests and the monitoring of Coumadin and PT/INR levels is a physician’s
function, not a function of a nurse or the facility, except to the extent Petitioner care
planned for Resident 1. Petitioner asserts it followed Resident 1’s care plan, monitored
for observable side-effects of excessive Coumadin dosing, and ensured monthly visits
from the resident’s attending physician, who was the one with the authority to issue
orders for laboratory analysis, not Petitioner or its staff. Petitioner argues that it is not in
a position to second-guess the physician’s decisions with regard to laboratory testing for
Coumadin. Petitioner argues that it does not have an obligation to ensure that physicians
services are delivered without error. The PDR states that monitoring for Coumadin
effectiveness is a matter of unique physician involvement and physician judgment and
nurses are not required to challenge judgments that physicians make that are uniquely
within their skill and training. Petitioner’s staff also saw no signs that Resident 1’s
Coumadin level was causing side-effects or that there was a need for more frequent
laboratory testing. P. Br. at 11-18; P. Reply at 1-2; Petitioner’s Proposed Findings of
13

Fact and Conclusions of Law, filed with Petitioner’s Reply Brief on October 15, 2008,
Conclusion of Law (P. Law) 3, 4. Petitioner asserts that the only possible period of
immediate jeopardy would be following the facility’s failure to follow through on the
pharmacist consultant’s recommendation with regard to Resident 1 after September 28,
2007. P. Reply at 2.

Petitioner admits that it was deficient by not following physician’s orders with respect to
PT/INR testing for Resident 7 and admits that due to staffing issues there were problems
with laboratory monitoring during July and August. Petitioner argues that except in the
cases of Residents 7, 11, and 14, it had a 99% accuracy in ordering laboratory tests. P.
Brief at 10-11; P. Law 3. Petitioner further asserts that there was no immediate jeopardy.
P. Reply at 1-2.

Petitioner is obligated by the regulation to ensure that each resident’s drug regimen is free
of unnecessary drugs, which includes any drug used without adequate monitoring. The
standard of practice is to monitor Coumadin by laboratory testing for PT/INR monthly.
The regulation squarely places the burden upon Petitioner to ensure there is adequate
monitoring and Petitioner does not have the option of hiding behind either the physician’s
or consulting pharmacist’s failure to act. I take no issue with Petitioner’s assertion that
nursing staff may not order laboratory tests or substitute its judgment for that of the
physician. However, Petitioner does have the burden under the regulation to ensure that
monitoring is done. When monitoring is not done, Petitioner has the burden to show that
it took action to ensure the monitoring was done or that the clinical evidence reflects a
reasonable explanation for why it was not. Furthermore, Petitioner has the burden to
ensure that its records receive a competent pharmacist review, and Petitioner offers no
explanation for why the consulting pharmacist missed the fact that there was no
Coumadin monitoring between July 31 and September 28, 2007.

I further conclude that the finding of immediate jeopardy based upon the violations of 42
C.F.R. §§ 483.25(1) and 483.60(c) was not clearly erroneous. When Resident 1 was
hospitalized on October 10, 2007, his INR was high. Resident 7’s INR also tested high
when he cut himself and the nurse observed excessive bleeding. There is no dispute that
excessive Coumadin levels may lead to serious harm or death. I conclude Petitioner has
not shown that serious harm or death was not likely due to its failure to monitor
Coumadin therapy. I further conclude that Petitioner has failed to show clearly erroneous
the determination that immediate jeopardy commenced on July 31, 2007 and continued
until November 2, 2007, a date that is undisputed by Petitioner.

4. Petitioner concedes it violated 42 C.F.R. §§ 483.15(a) (Tag F241),
483.25(d) (Tag F315); and does not challenge the alleged violation of 42
C.F.R. § 483.25(h) (Tag F323).

5. Petitioner’s violation of 42 C.F.R. §§ 483.15(a) (Tag F241) and
483.25(d) (Tag F315) resulted in actual harm to the resident involved.
14

6. Petitioner’s violation of 42 C.F.R. § 483.25(h) (Tag F323) had the
potential for causing more than minimal harm that was not immediate
jeopardy and did not result in actual harm.

7. Petitioner has no right to ALJ review of the level of noncompliance,
i.e. the scope and severity determination, except when a successful
challenge would affect the range of CMP that can be imposed or the
finding of substandard quality of care that resulted in loss of NATCEP
authority. 42 C.F.R. § 498.3(b)(14), (b)(16), and (c)(10).

a. Facts

The surveyors allege that Petitioner violated 42 C.F.R. § 483.15(a) (Tag F241) because
Residents 2, 5, and 17 had incontinent episodes while waiting for extended periods to be
toileted by staff. The surveyors alleged actual psychosocial harm to Resident 5 based on
the surveyors’ observation that Resident 5 became tearful when discussing the
incontinent episodes with surveyors. CMS Ex. 46, at 2; Tr. 110-11.

The surveyors allege that Petitioner violated 42 C.F.R. § 483.25(d) (Tag F315) because
Petitioner failed to assess and provide appropriate treatment and services for five
incontinent residents (Residents 1, 2, 5, 6, and 17) to achieve and maintain as much
normal bladder function as possible. Actual harm was the decline in bladder function
with failure to intervene to achieve more normal bladder function. CMS Ex. 46, at 25-26.

The surveyors allege that Petitioner violated 42 C.F.R. § 483.25(h), by failing to ensure
that the resident environment remained as free of accident hazards as possible, because
two residents fell while attempting to toilet themselves and Petitioner did not re-evaluate
the residents’ toileting plans and determine whether the toileting plans caused or
contributed to the falls. Actual harm is not alleged as indicated by the assigned scope and
severity level of D. CMS Ex. 46, at 35-36.

Petitioner does not dispute that it violated 42 C.F.R. §§ 483.15(a) (Tag F241), 483.25(d)
(Tag F315), and 483.25(h) (Tag F323) as alleged. Tr. 172; P. Br. at 21-22; P. Law 7;
Request for Hearing.

b. Analysis

Although Petitioner does not dispute the violations cited under Tags F241 and F315,
Petitioner argues that CMS has not proved that those violations resulted in actual harm
and a scope and severity of G is not justified. P. Br. at 21-22; P. Law 7; Request for
Hearing.

Petitioner argues that the only evidence of psychosocial harm noted in the SOD is that
Resident 5 cried when discussing the details of the deficiencies with the surveyors.
Petitioner asserts that her crying was not an indication of psychosocial harm, but rather a

15

symptom of her condition relating to her CVA diagnosis, which made it difficult for her
to express her feelings. Petitioner asserts that she frequently became emotional and
weepy when she experienced difficulty in expressing herself or being understood and that
her tearfulness is not a valid basis to establish that she experienced psychosocial harm as
aresult. Instead, it was simply her manner of communication. P. Br. at 22.

Petitioner’s right to a hearing by an ALJ is not unlimited. The regulations, specifically
42 C.F.R. § 498.3(b)(14), (b)(16), and (c)(10), only grant Petitioner a right to ALJ review
of the surveyors’ scope and severity determination if such review might affect the range
of CMP that may be imposed by CMS or affect a finding of substandard quality of care
that resulted in the facility’s loss of NATCEP authority. The violations cited under Tags
F241 and F315 are not alleged to have posed immediate jeopardy and the range of CMPs
available to CMS as an enforcement remedy for these violations is not affected, and
would not be affected, if 1 decided favorably for Petitioner that the two violations did not
cause actual harm. 42 C.F.R. § 488.438(a) (upper range of CMPs is for deficiencies that
constitute immediate jeopardy and lower range for deficiencies that do not). Further,
CMS found substandard quality of care only with regard to the deficiencies cited under
Tags F309 and 329. Request for Hearing, CMS Notice Letter dated November 15, 2007,
page 3; CMS Ex. 46, at 1-2; CMS Ex. 53, at 1-2. Thus, Petitioner has no right to ALJ
review as to the determination that the violations of 42 C.F.R. §§ 483.15(a) (Tag F241),
483.25(d) (Tag F315), and 483.25(h) (Tag F323) caused actual harm to the residents. I
further note that the state would be required to withdraw Petitioner’s authority to conduct
a NATCEP based upon the CMP exceeding $5000, even in the absence of a finding of
substandard quality of care that triggered an extended survey.

However, even if I provided the review Petitioner requested, I would conclude that the
evidence raised the inference of actual harm to Resident 5 and that Petitioner did not
rebut the inference. Regarding the deficiency alleged under F315, there is no dispute that
Resident 5 became tearful during an interview with surveyors when there was a
discussion about her incontinent episodes; her assertion that she had to wait so long for a
response to her call light that she urinated in her incontinent brief; and her statement that
being incontinent made her feel awful. This undisputed evidence is sufficient to raise an
inference that Resident 5 suffered embarrassment and possible shame, which is not
rebutted by Petitioner’s assertion that Resident 5 becomes tearful because she has
difficulty expressing herself or being understood. The evidence does not show Resident
5 had difficulty expressing herself to the surveyors or being understood. Furthermore, it
is within common experience that a cognizant adult would feel shame and or
embarrassment at being incontinent. Whether shame or embarrassment rises to the level
of psychosocial harm is a matter of professional judgment and Petitioner has not offered
evidence to rebut the surveyors’ professional opinion that Resident 5 suffered actual
harm. Regarding the violation of 42 C.F.R. § 483.25(d) (Tag F315), Petitioner has not
argued or offered evidence that the residents did not suffer actual harm in the form of
decline in bladder function, at least with regard to continence.

16

8. Petitioner returned to substantial compliance with program
participation requirements on November 23, 2007.

9. Alternative remedies, the DPNA and daily CMP, ended on
November 22, 2007.

The regulations governing the duration of alternative remedies, including a daily CMP
and a DPNA, are found at 42 C.F.R. §§ 488.454 and 488.440. Section 484.454(a)
provides that “alternative remedies” continue to accrue until “[t]he facility has achieved
substantial compliance, as determined by CMS or the State based upon a revisit or after
an examination of credible written evidence that it can verify without an on-site visit.”
Section 488.454(e) states that an alternative remedy may terminate on a date prior to a
revisit survey if the facility “can supply documentation acceptable to CMS or the State
survey agency that it was in substantial compliance” on the earlier date and was capable
of remaining in substantial compliance. Section 488.440(h)(1) of 42 C.F.R. states the
same concept with reference to a CMP.

In this case both the testifying surveyors and facility representatives acknowledged that
the facility established substantial compliance as of November 23, 2007. Tr. 89-97, 116,
234-35.

CMS argues that Petitioner did not come back into substantial compliance with
participation requirements until January 4, 2008, the date of the revisit survey. However,
there is no evidence that any deficiency was cited by the January 4, 2008 survey that
would be the basis for finding Petitioner not in substantial compliance between
November 23, 2007 and January 4, 2008. The surveyors specifically testified that
Petitioner had completed its plan of correction not later than November 23, 2007, and
they were of the opinion that Petitioner was in substantial compliance as of that date.
CMS did not rebut the testimony of its surveyors or explain in its brief why I should not
accept the testimony of its surveyors that Petitioner was in compliance as of November
23, 2007. Thus, I conclude Petitioner returned to substantial compliance on November
23, 2007, and the remedies in this case no longer had a basis and ended as of November
22, 2007.

10. The enforcement remedies proposed by CMS are not reasonable.

11. A CMP of $3050 per day for the period of immediate jeopardy
from July 31, 2007 through November 1, 2007, and of $250 per day for
the period November 2, 2007 through November 22, 2007, is
reasonable.

CMS proposes the following enforcement remedies: a CMP of $4550 per day from July
31 through November 1, 2007; a $250 per day CMP from November 2, 2007 through
January 3, 2008; and a discretionary DPNA from November 17, 2007 through January 3,
17

2008. I have concluded that Petitioner returned to substantial compliance with program
participation requirements on November 23, 2007. Therefore, it is unreasonable for any
of the proposed enforcement remedies to run beyond November 22, 2007.

A per day CMP of $4550 is not reasonable in this case. The factors I must consider in
making my determination as to whether the proposed CMP amounts are reasonable are
set out at 42 C.F.R. § 488.438(f) and include: (1) the facility’s history of noncompliance,
including repeated deficiencies; (2) the facility’s financial condition; (3) the factors
specified in 42 C.F.R. § 488.404 for determining the seriousness of deficiencies, the
relationship of deficiencies, and history of noncompliance; and (4) the facility’s degree of
culpability, which includes but is not limited to neglect, indifference, or disregard for
resident care, comfort or safety.

I conclude that the $4550 CMP CMS imposed for the period of immediate jeopardy is not
reasonable and I am lowering the amount of the CMP to $3050 per day. The upper range
of CMPs, from $3050 per day to $10,000 per day, is reserved for periods when
substantial noncompliance with program participation requirements poses immediate
jeopardy to facility residents. Immediate jeopardy existed at Petitioner’s facility from
July 31, 2007 through November 1, 2007, and a daily CMP in the upper range is
appropriate for that period. The minimum authorized CMP is $3050. CMS proposed
$4550 per day. CMS asserts that the CMP is reasonable and that Petitioner had a “casual
attitude” toward residents receiving Coumadin. CMS Br. at 20. Petitioner asserts that it
had an excellent compliance history of deficiency free surveys, that there is no evidence
in the record of neglect or indifference towards residents that would enhance its
culpability, and no evidence of a systemic breakdown with respect to its laboratory
monitoring that warrants increased penalties. P. Br. at 23. CMS did not respond to
Petitioner’s assertions. CMS letter dated October 18, 2008, stating CMS determined not
to submit a reply brief.

I have considered the regulatory factors. The evidence does not show a history of
noncompliance. Petitioner has presented no evidence of an inability to pay. IDR lowered
the scope and severity of two alleged deficiencies from immediate jeopardy to the
potential for more than minimal harm that was not immediate jeopardy without actual
harm. Although I did not specifically address the alleged deficiency under Tag F490,
CMS agreed that the alleged violation was derivative of other alleged violations and I
would not have treated that deficiency as the basis for a larger CMP in this case. I also
elected not to specifically address the alleged deficiency under Tag F520, but that
deficiency, even if founded, would have no effect on my determination of the reasonable
remedy in this case; for while that alleged deficiency is not truly derivative, it cites
Petitioner for not having an effective QAC based on the existence of the other alleged
deficiencies.

18

The $250 per day CMP imposed for the period after immediate jeopardy was abated and
before Petitioner returned to substantial compliance, is reasonable. The $250 per day
CMP is at the lower end of the low range of CMPs and is consistent with Petitioner’s
degree of culpability and the seriousness of the deficiencies that remained uncorrected
after immediate jeopardy was abated.

Il. Conclusion

For the foregoing reasons, I conclude that Petitioner was not in substantial compliance
with program participation requirements at a level of immediate jeopardy from July 31
through November 1, 2007, immediate jeopardy was abated on November 2, 2007, but
Petitioner remained out of substantial compliance until November 23, 2007. Reasonable
enforcement remedies are a CMP of $3050 per day for the period of immediate jeopardy;
a CMP of $250 per day from November 2, 2007 through November 22, 2007; and a
DPNA from November 17 through 22, 2007. The total CMP is $291,950 (94 days at
$3050 and 21 days at $250). The state agency was required to withdraw Petitioner’s
authority to conduct a NATCEP for a period of two years effective November 7, 2007.

/s/
Keith W. Sickendick
Administrative Law Judge