Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Rosewood Care Center of Rockford
(CCN: 145891),

Petitioner
v.

Centers for Medicare and Medicaid Services.
Docket No. C-11-74
Decision No. CR2440

Date: October 4, 2011

DECISION
I sustain the determination of the Centers for Medicare and Medicaid Services
(CMS) to impose remedies against Petitioner, Rosewood Center of Rockford,

consisting of:

¢ civil money penalties of $3,050 per day for each day of a period beginning
on August 6, 2010 and running through August 12, 2010;

¢ civil money penalties of $200 per day for each day of a period beginning on
August 13, 2010 and running through October 27, 2010; and

e denial of payment for new Medicare admissions for each day of a period
beginning on September 27, 2010 and running through October 27, 2010.

I. Background

Petitioner is a skilled nursing facility that is located in Rockford, Illinois. It
participates in the Medicare program. Its participation in Medicare is governed by
sections 1819 and 1866 of the Social Security Act (Act) and by implementing
regulations at 42 C.F.R. Parts 483 and 488. Its hearing rights in this case are
governed by regulations at 42 C.F.R. Part 498.

Petitioner requested a hearing to challenge a determination by CMS to impose the
remedies that I cite in the opening paragraph of this decision. CMS premised its
determination on findings of noncompliance with Medicare participation
requirements that were made at surveys conducted of Petitioner’s facility on
September 2, 2010 (September Survey) and October 27, 2010 (October Survey).
The noncompliance findings included a finding that Petitioner had contravened
participation requirements to the extent that residents were in immediate jeopardy.
“Immediate jeopardy” means noncompliance that is so egregious as to cause, or be
likely to cause, serious injury, harm, impairment, or death to a resident or residents
of a skilled nursing facility. 42 C.F.R. § 488.301.

The case was assigned to me for a hearing and a decision. I ordered the parties to
exchange proposed exhibits, including the written direct testimony of all
witnesses, and pre-hearing briefs. The parties complied with that order, and I
scheduled the case for an in-person hearing to be held on August 22, 2011.
Petitioner moved for partial summary judgment. CMS then cross-moved for
partial summary judgment. I denied the parties’ motions.’ The parties then
informed me that they agreed that this case could be decided based on their written
submissions. | afforded the parties the opportunity to file final briefs.

CMS filed a total of 19 proposed exhibits that it identified as CMS Exhibit (Ex.) 1
—CMS Ex. 19. Petitioner filed a total of 16 proposed exhibits that it identified as
P. Ex. 1 — P. Ex. 16. I receive all of the parties’ exhibits into the record.
II. Issues, Findings of Fact, and Conclusions of Law

A. Issues

The issues in this case are whether:

1. Petitioner failed to comply substantially with Medicare
participation requirements; and

'T ruled on the parties’ motions at a telephone pre-hearing conference. I ruled that
there were disputed issues of fact that precluded me from entering summary
judgment in favor of Petitioner. I ruled that CMS filed its motion too close in
point of time to the August 22 hearing date for me to rule on it prior to the hearing.
This decision memorializes my rulings. I also denied the parties’ motion to
continue the hearing.
2. CMS’s remedy determinations are reasonable.
B. Findings of Fact and Conclusions of Law
I make the following findings of fact and conclusions of law (Findings).

1. Petitioner failed to comply substantially with Medicare
participation requirements.

a. Petitioner failed to comply substantially with the
requirements of 42 C.F.R. § 483.25(m)(2).

From August 6 through August 12, 2010, Petitioner manifested immediate
jeopardy level noncompliance with the requirements of 42 C.F.R. § 483.25(m)(2),
which requires that a skilled nursing facility must ensure that its residents are free
from significant medication errors. Petitioner’s noncompliance with this
participation requirement, at a level of noncompliance that is less egregious than
immediate jeopardy, continued through October 27, 2010.

Petitioner concedes that, on August 6, 2010, it manifested immediate jeopardy
level noncompliance with the requirements of 42 C.F.R. § 483.25(m)(2). The
undisputed facts graphically establish that noncompliance. On that date, at 3:30 in
the afternoon, Petitioner admitted a resident who is identified as R2. This
resident’s medical problems included a history of malignant hypertension, in other
words, potentially lethal high blood pressure. CMS Ex. 9 at 16-17. The resident
came to the facility with prescriptions for several anti-hypertensive medications.
Id. Notwithstanding, Petitioner’s staff failed to administer these medications to
the resident on August 6. /d. at 8. Petitioner did not have the necessary
medications on hand. /d. at 20. At 8:30 on the evening of August 6 — five hours
after the resident was admitted — Petitioner’s staff asked a pharmacy to rush the
needed medications to Petitioner. The staff anticipated administering the
medications to R2 at some point during the next nursing shift, or early on the
morning of August 7, 2010. Jd. at 20. The record does not show that the resident
received the necessary medications at Petitioner’s facility, either on the evening of
August 6 or during the early morning hours of August 7, 2010.

Early on the morning of August 7, 2010, R2 complained of a stomachache and
headache. Her blood pressure was recorded at 210/100. CMS Ex. 9 at 18. The
resident was brought by ambulance to a hospital emergency room at about 3:50 on
the morning of August 7. The emergency room physician concluded that R2
suffered from:
[p]ulmonary edema likely secondary to hypertensive emergency.
Likely her high blood pressure may have resulted from skipped
doses of her blood pressure medications in the nursing home, but in
the remote possibility that there could be other possible causes of her
pulmonary edema....

CMS Ex. 9 at 10. The resident remained in the hospital, in intensive care, for six
days before being discharged. CMS Ex. 7 at 31.

I draw three conclusions from these undisputed facts. First, and obviously,
Petitioner’s staff endangered the life of R2 by failing to give her blood pressure
medications that were necessary to treat her malignant hypertension. Equally
obviously, the staff failed to comprehend the extreme danger that their inaction
posed for R2. It was not until five hours after the resident was admitted to
Petitioner’s facility that the staff recognized that they were lacking medication that
was necessary to protect R2 from potentially lethal consequences. Even then —
and notwithstanding the fact that the staff made a rush order for the medication —
the staff failed to comprehend that additional delays were putting the resident at
extreme risk. The rush order that the staff made at 8:30 on the evening of August
6, 2010 anticipated several hours’ additional delay before the resident would
receive her medications. Yet her orders indicate that these medications were
supposed to be given to her twice a day at 8 am and 4 pm. CMS Ex. 9 at 16.

Third, it is also obvious that Petitioner had no mechanism in place for assessing
the urgent medication needs of newly admitted residents, and no mechanism for
assuring that newly admitted residents would receive necessary medication. These
deficiencies are made manifest by the failures to perceive the risks that R2 was
being exposed to, and by the failure to address her medication needs.

Petitioner, while conceding immediate jeopardy level noncompliance on August 6,
2010, makes two arguments aimed at limiting its liability. First, Petitioner asserts
that it ended its jeopardy, indeed, that it completely abated its noncompliance, on
August 7, 2010. Thus, according to Petitioner, there exists no basis to impose any
remedies against it after August 6.

Second, Petitioner asserts that the surveyors who conducted the September Survey
cited Petitioner’s noncompliance as “past” noncompliance; that is to say,
noncompliance that was present and completely abated prior to the September
Survey. For that reason, according to Petitioner, no remedies may be imposed
against it after August 6.

I find both of these arguments to be unpersuasive. Petitioner’s first argument
notwithstanding, it has not offered proof establishing that it abated its immediate
jeopardy level noncompliance by August 7, 2010. Nor has it proven that it abated
all noncompliance before October 27, 2010. Indeed, and as I shall discuss, there is
affirmative proof showing that Petitioner continued to be out of compliance with
the requirements of 42 C.F.R. § 483.25(m)(2) as late as the October Survey.

As to Petitioner’s second argument, I find it to be irrelevant. Petitioner premises
its argument about “past” noncompliance on its interpretation of some language in
the report of the September Survey. Seizing on that language, it acts as if CMS’s
advocacy in this case is set in stone by the choice of words in the survey report.
That argument misrepresents the role of the survey report and misstates the
function of the de novo administrative hearing that I conduct in this case.
Moreover, Petitioner’s asserted interpretation of the language in the survey report
is at variance with what the report actually says.

Petitioner argues that CMS’s determination that immediate jeopardy was not
abated prior to August 12, 2010 is unsupported. According to Petitioner:

neither the surveyors, the . . . [Illinois State survey agency], nor
CMS offer any explanation as to why all the steps taken by the
facility through August 13, 2010, were necessary to abate the . . .
[immediate jeopardy]. That is, the surveyor offers no reason why
the completion of the investigation by the facility and inservice by
the pharmacist were necessary to abate the . . . [immediate jeopardy].

Petitioner’s Closing Brief at 6-7. The argument assumes, incorrectly, that CMS
has a burden of proof to establish why a facility’s corrective actions are
insufficient to abate immediate jeopardy. That argument stands the parties’
burdens on their heads. In fact, it is Petitioner’s duty to prove why its corrective
actions abated immediate jeopardy. These actions were, after all, what Petitioner
elected to implement to address a problem that Petitioner concedes it caused.
Having caused the problem, Petitioner must prove that it effectively addressed it.

Second, Petitioner seems to be saying that it should not be held accountable for
completing certain corrective actions that it elected to take because CMS cannot
prove that they were, in fact, necessary. I find that position to be puzzling.
Petitioner’s management decided that certain actions were necessary to eliminate
immediate jeopardy at the facility. It was imperative that the actions be
implemented given that these are what Petitioner opted for to address the problem
that it created.

Petitioner also contends that it abated its immediate jeopardy by no later than
August 7, 2010, because it took affirmative actions on that date to remove
immediate jeopardy. These actions — which Petitioner asserts convinced the
surveyors who conducted the September Survey that immediate jeopardy had been
abated immediately — are recited in the September Survey Report and consist of
the following:

e On August 7, Petitioner’s director of nursing began investigating what had
occurred and determined that all of a resident’s medications needed to be
secured as soon as possible upon the resident’s admission and/ or used from
the convenience box as necessary.

e The director of nursing began in-servicing the nurses. In-servicing and
monitoring were ongoing as of September 2, 2010.

e R2’s admitting nurse was suspended pending the outcome of the
investigation into what had occurred.

e The director of nursing assured that all new residents’ medications were
accounted for and properly administered from the previous day.

CMS Ex. | at 18-19.

Despite Petitioner’s assertion, there is nothing in the report of the September
Survey that supports a conclusion that immediate jeopardy was abated effective
August 7, 2010. The survey report does not conclude that immediate jeopardy
was abated on that date; rather, it concludes that the immediate jeopardy persisted
until August 13, 2010. CMS Ex. 1 at 14, 20-22.

Thus, Petitioner mischaracterizes the survey report. Moreover, Petitioner’s
argument that it abated its immediate jeopardy immediately is not supported by the
evidence. The steps, recited by the surveyors, that Petitioner took on August 7,
2010, may have been actions that were necessary to abate immediate jeopardy.
But, the fact that Petitioner’s director of nursing determined that these steps were
necessary, and even began to implement them as of August 7, 2010, does not
mean that they were completely implemented by that date. For example,
determining that a newly admitted resident’s medications needed to be secured as
soon as possible is not proof that this determination, even after it was
communicated to the staff, was immediately and effectively implemented by the
staff.

Similarly, in-servicing the nurses (retraining them as to their obligations and
duties) may have been a necessary measure. But proof that in-service training was
conducted is not proof that it was absorbed by the staff and that the lessons taught
in that training were implemented by them. Moreover, and as the survey report
states, in-servicing was only begun on August 7, it was not completed on that date.
Indeed, some staff members were still being in-serviced as of September 2, 2010.

As I have discussed above, CMS determined that Petitioner did not completely
abate its non-immediate jeopardy level noncompliance with 42 C.F.R.

§ 483.25(m)(2) prior to October 27, 2010. CMS predicates this determination to
some extent on its conclusion that, as of October 27, Petitioner continued to fail to
comply with the regulation’s requirements. CMS Ex. 2.

The evidence offered by CMS pertains to a resident who is identified in the report
of the October Survey as R14. This resident was admitted to Petitioner’s facility
on October 19, 2010 with a prescription for a cardiac medication, Diltiazem. CMS
Ex. 2 at 1. The staff failed to obtain the medication from the pharmacy on that
date, and, consequently, the resident did not receive the medication on the date of
admission. Jd.

The noncompliance established by this episode is, but for the level of harm
involved, factually indistinguishable from what happened to R2 on August 6-7,
2010. Again, there is proof that Petitioner admitted a resident with a prescription
for a medication, but that its staff failed to obtain the medication and to administer
it timely to the resident. It is compelling evidence of continuing noncompliance
by Petitioner.

Petitioner offers no evidence to counter what I have just described. In effect, it
concedes the facts and concedes the noncompliance. It argues, however, that this
noncompliance is not proof of continuing noncompliance by Petitioner after
August 6, 2010. Rather, it characterizes it as an isolated incident, separated by the
passage of many weeks from the noncompliance that was uncovered at the
September Survey.

As support for this argument, Petitioner asserts that the surveyors found only
“past” noncompliance at the September Survey. In Petitioner’s eyes, the
surveyors absolved Petitioner of any liability because they found that the
noncompliance relating to R2 ended almost as soon as it occurred. Petitioner
relies on the following language in the September Survey report:

The facility became aware of R3’s medication omission on 8/7/10
and completed a thorough investigation of the circumstances. The
facility implemented corrective actions and completed these on
8/13/10.

CMS Ex. 1 at 14. As I discuss above, this argument is both factually and legally
incorrect. First, the language cited by Petitioner does not mean that the surveyors
found that a// noncompliance with 42 C.F.R. § 483.25(m)(2) was abated by
August 13, 2010. In citing this language, Petitioner omits to cite the first sentence
of the relevant paragraph:

The Immediate Jeopardy was removed on August 13, 2010 when the
surveyor determined that the facility took immediate action to ensure
that the harm is not likely to recur....

CMS Ex. 1 at 14. That language makes it obvious that what the surveyors were
talking about in the September Survey report was abatement of immediate
jeopardy. They found that immediate jeopardy was abated by August 13, 2010, a
position that is entirely consistent with CMS’s determination and the evidence.
They made no finding that all noncompliance with the regulation, including non-
immediate jeopardy level noncompliance, was abated by that date.

However, even a surveyor finding that all noncompliance was abated by August
13 would be irrelevant as a matter of law. The surveyors do not make the final
determination of noncompliance, CMS does. Moreover, this is a de novo
proceeding. CMS has given notice to Petitioner that it determined that
noncompliance continued through October 27, 2010. That notice supersedes any
conclusion that the surveyors may have made. And, it puts the issue of date of
compliance before me de novo. I therefore base my decision on when compliance
was obtained on the objective evidence and not on what a surveyor or surveyors
may or may not have said at some point in the past.

As I have discussed, there is compelling, unrebutted evidence that Petitioner
continued to be noncompliant as of October 27, 2010. That evidence is sufficient
for me to infer that noncompliance at the non-immediate jeopardy level continued
after August 13. Furthermore, Petitioner’s own corrective actions did not envision
immediate completion of corrections. As I have discussed, as of the September
Survey, Petitioner’s in-servicing activities were still ongoing.

b. Petitioner failed to comply substantially with the
requirements of 42 C.F.R. §§ 483.20(k)(3)(i), 438.25(g)(2), and
483.75() (1).

There were additional noncompliance findings made at the September Survey.
These included findings that Petitioner failed to comply substantially with the
requirements of: 42 C.F.R. § 483.20(k)(3)(i), which requires that services
provided or arranged by a skilled nursing facility meet professional standards of
quality; 42 C.F.R. § 483.25(g)(2), which requires that a facility ensure that a
resident who is fed by naso-gastric tube or gastrostomy tube receives the
appropriate treatment and services to prevent aspiration pneumonia, diarrhea,
vomiting, dehydration, metabolic abnormalities, and nasal-pharyngeal ulcers, and
to restore, if possible, normal eating skills; and 42 C.F.R. § 483.75(1)(1), which
requires a facility to maintain clinical records for each of its residents in
accordance with accepted professional standards and practices that are complete,
accurately documented, readily accessible, and systematically organized.

I find that the evidence overwhelmingly sustains CMS’s determinations that
Petitioner failed to comply substantially with the requirements of these
regulations.

i. Petitioner failed to comply substantially with the
requirements of 42 C.F.R. § 483.20(k)(3)(i).

CMS offered unrebutted evidence concerning the care that Petitioner provided to a
resident who is identified in the September Survey report as R1. The failure to
provide care to R1 that met professional standards of quality is made evident by
the fact that R1 suffered the consequences of improper placement of a gastrostomy
tube during her stay at Petitioner’s facility. On July 19, 2010, a gastrostomy
feeding tube was surgically inserted into the resident’s stomach. CMS Ex. | at 2.
Difficulties with keeping the tube unblocked were encountered subsequently,
while R1 resided at Petitioner’s facility. On July 29, 2010, the resident’s surgeon
ordered that the tube be changed. A nurse practitioner replaced the tube with a
smaller diameter tube than had originally been implanted. Furthermore, the tube
was not placed properly. On July 31, 2010, the resident was hospitalized. The
resident received emergency surgery to address a dislodged gastrostomy tube and
to deal with complications resulting from the improper placement of the tube.
CMS Ex. 8 at 45-49.

Petitioner’s defense to the evidence that I have just recited is that the nurse
practitioner, who improperly replaced R1’s gastrostomy tube, was not an
employee of Petitioner, but an independent contractor. Petitioner contends that it
has no legal responsibility for the performance of this individual because she was
not an employee.

I disagree. On its face, 42 C.F.R. § 483.20(k)(3)(i) applies to more than services
that are provided by a facility’s employee. It applies to services that are “provided
or arranged” by a facility. The plain meaning of the regulation is that it applies to
all services that are given to a resident under the aegis of a skilled nursing facility,
not just to those that are provided by employees.

The language of the regulation is entirely consistent with the intent of the Act and
its implementing regulations. The Act applies to skilled nursing facilities and to
the services that they provide. It does not distinguish between facilities and their
10

employees or facilities and independent contractors who provide services on
facilities’ premises. The act defines a “skilled nursing facility” to be an institution,
or a distinct part of an institution, which is primarily engaged in providing skilled
nursing care and related services or rehabilitation services to covered

beneficiaries. Act § 1819(a)(1)(A), (B). The Act states additionally that:

A skilled nursing facility must care for its residents in such a manner
and in such an environment as will promote maintenance or
enhancement of the quality of life of each resident.

Act § 1819(b)(1)(A). Thus, a skilled nursing facility is responsible for everything
that happens on its premises, whether what happens is the consequence of actions
by its employees or whether it is the consequence of independent providers who
are performing services on the premises.

If Petitioner’s argument were taken to its logical end, the Act and implementing
regulations could be made meaningless by any facility that desires to immunize
itself from liability. Using Petitioner’s logic, a facility could hire contractors to
perform all of its services and escape liability for the contractors’ actions on the
basis that the contractors and their employees are not employees of the facility.

That plainly violates both the intent and the plain meaning of the Act.

li. Petitioner failed to comply substantially with the
requirements of 42 C.F.R. § 483.25(g)(2).

CMS bases its assertion that Petitioner failed to comply with the requirements of
this regulation on the evidence that I discussed pertaining to R1 and also on
evidence pertaining to an additional resident, identified in the report of the
September Survey as R4. In the case of R4, the evidence establishes that, on July
6, 2010, Petitioner’s staff discovered that the resident had a clogged feeding tube.
CMS Ex. 10 at 5-6. The resident needed hospitalization to address the problem.
At the hospital, it was determined that the resident’s feeding tube was dislodged
due to feeding tube mismanagement. Jd. at 37-38.

The evidence offered by CMS thus shows mismanagement of feeding tubes of two
of Petitioner’s residents. In the case of R1, the mismanagement consisted of a
botched effort at replacing the tube, coupled with use of a tube that was smaller
than that which had been ordered by the resident’s physician. In the case of R4,
the mismanagement consisted of dislodging the resident’s feeding tube in the
course of attempts to unclog it.

In responding to this evidence, Petitioner makes the same arguments about the
care provided to R1 that I have discussed and rejected previously. I need not
address those arguments again. As respects R4, it is Petitioner’s contention that
the resident’s clogged tube was essentially unavoidable and that it should not be
held responsible for that event. It argues also that its staff followed facility
policies in attempting to unclog the resident’s tube.

For purposes of this decision, I will assume that the resident’s clogged tube was an
unavoidable development and that its staff used approved facility policies to
attempt to unclog it. That, however, does not absolve Petitioner from
mismanaging the efforts to unclog the tube. The resident was hospitalized in part
because the feeding tube had become dislodged. The staff should have been able
to protect the resident against that development, even if the tube’s clogging was an
unavoidable event and even if they followed facility protocol in attempting to
unclog it.

Petitioner argues that the hospital records, showing that the tube was dislodged, do
not establish that the tube became dislodged at Petitioner’s facility. Petitioner’s
Pre-Hearing Brief at 14. In fact, the reasonable inference is that the tube did
become dislodged, while R4 was at the facility. Petitioner has offered no evidence
to show that the resident was away from the facility during the time when she
experienced problems with her feeding tube, nor has Petitioner offered a plausible
alternative explanation for the tube becoming dislodged other than
mismanagement of the tube by Petitioner’s staff.

tii. Petitioner failed to comply substantially with the
requirements of 42 C.F.R. § 483.75()(1).

The evidence relied on by CMS to establish noncompliance with this regulation
pertains to the care that Petitioner’s staff provided to a resident who is identified as
RS in the September Survey report.” R5 was a diabetic resident admitted to
Petitioner’s facility from a local hospital on June 30, 2010. The resident had a
prescription for insulin injections according to a schedule. CMS Ex. | at 21.
However, the resident failed to receive the prescribed injection on the morning of
July 1, 2010. This was due to a transcription error by Petitioner’s staff. In
preparing the resident’s July medication administration record (MAR), the staff
failed to transfer over from the June MAR the orders that the resident receive
insulin. Jd. at 21-22.

> The care that Petitioner’s staff gave to R5 was also cited in the September Survey
report as non-immediate jeopardy level noncompliance with the requirements of
42 C.F.R. § 483.25(m)(2). I did not address this evidence with respect to that
regulation because of Petitioner’s concession that it had contravened the
regulation’s requirements at the immediate jeopardy level of noncompliance.
12

The documentation error that I have just described was plainly serious. As a
consequence of staff error, a resident failed to receive a dose of prescribed
medication. The error is an obvious violation of the regulation, which requires
that records be accurately documented.

Petitioner does not dispute any of the evidence that I have just cited, nor does it
contend that the error committed by its staff was not serious. Its sole defense is
that this noncompliance was “past” noncompliance and should not be a basis for
imposition of remedies against it. Petitioner’s Pre-Hearing Brief at 15. I have
addressed and rejected that argument previously. It is unnecessary that I address it
again.

2. CMS’s remedy determinations are reasonable.

a. Civil money penalties of $3,050 per day for the period
beginning August 6 and running through August 12, 2010
are reasonable as a matter of law.

The minimum daily civil money penalty amount that CMS may impose to remedy
immediate jeopardy level noncompliance is $3,050 per day. 42 C.F.R.

§ 488.438(a)(1)(i). CMS imposed the minimum amount to remedy Petitioner’s
immediate jeopardy level noncompliance, and, therefore, it is reasonable as a
matter of law.

b. Civil money penalties of $200 per day for the period
beginning August 13 and running through October 27,
2010 are reasonable.

The permissible range for daily civil money penalties that are imposed to remedy
non-immediate jeopardy level deficiencies is from $50 to $3,000 per day. 42
C.F.R. § 488.438(a)(1)(ii). A decision as to where within that range a penalty
should fall depends on factors specified by regulation that include: the seriousness
of a facility’s noncompliance; its compliance history; its culpability; and its
financial condition. 42 C.F.R. §§ 488.438(f)(1) — (4); 488.404 (incorporated by
reference into 42 C.F.R. § 488.438(f)(3)).

The civil money penalties of $200 per day are minimal, constituting only six
percent of the maximum allowable daily penalties for non-immediate jeopardy
level noncompliance. I find that they are amply justified by the seriousness of
Petitioner’s noncompliance. Indeed, the continuing noncompliance by Petitioner
with the requirements of 42 C.F.R. § 483.25(m)(2) would justify the entire penalty
amount without consideration of Petitioner’s other, non-immediate jeopardy level
noncompliance.
13

Petitioner does not challenge the reasonableness of the penalty amount. It argues
that no penalties should be imposed against it, reiterating its past noncompliance
argument and its assertion that it corrected all deficiencies by August 7, 2010. I
have addressed those arguments elsewhere.*

c. Denial of payment for new Medicare admissions for the
period beginning September 27 and running through
October 27, 2010 is authorized by regulation.

CMS is authorized by regulation to impose denial of payment for new Medicare
admissions for any date on which a facility is not substantially complying with
Medicare participation requirements. 42 C.F.R. § 488.417(a). Whether to do so is
a matter of discretion that a facility may not challenge.

Here, there is justification for CMS’s imposition of the remedy for each day of the
September 27 — October 27, 2010 period. Petitioner was not complying
substantially with Medicare participation requirements during this period. That is
sufficient to justify CMS’s imposition of the remedy.

Petitioner again makes its past noncompliance argument to assert that there is no
basis for CMS to deny payment for new admissions. I have addressed that
argument previously and will not revisit it here.

/s/
Steven T. Kessel
Administrative Law Judge

> Petitioner argues that it corrected all of its non-immediate jeopardy level
noncompliance by September 2, 2010. I do not find it necessary to address
whether Petitioner abated its noncompliance with regulations other than 42 C.F.R.
§ 483.25(m)(2) prior to October 27, 2010, because I find that its noncompliance
with that regulation continued through October 27.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
MS Care Center of Greenville
(CCN: 25-5252),
Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-10-913
Decision No. CR2439

Date: September 30, 2011

DECISION

I sustain the determination of the Centers for Medicare and Medicaid Services (CMS) to
impose civil money penalties (CMPs) against Petitioner, MS Care Center of Greenville,
of $3,550 per day from May 9, 2010 through June 1, 2010 and $100 for one day of
noncompliance, June 2, 2010, after the immediate jeopardy was abated, for a total CMP
of $85,300."

I. Background

Petitioner is a skilled nursing facility located in Greenville, Mississippi. It participates in
the Medicare program, and its participation is subject to the requirements of sections
1819 and 1866 of the Social Security Act (Act), as well as implementing regulations at 42
C.F.R. Parts 483 and 488. Petitioner’s hearing rights are governed by regulations at 42
C.F.R. Part 498. To participate in the Medicare program, a nursing facility must maintain

' CMS stated that the total CMP here is $85,000. CMS Br. at 2. However, my
calculations indicate 24 days of immediate jeopardy at $3,550 plus one day of non-
immediate jeopardy at $100 totals $85,300.
substantial compliance with program requirements. To be in substantial compliance, a
facility’s deficiencies may pose no greater risk to resident health and safety than “the
potential for causing minimal harm.” 42 C.F.R. § 488.301.

The Secretary of Health and Human Services contracts with state survey agencies to
conduct surveys to determine whether skilled nursing facilities are in substantial
compliance. Act § 1864(a); 42 C.F.R. § 488.20.

This appeal involves an elopement incident at Petitioner’s facility. Petitioner reported the
incident and on June | and 2, 2010, the Mississippi State Department of Health
conducted a survey regarding the incident. Following the survey, CMS determined that
Petitioner was not in substantial compliance with two requirements at the immediate
jeopardy level—Tag F224 (42 C.F.R. § 483.13(c)), Staff Treatment of Residents; and
Tag F323 (42 C.F.R. § 483.25(h)), Accidents and Supervision. By letter dated June 18,
2010, CMS notified Petitioner that it imposed a CMP of $3,550 per day for the period of
May 9 through June 1, 2010 for the immediate jeopardy deficiencies and a CMP of $100
for one day of noncompliance after the immediate jeopardy was abated.

Petitioner timely requested a hearing of the deficiencies found and remedies imposed. I
conducted a hearing in this matter on February 23 through February 25, 2011 in Jackson,
Mississippi and a transcript (Tr.) of the proceedings was prepared.” CMS offered CMS
Exhibits (Exs.) 1 through 15, which were admitted. However, CMS replaced its
proposed CMS Ex. 14 with a new CMS Ex. 14 at the hearing. CMS offered a rebuttal
exhibit, CMS Ex. 17, which was admitted. Tr. at 473 (no CMS Ex. 16 was ever offered).
Lalso identified and admitted as ALJ Ex. | a list identifying the residents and staff by key
number. Tr. at 454. Petitioner offered P. Exs. 1 through 49. Petitioner withdrew its P.
Ex. 11 and replaced it with P. Ex. 11A. All of Petitioner’s exhibits so offered were
admitted. CMS called Surveyor Jane McNally, R.N. and Surveyor Ordenia Howzie-
Warkie, R.N. as witnesses. Petitioner called Jennifer Holdeman, R.N., Petitioner’s
Director of Nursing, and Donna Cingolani, R.N., Petitioner’s Risk Management Nurse.
The testimony of Judy Pevey, R.N., Petitioner’s expert witness, was taken by deposition
on March 24, 2011. The parties filed post-hearing briefs (CMS Br. and P. Br.) and were
given the opportunity to submit post-hearing reply briefs. Only Petitioner submitted a
post-hearing reply (P. Reply).

> Because one of Petitioner’s witnesses, Judy Pevey, was not available during the
scheduled hearing, the parties agreed to take her testimony by deposition. The transcript
of her March 24, 2011 deposition is cited as ““Pevey Tr.” to avoid confusion with the
hearing transcript (Tr.).
IL. Issues
The issues before me are —

e From May 9, 2010 through June 2, 2010, was the facility in substantial compliance
with Medicare requirements?

e Was CMS’s determination of immediate jeopardy level noncompliance clearly
erroneous? and

e Is the penalty imposed—$3,550 per day CMP for the period of May 9 through
June 1, 2010 and a $100 per day CMP for June 2, 2010—reasonable?

III. Discussion

The deficiencies cited stem from the elopement of one resident, R1, from Petitioner’s
facility on May 9, 2010. No one disputes that R1 eloped sometime around 7 p.m. No
one disputes that R1, who was wheelchair-bound and housed on the second floor of the
facility, somehow got into the elevator, rode it down to the main floor, got out the
allegedly-secure exit door to a patio area, and then rolled himself through a gate, through
the parking lot, and across the street to the Krystal Double Quick, an adjacent
convenience store with a drive-up fast-food window.* No one saw him exit the building.
CMS Ex. 1. By coincidence, R1 was spotted when one of the CNA staff noticed him
across the street in the Krystal Double Quick parking lot when she went to move her car.
P. Ex. 30 at 1 and 4. A little while later, one of the CNAs responsible for R1 was looking
for him. P. Ex. 30 at 3. She looked around the building and could not find him. She then
went outside and saw R1 in the parking lot of the adjacent convenience store with the
other CNA. Then these two CNAs and one other attempted to get R1 back into the
facility. Not more than a half hour later, R1 again got on the elevator and exited the

* One of Petitioner’s witnesses did, however, try to contend that R1 did not exit
Petitioner’s premises even though R1 was found on the premises of the adjacent fast food
restaurant/convenience store across the street. See Tr. 188-89. She contended that the
property line of Petitioner’s facility “even goes out into that street.” Tr. at 189. I find
this witness’s statements in this respect disingenuous: these statements have no basis in
fact or reality. She neither saw the resident outside the facility nor was even present there
that day. Tr. at 190. Nor did she speak to the CNA who found R1 in the parking lot of
the fast-food restaurant/convenience store. Rather, her opinions were based solely on
what others told her. Tr. at 190. I find her statements to be less than objective and that
lack of objectivity reduces the credibility of her testimony here. Clearly, as soon as R1
exited the building and into the parking lot without staff being aware, he had eloped.
building right behind a facility visitor and was out in the parking lot. A CNA was in
reach of him and returned him to the second floor. P. Ex. 20 at 2.

1. Petitioner failed to comply substantially with Medicare participation
requirements.

This case addresses the level of supervision that Petitioner’s staff gave to R1, whom
Petitioner had identified as being at risk for eloping from the facility premises. CMS
alleges that Petitioner failed to comply with two specific regulatory requirements. 42
C.F.R. § 483.13(c) requires a facility to develop and implement policies and procedures
that, among other things, protect a resident against neglect.* 42 C.F.R. § 483.25(h)
requires a facility to provide residents with adequate assistance devices and supervision
to prevent accidents and to render its premises free from accident hazards.°

Essentially, Petitioner argues that it did develop and implement policies and procedures
to protect this resident against neglect but that despite these efforts, his elopement was
unforeseeable. Petitioner contends that sometimes events such as this one happen despite
all the measures that a facility can put in place. Petitioner argues that even though R1
was assessed as an elopement risk and that his care plan addressed this as a problem, his
elopements on May 9 were not reasonably foreseeable.

The weight of the evidence establishes that Petitioner did not comply substantially with
these two requirements. Although Petitioner had developed some policies to protect its
residents against the risk of elopement, it failed to implement those policies.

Furthermore, Petitioner failed to protect R1 from the obvious risks and hazards associated
with his eloping from the facility by not providing him with adequate supervision and
whatever other protection necessary to keep him from eloping from the facility.

Petitioner admitted R1 to its facility on April 14, 2010 from an acute care facility with
diagnoses of post cardiac arrest with anoxic encephalopathy (a degenerative disease of
the brain caused by prolonged insufficient oxygen supply), hypertension, expressive
aphasia (a defect in the ability to communicate through speech) and amputation of the leg

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

* Under Mississippi law, indicators of neglect by a caregiver include lack of supervision.
CMS Ex. 13 at 2.

° Based on my de novo review, I find that the remedy imposed of $3,550 per day would
be reasonable based solely on Petitioner’s substantial noncompliance with 42 C.F.R.

§ 483.25(h) without even addressing Petitioner’s noncompliance under 42 C.F.R.

§ 483.13(c). Bedford Care Center — Monroe Hall, LLC, DAB No. CR2229 (2010).
above the right knee. Tr. 329, 333. R1 was younger than the residents normally admitted
to the facility (ne was approximately 55 years old at admission). P. Ex. 19; Tr. at 329.”
His room was on the second floor of Petitioner’s three-floor facility. CMS Ex. 2 at 3.
Apparently, R1 had overdosed on crack cocaine or some other drug, ended up in the
hospital and "coded." As a result, he suffered anoxic brain injury. Tr. 329. He had been
in the hospital for a while on a ventilator, and then started recovering some level of
functioning. When he was admitted to Petitioner's facility, he was heavily sedated, in a
kind of medicated coma and not really able to answer questions. Tr. 330. Consequently,
at the time of his admission, he was bed-bound and showed little or no inclination to
wander.

Shortly thereafter, though, as he was weaned from the sedating medications, he began to
get up from his bed and eventually became able to use his wheelchair; later, he would
hop on his one leg down the hallway, and in and out of other residents’ rooms. Tr. 341;
P. Ex. 20 at 1. Nurse’s Notes for April 24, 2010 state that R1 was at “elevator, trying to
get on” and “keeps pulling w/c [wheelchair] alarm off.” CMS Ex. 9, at 18. Because he
was continually getting up and out of his wheelchair, Petitioner used a soft belt restraint
but he would break these. Jd. at 19. He also would be placed at the “nursing station
where he could be watched carefully.” Jd. But within days he was again trying to tear
off the soft waist restraint; on April 28, he cut the restraint with his dinner knife. R1
continually would get up and out of his wheelchair and hop around. Id. at 21.

As a result of his increased agitation and activity, Petitioner reassessed R1 on May 3,
2010 as a wanderer and an elopement risk. P. Ex. 18; P. Ex. 19 at 2; Tr. 346. Petitioner
updated R1’s care plan to reflect that he was deemed an elopement risk and indicated
that the following approaches would be employed to address this risk and problem —

e Chair alarm while up in wheelchair to alert staff he is trying to get up without
assistance;

e Bed alarm while in bed to alert staff he may be trying to get up without assistance;

e Place R1 in an area where constant observation is possible;

e Redirect him when found wandering;

e Team meeting with PTA, ADON, CNA;

e Ensure he has proper ID (wristband);

e Make sure staff is aware of his wander/elopement risk;

e Place a picture of resident in elopement book;

e Family to sign LOA [leave of absence] form when taking resident out of facility;

e Elopement/Wander risk per RN; reevaluate as needed;

7 Petitioner’s witness stated that R1 was in his mid-to-late forties, but his records indicate
he was born in May 1955 so at the time of admission he was just short of his fifty-fifth
birthday. Tr. at 329; P. Ex. 19.
e Be mindful of his location;

e Provide diversional activities;

¢ Observe closely; and

e Contact family for additional support if necessary.

P. Ex. 19 at 2.

R1 also was beset with a number of conditions that placed him at great risk for injury, or
worse, if he eloped. R1 was cognitively impaired, had poor decision-making skills, and
had short and long term memory problems. P. Ex. 19 at 1; CMS Ex. 9 at 6, 8,9. An
addition to his care plan on May 3, 2010 indicated that he had fallen at least four times
since his admission on April 14, 2010 and was at risk for further falls due to his
amputated right leg, his unsteady gait, and his constant attempts at trying to get out of his
wheelchair. CMS Ex. 9 at 8.

When the surveyor asked the Director of Nursing for Petitioner’s elopement policy, she
was given a document which states as follows —

ELOPEMENT POTENTIAL / WANDERING INSTRUCTIONS

1. An Elopement Assessment must be completed on the day of
admission. If the resident is identified as an elopement risk, the
resident will be care planned accordingly.

2. Elopement risk must be added to the C.N.A. care plan.

3. The supervisor will initiate Visual Checks as necessary.

CMS Ex. 14.

Despite the fact that R1’s care plan required that he be placed in an area where constant
observation would be possible and that staff be mindful of his location, he nevertheless
eloped without anyone observing his absence or knowing his whereabouts. There is even
an admission in the May 9, 2010, Nurse’s Notes that staff found it impossible to keep him
under constant observation, but nothing was done to remedy this obviously-dangerous
situation. See CMS Ex. 9 at 23 (R1 “keeps going to the other hall, unable to watch him
every minute and unable to keep him out of the other rooms. Few residents have
complained of a onelegged man hopping in their rooms” and “that scares them. Esp.
[especially] at night when they are abed.”).

The notes from later that same day indicate that a CNA reported finding R1 outside in the
“Krystal” parking lot in his wheelchair. Staff’s only intervention to this elopement was
to instruct R1 “not to get on elevator or leave floor unattended.” CMS Ex. 9 at 23. Yet,
only a half hour after he was returned from the “Krystal Drive Thru” parking lot, he left
the floor a second time by the elevator and was escorted back to the floor by a CNA. Id.
But it was only after the second elopement, that Petitioner took any deliberate action to
protect R1. Petitioner at that time placed R1 on one-on-one observation until such time
as he could be evaluated for and transferred to a psychiatric unit. CMS Ex. 9 at 14; CMS
Ex. 7 at 1.

The nurse’s notes further explain that just prior to his first elopement on May 9, R1 had
been sitting at the elevator for long intervals. He was moved several times but came back
to the elevator soon after. CMS Ex. 9 at 23. These limited interventions are not
consistent with R1’s care plan which indicates he should be in an area where constant
observation is possible, that staff should be mindful of his location, and that they should
provide R1 with diversional activities.

The nurse’s notes indicate that R1 exited the floor again and that “the laundry person
stated she saw [a] visitor leaving the building” and “this pt [patient] was right behind
them” and “out in the parking lot.”* Jd. The fact that R1 exited the building twice in
such a short span of time indicates that there were other problems that the facility had not
yet addressed.

Petitioner indicates that it also had facility-wide interventions in place to prevent neglect.
It claims that all the stairwell doors and exit doors were equipped with magnetic locks
which required a code to open from the inside. P. Br. at 12. While only staff was to have
this code, apparently it was given to frequent visitors as well so that they could exit the
building without staff having to let them out. Tr. at 195. But as the surveyor testified,
there were no written procedures addressing the use of keypad locks, such as limitations
or restrictions on who was to have access to the code, how often the codes should be
changed, and how to prevent visitors from giving out the code to others, or from letting
residents get out of the facility behind them. Tr. at 106. Nevertheless, R1 was able to
exit the doors both times. Either he was able to access the code or he followed a visitor
out the door without anyone detecting his exit. Obviously, the use of the exit codes was
intended to deter residents from exiting the facility unattended, yet this intervention for
preventing elopement was ineffective to say the least, especially if nearly everyone had
access to the codes as seems to have been the case. The fact that the facility made daily
checks to the door locks is irrelevant once it had routinely provided the access code for
these locks to visitors to the facility. The door locks served as a method of augmenting
its supervision of its residents by securing the facility’s exit doors from residents seeking

* Petitioner’s witness testified that R1’s second attempt at elopement was thwarted
because the second floor nurse saw R1 enter the elevator, called down to the laundry
room and asked the laundry aide to stop R1 until the CNA arrived. Tr. at 363. However,
Petitioner’s own notes, contemporaneous to the actual incident, contradict this account
and indicate that R1 actually exited the building a second time and was again in the
parking lot. Compare P. Ex. 20 at 2 with Tr. 363.
to elope from the facility. The fact that R1 exited the facility twice in the same day
unequivocally establishes that this measure failed. Yet, Petitioner does not address this
other than to state that by June 1, 2010 at 4 p.m., signs were posted to all exit doors by
the Administrator to alert all visitors not to let residents out of the facility and for all staff
to monitor. The facility also informed staff that the gate to the patio should be closed and
latched at all times and a sign was posted there as well informing visitors and staff of this.
P. Ex. 42 at 24. Staff were to monitor the gate and initial the documenting sheet placed at
the west patio entrance every two hours and this was done every two hours by the first-
floor laundry personnel at night.

Also, at all times relevant during this period, the only monitoring of the exit doors, if any,
was by use of security cameras. Tr. at 196. Petitioner indicates that it had mounted
security cameras on the second floor with monitors at the second floor nursing station. °
CMS Ex. 2 at 8. The security cameras were directed at the elevators. Jd. Yet, at the time
of R1’s elopement, no one was monitoring these cameras; no one was even aware he had
exited the floor on the elevator until by happenstance he was seen in the parking lot of the
Krystal Double Quick, across the street from the facility. Security cameras are of little
utility in preventing an elopement if no one is watching the monitors, and that is exactly
what happened here. Ifa facility relies on devices such as key-coded door locks and
security cameras with monitors as measures to assist in preventing elopements, then the
facility must make sure that it has established policies and procedures for these
interventions, and those policies and procedures must address how the devices will be
used and who will be assigned to monitor the devices and interventions. And the facility
obviously must be sure that the procedures for those devices are being properly
implemented if it hopes to achieve the intended results.

Thus, if a facility such as Petitioner's expects to prevent elopement by certain means,
such as security cameras directed at the elevator, key-coded door locks, and other
interventions specific to an individual resident such as keeping the resident under
constant observation, it must ensure that whatever means it chooses to use to prevent
elopement, neglect, and to appropriately supervise its residents is functioning and being
implemented by its staff correctly. Despite Petitioner’s protestations, I cannot conclude
that Petitioner did so here.

Taken as a whole, I find that Petitioner has not rebutted the evidence presented by CMS.
That evidence establishes that Petitioner failed to develop and implement policies and

° Since R1 was housed on the second floor, the surveyor only reviewed the camera and
monitors on the second floor, although there is some indication that there were also
cameras mounted on the third floor. As to whether there were cameras directed at the
exit doors, Petitioner’s witness seemed to indicate there were but her testimony is not
clear. She was asked whether anyone monitored the exit doors and she answered, yes
with the cameras. Tr. at 196.
procedures that, among other things, protected R1 against neglect and failed to provide
R1 with adequate assistance devices and supervision to prevent accidents, namely
elopement from the facility.

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

Immediate jeopardy exists if a facility’s noncompliance has caused, or is likely to cause,
“serious injury, harm, impairment, or death to a resident.” 42 C.F.R. § 488.301. CMS’s
letermination as to the level of a facility’s noncompliance (which would include an
immediate jeopardy finding) must be upheld unless it is “clearly erroneous.” 42 C.F.R.

§ 498.60(c). The Board has observed repeatedly that the “clearly erroneous” standard
imposes on facilities a heavy burden to show no immediate jeopardy and has sustained
leterminations of immediate jeopardy where CMS presented evidence “from which

[o]ne could reasonably conclude’ that immediate jeopardy exists.” Barbourville Nursing
Home, DAB No. 1962, at 11; Florence Park Care Center, DAB No. 1931, at 27-28
(2004).

‘

There is no question that Petitioner’s noncompliance placed R1 and other elopement-risk
residents in immediate jeopardy. I find that the CMS assertion that the facility's lapse
created a situation of immediate jeopardy was not clearly erroneous. Here, Petitioner
failed to implement its procedures to protect R1 from neglect by failing to adequately
supervise him and to provide assistance devices and the kind of supervision necessary to
prevent R1’s elopement from the facility. As a result of the elopement, the movements
and whereabouts of R1 went unnoticed. While it is true that Rl suffered no actual harm,
that benign outcome was merely fortuitous. But a finding of immediate jeopardy does
not require a finding of actual harm, merely a finding that there was or is a likelihood of
serious injury, harm, impairment or death. Clearly, the likelihood of serious harm or
death to R1 was great due to his cognitive impairment, his history of falls, and his lack of
safety awareness. Once he eloped from the facility, he was at risk for falling or being
struck by a motor vehicle.

3. The penalty imposed is reasonable.

CMS imposed a penalty in the amount of $3,550 per day from May 9, 2010 through June
1, 2010, when the immediate jeopardy was abated and $100 for June 2, 2010 for one day
of noncompliance after the immediate jeopardy was abated.

In order to determine whether the CMPs are reasonable, I apply the factors listed in 42
C.F.R. § 488.438(f), which are: (1) the facility’s history of noncompliance; (2) the
facility’s financial condition; (3) factors specified in 42 C.F.R. § 488.404; and (4) the
facility’s degree of culpability, which includes neglect, indifference, or disregard for
10

resident care, comfort, or safety. The absence of culpability is not a mitigating factor.
The factors listed in 42 C.F.R. § 488.404 include: (1) the scope and severity of the
deficiency; (2) the relationship of deficiency to other deficiencies resulting in
noncompliance; and (3) the facility’s prior history of noncompliance in general and
specifically with reference to the cited deficiencies.

In reaching a decision on the reasonableness of the CMP, I must consider whether the
evidence supports a finding that the amount of the CMP is at a level reasonably related to
an effort to produce corrective action by a provider with the kind of deficiency found, and
in light of the above factors. I am neither bound to defer to CMS’s factual assertions, nor
free to make a wholly independent choice of remedies without regard for CMS’s
discretion. Barn Hill Care Center, DAB No. 1848, at 21 (2002).

CMS has imposed a penalty of $3,550 per day, which is at the low end of the penalty
range for situations of immediate jeopardy ($3,050-$10,000). CMS does not cite facility
history as a factor that justifies a higher CMP and Petitioner does not argue that its
financial condition affects its ability to pay the penalty.’ I have considered the
remaining necessary factors. The facility here is culpable for the deficiency because it
did not properly supervise its staff to determine whether its own policies and procedures
intended to prevent elopements were being implemented as required. This measure of
culpability, taken into consideration together with the finding of immediate jeopardy, is
sufficient to sustain the CMP at $3,550 per day for the period of May 9, 2010 through
June 1, 2010. I further conclude that the CMP of $100 for June 2, 2010, is reasonable
because while Petitioner had abated the immediate jeopardy by that date, prior to this
date the facility was still not monitoring the security cameras and gates.

Therefore, I find the penalties imposed reasonable.
IV. Conclusion

For the reasons discussed above, I find that Petitioner’s facility was not in substantial
compliance with the Medicare requirements, and that its noncompliance posed immediate

'° CMS cites to other incidents of elopement at Petitioner’s facility which preceded the
elopement here, but that alone without reference to findings of substantial noncompliance
for those elopements is not what I would necessarily consider to be evidence of the
facility’s past noncompliance.

"" The surveyor testified that on June 1, 2010, she observed that staff was not always
monitoring the security cameras and that justified the additional day of noncompliance at
the non-immediate jeopardy level. CMS Br. at 17; Tr. 127-28.
11

jeopardy to resident health and safety. I affirm as reasonable the penalties imposed.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Guild Home for the Aged Blind
(CCN: 33-5512),
Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-10-691
Decision No. CR2437

Date: September 26, 2011

DECISION

Petitioner, Guild Home for the Aged Blind (“Guild Home”), was a skilled nursing facility
(SNF) located in Yonkers, New York, that participated in the Medicare program as a
provider of services. The Centers for Medicare and Medicaid Services (CMS)
determined that Petitioner was no longer providing SNF services to the community and
advised Petitioner that CMS was terminating its Medicare provider agreement. Petitioner
now seeks review of that determination, and CMS has moved to dismiss Petitioner’s
hearing request, or, in the alternative, asks that I grant summary disposition in its favor.'

I deny CMS’s motion to dismiss, but I grant its motion for summary disposition because
the undisputed evidence establishes that Guild Home stopped furnishing SNF services to

' Petitioner filed its hearing request (H.R.), along with four exhibits (P. Exs. A - D).

CMS filed its motion and brief (CMS Br.), along with two exhibits. (CMS Exs. 1-2).

Petitioner filed its brief in response (P. Br.) which did not include additional exhibits.
Absent objection, I admit all proposed exhibits to the record.
residents and therefore CMS had the authority to terminate its Medicare provider
agreement. 42 C.F.R. § 489.53.

I. Applicable Law

The Social Security Act (“Act”) allows certain health care providers to participate in the
Medicare program if they have in effect provider agreements with the Secretary of Health
and Human Services (Secretary). See generally Section 1866 of the Act. Section 1866 of
the Act defines an eligible “provider of services” to include a “skilled nursing facility.”

In order to participate in the Medicare program, a provider must execute a “provider
agreement” and undergo surveys to certify its compliance with program requirements.
42 C.F.R. §§ 488.20, 489.11. The provider agreement contains assurances that the
provider meets, and will continue to meet, applicable conditions for Medicare
participation and also reflects CMS’s acceptance of the provider’s eligibility to
participate in the program. 42 C.F.R. §§ 489.11(a), 489.20.

A provider agreement may be terminated by either the provider or by CMS.
Termination by the provider (an event referred to as “voluntary termination”) is
governed by 42 C.F.R. § 489.52, which provides:

§ 489.52 Termination by the provider.

(a) Notice to CMS. (1) A provider that wishes to terminate its agreement
must send CMS written notice of its intent.

(b) Termination date. (1) If the notice does not specify a date, or the date is
not acceptable to CMS, CMS may set a date that will not be more than 6
months from the date on the provider’s notice of intent.

(3) A cessation of business is deemed to be a termination by the
provider, effective with the date on which it stopped providing
services to the community.

The Act empowers the Secretary to refuse to enter into an agreement or to refuse to
renew or terminate such an agreement upon notice after the Secretary —

(A) has determined that the provider fails to comply substantially with the
provisions of the agreement, with the provisions of this title and regulations
thereunder, or with a corrective action required under section 1886(f)(2)(B),
[or]

(B) has determined that the provider fails substantially to meet the
applicable provisions of section 1861....

Section 1866(b)(2) of the Act. In this case, the “applicable provision” of section 1861 is
section 1861(j), cross-referencing section 1819(a), which provides in relevant part:

In this title, the term “skilled nursing facility” means an institution (or a
distinct part of an institution) which —

(1) is primarily engaged in providing to residents —

(A) skilled nursing care and related services for residents who
require medical or nursing care, or

(B) rehabilitation services for the rehabilitation of injured, disabled,
or sick persons,

and is not primarily for the care and treatment of mental diseases... .
Sections 1861(j) and 1819(a) of the Act.

The implementing regulations specify that CMS may terminate a provider agreement
when the provider is not complying with Title XVIII of the Act, with applicable
regulations, or with terms of the provider agreement itself, or no longer meets the
relevant conditions for participation. 42 C.F.R. § 489.53(a)(1) and (3). Section
489.53(c)(1) states that CMS “gives the provider notice of termination at least 15 days
before the effective date of termination[.]” Section 489.53(c)(3) provides that the notice
of termination “states the reasons for, and the effective date of, the termination, and
explains the extent to which services may continue after that date[.]” Section 489.53(d)
states that a provider may appeal the involuntary termination of its provider agreement by
CMS in accordance with 42 C.F.R. Part 498.

Once a provider has been terminated, the Act prohibits that provider from filing another
provider agreement “unless the Secretary finds that the reason for the termination or
nonrenewal has been removed and that there is reasonable assurance that it will not
recur.” Section 1866(c)(1), as implemented by 42 C.F.R. § 489.57.

The Act establishes that “an institution or agency dissatisfied with a determination by the
Secretary that it is not a provider of services or with a determination described in
subsection (b)(2) of [Section 1866, quoted above] shall be entitled to a hearing thereon by
the Secretary (after reasonable notice) ....” Section 1866(h)(1) of the Act. The

regulations define an “affected party” with appeal rights under Medicare as “a provider
[or] prospective provider . . . affected by an initial determination . . .” and set out the
initial determinations by CMS that are subject to appeal. 42 C.F.R. §§ 498.2 and 498.3.
The involuntary termination of a provider agreement for reasons set out in 42 C.F.R.

§ 489.53 is one of the appealable CMS initial determinations. 42 C.F.R. § 498.3(b)(7).

IL. Discussion

The following facts are undisputed. Petitioner is a skilled nursing facility subsidiary of
The Jewish Guild for the Blind, a non-profit organization that provides a number of
services to persons of all ages who are visually impaired or blind and who may have
additional disabilities. At the times important to this decision, it participated in the
Medicare program. New York State authorities developed a commission to identify and
eliminate excess capacity in the health care delivery system. In response to the
commission’s goals, Petitioner submitted a proposal to the New York State Department
of Health (NYSDOH). Petitioner proposed to voluntarily close its physical facility and
decertify 181 of its Medicare-certified 219 beds. The remaining 38 beds were to be
relocated to another unrelated facility, Jewish Home and Hospital, that would, in turn,
eliminate its 38 certified beds. In essence, Petitioner would close its 219-bed facility,
transferring the remaining residents to the smaller, new facility along with its Medicare
certification. P. Br. at 1-2.

The NYSDOH approved Petitioner’s proposal on December 17, 2007. Petitioner then
began emptying its beds in the old location and transferred 35 of its residents to Jewish
Home and Hospital. Petitioner’s 35 residents were transferred to Jewish Home and
Hospital and enrolled as new admissions on February 15, 2008. Petitioner has not
provided skilled nursing facility care for a single resident since February 15, 2008.
Because of a number of impediments Petitioner encountered, including difficulties in
reaching an agreement with the NYSDOH on its Medicaid reimbursement rate, and
challenges selling its real property located at Petitioner’s original site, the NYSDOH did
not issue a revised operating certificate, and did not conduct a pre-opening survey. “It
was always the intention of Guild Home to open and operate the beds at the new
location.” P. Br. at 3. Jewish Home and Hospital has yet to decertify any of its beds.

On January 28, 2010, about two years since Petitioner ceased providing skilled nursing
services to residents, CMS issued a notice stating that “[b]ased upon information received
from the NYSDOH, Petitioner voluntarily discontinued providing Medicare-certified
skilled nursing services effective February 15, 2008.” P. Ex. A. The notice explained
that the “basis for this termination is found in” 42 C.F.R. § 489.52 (cessation of business
is deemed to be a termination by the provider, effective with the date on which it stopped
providing services to the community) and in 42 C.F.R. § 489.53(a)(1) and (3)
(termination by CMS for failing to comply with applicable statutes and regulations or
conditions of participation.) P. Ex. A. The notice further explained that although “CMS
is aware of the Guild[’]s project, we find it necessary to take this action due to the lack of
progress and the significant period of time.” P. Ex. A.

Petitioner requested that CMS hold its termination in abeyance for approximately one
month while Petitioner and NYSDOH established a Medicaid rate. “Once the rate is set,
and the beds become active, [CMS’s] concern about cessation of [Petitioner’s] business
will be fully addressed.” P. Ex. C. CMS responded to Petitioner’s request by letter dated
March 15, 2010. P. Ex. D. CMS explained that the basis for the termination action
outlined in the January 28, 2010 notice remained as explained earlier and that termination
was effective February 15, 2008. P. Ex. D.

A, Petitioner is entitled to review because its termination is in accordance with
42 C.F.R. § 489.53 and is therefore a reviewable initial determination.”

CMS argues that Petitioner voluntarily terminated its provider agreement by ceasing to
do business as a provider of skilled nursing services. Because the governing regulations
do not provide appeal rights for voluntary terminations, CMS requests that I dismiss this
case for cause pursuant to 42 C.F.R. § 498.70(b). CMS Br. at 9-12. Petitioner, on the
other hand, contends that it never intended to terminate its agreement with Medicare and
that by its very nature a voluntary termination must be intentional and CMS has no
authority to order a termination “voluntary by gunpoint.” P. Br. at 4-6.

I need not address whether a finding of voluntary termination creates appeal rights in this
context. 42 C.F.R. § 489.52. The record is explicit: CMS involuntarily terminated
Petitioner’s provider agreement while simultaneously finding that Petitioner had
voluntarily terminated the agreement. P. Exs. A, D. Consequently, I must deny the CMS
motion to dismiss because involuntary termination is an appealable initial determination
subject to my review. 42 C.F.R. §§ 489.53(b)(7), 498.3(b)(8).

B. CMS is entitled to summary disposition in its favor because the undisputed
facts establish that Petitioner was no longer “primarily engaged” in
providing services to residents when it stopped furnishing SNF services in
February 2008.

Summary disposition is appropriate if a case presents no genuine issue of material fact,
and the moving party is entitled to judgment as a matter of law. Illinois Knights Templar
Home, DAB No. 2274 at 3-4 (2009), and cases cited therein.

* My findings of fact and conclusions of law are set forth, in italics and bold, in the
discussion captions of this decision.
The moving party may show the absence of a genuine factual dispute by presenting
evidence so one-sided that it must prevail as a matter of law, or by showing that the non-
moving party has presented no evidence “sufficient to establish the existence of an
element essential to [that party’s] case, and on which [that party] will bear the burden of
proof at trial.” Livingston Care Center v. Department of Health and Human Services,
388 F.3d 168, 173 (6th Cir. 2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323-
24 (1986)). To avoid summary disposition, the non-moving party must then act
affirmatively by tendering evidence of specific facts showing that a dispute exists.
Matsushita Electric Industries Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986);
see also Vandalia Park, DAB No. 1939 (2004); Lebanon Nursing and Rehab. Center,
DAB No. 1918 (2004).

To defeat an adequately supported summary judgment motion, the non-
moving party may not rely on the denials in its pleadings or briefs, but must
furnish evidence of a dispute concerning a material fact... .

Illinois Knights Templar, DAB No. 2274 at 4; Livingston Care Center, DAB No. 1871 at
5 (2003).

In examining the evidence for purposes of determining the appropriateness of summary
disposition, I must draw all reasonable inferences in the light most favorable to the non-
moving party. Brightview Care Center, DAB No. 2132 at 2, 9 (2007); Livingston Care
Center, 388 F.3d at 172; Guardian Health Care Center, DAB No. 1943 at 8 (2004); but
see Brightview, DAB No. 2132 at 10 ({[E]ntry of summary judgment upheld where
inferences and views of non-moving party are not reasonable.). However, drawing
factual inferences in the light most favorable to the non-moving party does not require
that I accept the non-moving party’s legal conclusions. Cf: Guardian Health Care
Center, DAB No. 1943 at 11 (‘A dispute over the conclusion to be drawn from applying
relevant legal criteria to undisputed facts does not preclude summary judgment if the
record is sufficiently developed and there is only one reasonable conclusion that can be
drawn from those facts.”).

Petitioner does not dispute that it ceased to do business as a skilled nursing facility, the
basis for its provider agreement. Petitioner argues that did not cease operations because
it continued to provide services through its operation of adult day care centers. While
Petitioner contends that there are disputes of fact present, there simply are no material
facts in dispute here. Rather, this matter involves the parties’ differing interpretations of
the applicable law. It is a question of law as to whether Petitioner’s operation of adult
day care centers would constitute continuing business under the applicable statutes and
regulations.

Section 1866(b)(2)(B) authorizes the Secretary to terminate a provider agreement when
he has determined that the provider “fails substantially to meet the applicable provisions
of section 1861.” In this case, the “applicable provision” of section 1861 is section
1861(j), cross-referencing 1819(a), which defines a skilled nursing facility as an entity
that has or meets enumerated criteria, which include that the entity is “primarily engaged
in providing to residents-- skilled nursing care and related services for residents who
require medical or nursing care, or rehabilitation services for the rehabilitation of injured,
disabled, or sick persons, and is not primarily for the care and treatment of mental
diseases ....” Reading sections 1866(b)(2)(B) and 1861(j) together, the provider
agreement may be terminated by the Secretary if the provider “fails substantially to meet’
one or more of the definitional elements or criteria in section 1861(j), including the
“primarily engaged” criterion in section 1861(j).

Petitioner does not dispute that it has not provided residents skilled nursing or
rehabilitation services. Petitioner has cared for no residents since mid-February 2008.
These facts establish that in February 2008, the Medicare-certified SNF stopped treating
residents. It was therefore no longer “primarily engaged” in providing skilled nursing, or
rehabilitation services, and no longer met the statutory definition of a SNF. CMS
therefore properly terminated its program participation. Act § 1866(b)(2), 42 C.F.R.

§ 489.53(a)(1); United Med. Home Care, Inc., DAB No. 2194 (2008) (holding that CMS
properly terminated the Medicare participation of an HHA that treated no patients
between February 9 and August 23, 2005); see Cornerstone Family Healthcare, DAB
No. 2319 (2010) (affirming Medicare termination of a rural health clinic that was no
longer providing services); Arizona Surgical Hosp., LLC, DAB No. 1890 (2003)
(upholding Medicare termination of a hospital that did not provide in-patient services for
39 days and therefore did not meet the provisions of section 1861(e) of the Act).

There is absolutely no evidence that adult day health care services meet the criteria for
SNF services under section 1861(j). Evidence and logic point to quite a different finding
— adult day health care services are wholly different from SNF services. To begin with,
the obvious basic fact is that adult day care is not a residential program, but is by
definition a day program. Petitioner has provided no evidence or argument for me to
interpret otherwise, no matter how favorable a view I may try to take of its overall
position.

I further note that a SNF is subject to a survey to ensure that it meets the Medicare
conditions of participation, including requirements intended to ensure the quality of the
care provided and the protection of residents’ rights. Act § 1819; 42 C.F.R. Part 488,
subpart A. If the SNF is not providing services to any residents, it is not possible to
conduct a survey to see that it is providing those services according to the statutory and
regulatory requirements. 42 C.F.R. § 489.53(a)(3); A.M. Home Health Services, Inc.,
DAB No. 2354 (2010); United Medical Home Care, Inc., DAB No. 2194 (2008). In fact,
it is not disputed that the state survey agency had been unable to survey Petitioner’s SNF
since February 2008 because Petitioner had no residents. See CMS Br. at 7 n.2.
1. The CMS January 28, 2010 notice was sufficient to establish

termination; however, the effective date of termination is February 12,

2010 as a matter of law.

Petitioner argues that involuntary termination is improper because it did not receive

proper notice. Petitioner argues that the January 28, 2010 notice states clearly that it is a
voluntary termination. P. Br. at 8. Petitioner however misreads the clear language in the

notice stating that CMS received information that Petitioner had “voluntarily

discontinued providing Medicare certified skilled nursing services effective February 15,

2008.” P. Ex. A. Whether Petitioner voluntarily discontinued providing services is a

different issue from the voluntary termination of its provider agreement. Furthermore,
the January 28 notice specifies the bases for the termination as both 489.52 (“voluntary

termination”) and 489.53 (“involuntary termination”). P. Ex. A.

Although the January 28, 2010 notice included a retroactive date to February 15, 2008,
and involuntary termination requires notice at least 15 days before the effective date of

termination of the provider agreement, this does not constitute insufficient notice to
overturn the termination. See P. Br. at 8-9.

The Board has addressed Petitioner’s argument that its notice of termination was not

provided in accordance with the formal notice requirement and therefore should not be

applied. The Board explained that:

nothing in section 489.53 indicates that failure to provide the required
notices will, in itself, render CMS’s termination action invalid or void. The
chief purpose of section 489.53(c)’s notice requirements is to ensure that a
provider is afforded due process to challenge a termination decision by
CMS. Cf. 59 Fed. Reg. 56,116, 56,216 (Nov. 10, 1994)(noting that the
“purpose of the notice [required by section 489.53(c)(1)] is not for a facility
to make last minute corrections, but for the government to help fulfill its
duty to provide due process to facilities before termination”). The Board
has consistently held that a federal agency’s failure to comply with formal
pre-hearing notice requirements may be remedied by giving the adversely
affected party an opportunity to challenge the agency’s position in the
ensuing administrative appeal. See, e.g., West Virginia Department of
Health and Human Resources, DAB No. 2185, at 9 (2008); Recovery
Resource Center, DAB No. 2063, at 7-8 (2007); District of Columbia
Department of Human Services, DAB No. 1005, at 10 n.5 (1988); Alden
Town Manor Rehabilitation & HCC, DAB No. 2054, at 17-18 (2006)
(noting that the purpose of the Statement of Deficiencies generated by a
nursing home survey is to give notice of the basis for CMS’s imposition of
enforcement remedies but that such notice may also be provided in the
course of “pre-hearing record development”).
United Medical Home Care, Inc., DAB No. 2194, at 13 (2008).

In the present case, the January 28, 2010 CMS notice, citing both voluntary termination
under 489.52 and involuntary termination under 489.53(a)(1) and (3) as bases, clearly
stated that CMS viewed the provider agreement as terminated, even if not voluntarily so.
United Medical Home Care, Inc., DAB No. 2194, at 13-14. Considerably more vague
notice has been found sufficient by the Board in similar circumstances. Petitioner has
had sufficient opportunity to challenge the agency’s position through this administrative
process. United Medical Home Care, Inc., DAB No. 2194; see Livingston Care Center,
DAB No. 1871, at 20 (2002), aff'd, Livingston Care Center v. U.S. Department of Health
and Human Services, 388 F.3d 168 (6th Cir. 2004); see also St. Anthony Hospital v.
Secretary, Department of Health and Human Services, 309 F.3d 680, 708 (10th Cir.
2002) (“To establish a due process violation [in an administrative proceeding], an
individual must show he or she has sustained prejudice as a result of the allegedly
insufficient notice.”).

Termination of a provider agreement by CMS becomes effective no sooner than 15 days
after the notice of termination is issued. 42 C.F.R. § 489.53(c). Because the operative
notice of termination occurred on January 28, 2010, the effective date of termination was
February 12, 2010. Since Petitioner had sufficient notice as of January 28 that its
provider agreement was being involuntarily terminated, the effect of the action is
prospective, not retrospective. See United Medical Home Care, Inc., DAB No. 2194, at
15-16.

III. Conclusion

I grant summary disposition in favor of CMS because Petitioner ceased providing SNF
services as a matter of law. CMS properly terminated Petitioner’s Medicare provider
agreement effective February 12, 2010. 42 C.F.R. § 489.53(a)(1) -(2), (d)(1).

/s/
Richard J. Smith
Administrative Law Judge