Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Kermit E. White, M.D. &
Kermit E. White, M.D., P.C.

Petitioners,

v.
Respondent.
Docket No. C-15-735
Decision No. CR4553

Date: March 22, 2016

DECISION

Wisconsin Physician Services (WPS), an administrative contractor for the Centers for
Medicare & Medicaid Services (CMS), revoked the Medicare enrollment and billing
privileges of Kermit E. White, M.D. and his professional corporation, Kermit E. White
M.D., P.C. (Petitioners, collectively), pursuant to 42 C.F.R. § 424.535(a)(7). WPS
determined that Dr. White knowingly allowed another to use the billing number assigned
to Kermit E. White, M.D., P.-C. WPS upheld the revocation on reconsideration.
Petitioners now appeal to challenge the reconsidered determination. For the reasons set
forth below, I find that CMS had a legal basis to revoke Petitioners’ Medicare
enrollments and billing privileges because Dr. White knowingly allowed another doctor
to use his professional corporation’s billing number without executing a valid
reassignment.
I. Case Background and Procedural History

Dr. Kermit White is a medical doctor who practices in Michigan. Petitioner’s Exhibit (P.
Ex.) | at 1. He participated in the Medicare program as a “supplier” of services.’ In an
initial determination dated July 16, 2014, WPS notified Petitioners that it was revoking
their Medicare enrollments and billing privileges effective August 15, 2014, pursuant to
42 C.F.R. § 424.535(a)(7), because Dr. White permitted another doctor (hereinafter
“J.T.”) to submit claims under Dr. White’s professional corporation’s billing number for
services J.T. performed. CMS Exhibit (CMS Ex.) 2 at 1. WPS imposed three year re-
enrollment bars on Petitioners’ re-enrollments in the Medicare program. CMS Ex. 2 at 2.

On August 26, 2014, Petitioners submitted a Corrective Action Plan (CAP) in response to
the initial determination. In their CAP, Petitioners acknowledged that Dr. White “fail[ed]
to have appropriate compliance protocols in place” and that he did not provide “adequate
care and supervision to ensure all professional relationships were properly structured” in
his “effort to engage in collaborative practice with another physician ....” CMS Ex. 3 at
1.

On September 12, 2014, Petitioners also requested reconsideration of the initial
determination. Petitioners suggested that there were “any number of plausible and
appropriate reasons why Dr. White may have altered or amended the nature of the
services he provided... .” CMS Ex. 4 at 1. They alluded to the possibility that Dr.
White “may have had an appropriate business relationship . . . that would have supported
the use of Dr. White’s billing number for services rendered by another licensed provider
....” CMS Ex. 4 at 1-2. Petitioners did not actually argue or otherwise provide support
for the propositions that Dr. White had amended the nature of his practice or that he did
have an appropriate business relationship with J.T. Petitioners also criticized WPS for
failing to “address or consider whether or not the purported improprieties . . . were
conducted with Dr. White’s knowledge or consent, as opposed to surreptitiously.” CMS
Ex. 4 at 2.

WPS issued a reconsidered determination on October 20, 2014. WPS upheld the
revocations because it found “Dr. White admitted that he allowed [J.T.] to submit claims
under his group Medicare billing number,” and Dr. White instructed J.T. that “all
transactions using [his] name or credentials must stop immediately.” CMS Ex. 6 at 1.
Further, the hearing officer observed that the doctors did not enter into a valid
reassignment of benefits and therefore were not compliant with 42 C.F.R.

§ 424.535(a)(7). CMS Ex. 6 at 1.

' A “supplier” is defined as “a physician or other practitioner, a facility, or other entity
(other than a provider of services) that furnishes items or services under [Title XVIII of
the Social Security Act].” 42 U.S.C. § 1395x(d); see also 42 C.F.R. § 400.202.
Petitioners timely requested a hearing before an administrative law judge (ALJ). I was
assigned to hear and decide this case. I issued a prehearing order on December 22, 2014.
The parties filed prehearing briefs (CMS PH Br. and P. PH Br.) and proposed exhibits,
CMS Exs. 1-9 and P. Exs. 1-2.

As part of its prehearing exchange, CMS moved for summary judgment. Petitioner
opposed the motion. I determined that the parties’ prehearing exchanges presented
disputes of material fact and denied CMS’s motion for summary judgment on April 15,
2015. Order Denying Summary Judgment and Establishing Procedures for Hearing by
Video Teleconference at 1-2.

On September 21, 2015, I conducted a hearing by video teleconference to permit
Petitioners to cross-examine A.B., who at all relevant times was an investigator for
Cahaba Safeguard Administrators LLC (Cahaba), and to permit CMS to cross-examine
Dr. White. * At the hearing, I received both parties’ exhibits (CMS Exs. 1-9 and P. Exs.
1-2) into evidence. Transcript (Tr.) at 8. I scheduled posthearing briefing at the
hearing’s conclusion. Tr. at 70-71. CMS filed a posthearing brief and reply (CMS Br.
and CMS Reply), and Petitioners filed a posthearing brief and reply (P. Br. and P. Reply).

II. Issue Presented

Whether CMS had a basis to revoke Petitioners’ Medicare enrollments and billing
privileges pursuant to 42 C.F.R. § 424.535(a)(7).

III. Statutory and Regulatory Framework

The Social Security Act authorizes the Secretary of Health and Human Services
(Secretary) to establish by regulation procedures for enrolling providers and suppliers in
the Medicare program. 42 U.S.C. § 1395cc(j)(1)(A). The Secretary has promulgated
enrollment regulations for providers and suppliers in 42 C.F.R. Part 424, Subpart P. See
42 C.F.R. §§ 424.500 — 424.570 (2014). CMS may revoke the billing privileges of an
enrolled provider or supplier if it determines that certain circumstances exist. Id.

§ 424.535(a). Relevant to this case, CMS may revoke a provider’s or supplier’s billing
privileges if:

Misuse of billing number. The provider or supplier knowingly sells to or allows
another individual or entity to use its billing number. This does not include those

> A.B. was the lead investigator who prepared the report recommending that CMS
revoke Petitioners’ Medicare enrollments and billing privileges. Tr. at 15. He is
identified by name at CMS Ex. | at 1.
providers or suppliers who enter into a valid reassignment of benefits as specified
in § 424.80 or a change of ownership as outlined in § 489.18 of this chapter.

Id. § 424.535(a)(7) (italics in original).

When CMS revokes a provider’s or supplier’s billing privileges, any provider agreement
in effect at the time of revocation is terminated. 42 C.F.R. § 424.535(b). After revoking
a provider’s or supplier’s billing privileges, CMS must impose a re-enrollment bar of
between one and three years on the entity or individual. Jd. § 424.535(c). Once the re-
enrollment bar has expired, the supplier must submit a new enrollment application to re-
enroll in the Medicare program. Id. § 424.535(d).

A provider or supplier may request reconsideration of the initial determination to revoke
his or her billing privileges. 42 C.F.R. §§ 498.5(/)(1), 498.22(a). If dissatisfied with the
reconsidered determination, the supplier may request a hearing before an ALJ. Id.

§ 498.5((2).

IV. Findings of Fact and Conclusions of Law

A. Dr. White knowingly allowed J.T. to submit claims using Dr. White’s
professional corporation’s billing number for services that Dr. White did not
provide.

Petitioners first came to CMS’s attention due to unusual claims Dr. White’s professional
corporation submitted for reimbursement from Medicare for services Dr. White
apparently provided to Medicare beneficiaries. A.B. began to investigate Petitioners after
Cahaba identified an unusual pattern of claims that Kermit White M.D., P.C. submitted in
December 2013 and January 2014. CMS Ex. 9 at 2; Tr. at 17. Dr. White had historically
billed CMS for services provided during nursing home visits and had never billed for
either nerve block injections or B12 injections. In December 2013 and January 2014, he
apparently billed for 314 nerve block injections and 52 B12 injections. Also, his billing
for two specific Current Procedural Terminology (CPT) codes ballooned from 13 and 3
over a nearly four year period to 562 and 121 from December 2013 to January 2014.
CMS Exs. | at 3; 9 at 1-2. A new billing agency submitted these unusual claims on Dr.
White’s behalf. Finally, the claims related to Medicare beneficiaries for whom Dr. White
had never before submitted claims, but for whom an entity J.T. controlled had submitted
claims. CMS Ex. 9 at 1-2.

In response to these anomalies, A.B. interviewed Dr. White for an explanation of the
unusual claims. During their March 25 and March 26, 2014 interviews, Dr. White
reportedly told A.B. that he understood J.T. could not submit claims to Medicare because
J.T. had failed to respond to or follow-up with a letter from Medicare. CMS Ex. | at 51.
When A.B. asked Dr. White “why the claims for [J.T] were billed under his PTAN,” Dr.
White reportedly responded that J.T. and another individual, P.F., “convinced him to bill
under his number,” and P.F. “asked [Dr. White] if they could bill under his provider
number to help expedite the payment to [J.T.].”> CMS Ex. | at 52; CMS Ex. 9 at 2. A.B.
reported that according to Dr. White, “Medicare and Medicaid” assured P.F. that “there
were no issues with billing under [Dr. White’s] PTAN.” CMS Ex. | at 52. A.B.
understood that part of the agreement between Dr. White, J.T. and P.F. was that they
would reportedly use J.T.’s biller to submit the claims. Toward the end of January 2014,
Dr. White reportedly explained his relationship with J.T. came to a conclusion. The day
before A.B. interviewed Dr. White in person, Dr. White reportedly stated that J.T.
approached Dr. White, demanded $100,000, and had to be escorted from the premises.
CMS Ex. | at 52.

When A.B. later interviewed the biller J.T. and Dr. White shared, she reportedly
confirmed that she met with Dr. White and J.T. From that meeting, she reportedly
understood that J.T. “was going to submit claims from his clinics under [Dr.] White’s
provider number while [J.T.] receives a new number from Medicare.” CMS Ex. | at 53.
She reportedly agreed to submit the claims on the condition that both J.T. and Dr. White
sign a contract permitting her to submit claims on their behalves. Dr. White signed the
requested contract on December 19, 2014, while J.T. signed it on December 13, 2014.
CMS Ex. | at 21-29. The biller reportedly never received an enrollment application from
J.T. to formalize his relationship with Dr. White. CMS Ex. | at 53.

Dr. White has a very different explanation for his relationship with J.T. and denies
making most of the statements A.B. attributed to him. Dr. White explains that he agreed
to serve as Medical Director of J.T.’s clinics. His responsibilities were to “treat patients,
supervise clinical and administrative staff, and assist in marketing” the clinics. P. Ex. 1
at 2. He created a written agreement detailing his arrangement with J.T., signed it on
January 31, 2014. He testifies that he then forwarded it to J.T. for his signature. P. Ex. 1
at 2; P. Ex. 2. He specifically disavowed ever “authoriz[ing] [J.T.] or anyone else to
submit claims under [his] Provider Transaction Access Number (“PTAN”’) other than
those claims for services [he] performed or supervised.” P. Ex. | at 2.

According to Dr. White, he had an employer-employee relationship with J.T., and he
believed he “would be paid a set fee plus a percentage of services [he] personally
rendered or supervised.” P. Ex. 1 at 2. Further, he believed that permitting “[J.T.]’s
practice(s) to bill for those services was a condition of [his] employment.” P. Ex. | at 2.
Dr. White confirms A.B.’s report that Dr. White believed, based on conversations with
P.F. and the biller, that his arrangement with J.T. “was appropriate.” P. Ex. 1 at 2. He
repudiates his reported admission to A.B. that he allowed J.T. to submit claims under his

> “pF.” is the individual identified in CMS Ex. | at 51, with those initials. I identify her
by her initials because she is not a party to this proceeding.
professional corporation’s PTAN and characterizes the quoted statement in the report as
“not an accurate representation of [their] conversation(s)....” P. Ex. 1 at 2. Dr. White
unequivocally testifies that he “shad no knowledge of the fact that [J.T.] was apparently
submitting claims to CMS with [his] billing or other identifying information for services
[he] did not perform or supervise, and [he] certainly did not authorize [J.T.] or anyone
else” to do so. P. Ex. 1 at 3. Finally, Dr. White testifies that “[a]s soon as [he] became
aware of [J.T.’s] misappropriation of [his] billing information, [he] immediately
contacted him and demanded that he cease and desist from any such activity.” P. Ex. 1 at
3.

After weighing the direct testimony and testimony on cross-examination, as well as all
the evidence in the case, I find Dr. White’s explanation to not be fully credible. I find
that A.B.’s testimony, including that his interview reports were generally consistent with
other evidence, such as the unusual billing data the contractor originally discovered and
Petitioner’s reconsideration and CAP requests, to be more credible. See CMS Ex. 9 at 1-
2; Tr. at 19. Dr. White denies the essential accusation in this case: that he knowingly
allowed J.T. to bill for services J.T. provided using Dr. White’s professional
corporation’s PTAN. In order to support his denials, Dr. White primarily points to the
purported written agreement between him and J.T. P. Ex. 1 at 2.

Petitioners argue that Dr. White, “viewing himself as an employee of J.T.’s clinics,
drafted and signed an agreement reducing to writing the agreement of the parties.” P. PH
Br. at 2. Dr. White, however, did not sign the written agreement memorializing his
understanding of his relationship with J.T. until January 31, 2014, six weeks after he
signed a contract permitting J.T.’s biller to submit claims using his billing information
and at least two months after he began working with J.T. CMS Ex. | at 25, 51; P. Ex. 2.
Though he began providing services in one of J.T.’s clinics in November 2013, Dr. White
inexplicably dated the agreement as beginning on June 1, 2013. CMS Ex. 1 at 51; P. Ex.
2. By the time Dr. White signed the agreement with J.T. on January 31, 2014, his
professional corporation had already billed Medicare for 314 units of nerve block
injections, 52 units of B12 injections, 562 units of CPT code 99215 and 121 units of CPT
Code 96372. CMS Exs. 9 at 2; 1 at 3. Dr. White does not claim that he actually provided
these services. He told A.B. that he “did not know about the nerve block injections until
after they were submitted and agents had visited the billing agency.” CMS Ex. | at 52.

Petitioners urge that “the most crucial analysis . . . is an evaluation of the credibility of
the witnesses” and argue that neither A.B. nor the biller Dr. White shared with J.T. is
credible. P. Br. at 4: P. PH Br. at 8. A.B. reported Dr. White’s admission to agreeing
that J.T. would submit claims using Dr. White’s professional corporation’s billing
number. A.B. also reported that the biller Dr. White shared with J.T. told A.B. that she
was aware of the illicit arrangement between Dr. White and J.T. as a result of the meeting
she had with the two of them. CMS Ex. | at 51-54.
Petitioners argue that A.B. was evasive on cross-examination and failed to directly
answer yes-or-no questions. P. Br. at 6; Tr. at 25-26. While I agree that A.B. could have
been more direct at hearing when originally answering whether Dr. White explicitly
reported in their interview that he allowed J.T. to use his billing number, I find his
testimony generally credible. He ultimately did affirm, after refreshing his recollection of
is investigative report, that based on his interview with Dr. White, he believed Dr. White
knowingly authorized J.T. to bill for services J.T. provided using Dr. White’s
professional corporation’s billing number. Tr. at 28. A.B. had no incentive to create a
false report. He testified that he took notes during the interviews he had with Dr. White,
prepared the reports found in CMS Ex. | at 51-52 based on those notes, and that the
reports are a “true and accurate copy of the notes of [his] phone and in-person interviews
with Dr. White.” CMS Ex. 9 at 1-2. A.B.’s report and testimony is also consistent with
Petitioners’ request for reconsideration in which they alluded to the possibility that Dr.
White “may have had an appropriate business relationship . . . that would have supported
the use of Dr. White’s billing number for services rendered by another licensed
provider,” even though there was never ultimately any proof of the appropriateness of the
arrangement. See CMS Ex. 4 at 1-2. Similarly, A.B.’s testimony is consistent with
Petitioners’ CAP that acknowledged that Dr. White “fail[ed] to have appropriate
compliance protocols in place” and that he did not provide “adequate care and
supervision to ensure all professional relationships were properly structured” in his
“effort to engage in collaborative practice with another physician ....” CMS Ex. 3 at 1.

With respect to the biller that Dr. White shared with J.T., I have no reason to doubt
A.B.’s characterization of her statements. Petitioners characterize her testimony as
“unreliable hearsay” emanating from “a complaining witness in the underlying dispute
and subsequent indictment of [J.T.] ... and a potential qui tam plaintiff... .” P. PH Br.
at 8. If Petitioners wished to examine the biller’s reported position, they could have
requested a subpoena to compel her testimony at the hearing. 42 C.F.R. § 498.58. They
did not do so. Further, A.B. testified that he found the biller credible. Tr. at 33. I also
find her statements as described in A.B.’s report of contact to be consistent with
Petitioners’ statements during the reconsideration process regarding a lack of a proper
reassignment and worthy of some weight.

CMS has presented compelling evidence demonstrating that Dr. White knowingly
allowed J.T. to submit claims using Dr. White’s professional corporation’s billing
number. CMS has presented evidence that J.T. did submit such claims, and Petitioners
never acted at the relevant time to contact CMS or its agents to ascertain the gross
discrepancy between Dr. White’s historical billing and the sudden uptick in certain
procedures during the period in which he worked with J.T. Therefore, I find that, when
considering the overall evidence, Dr. White knowingly allowed J.T. to submit claims
using Dr. White’s professional corporation’s billing number for services that Dr. White
did not provide.
B. CMS was authorized to revoke Petitioners’ Medicare enrollments and billing
privileges pursuant to 42 C.F.R. § 424.535(a)(7).

Once CMS determined that Dr. White knowingly allowed another to use his professional
corporation’s billing number, and that neither a valid reassignment of benefits nor a
change of ownership existed, it was authorized to revoke Petitioners’ Medicare billing
privileges. 42 C.F.R. § 424.535(a)(7). Here, CMS has offered credible evidence that Dr.
White’s professional corporation submitted claims in a volume and of a kind that Dr.
White had never previously performed or had only performed in much smaller volumes.
CMS Ex. 9 at 1-2; CMS Ex. | at 3. Dr. White does not argue that he actually performed
these services. Indeed, he essentially concedes that he did not. P. Ex. 1 at 3. Nor do
Petitioners argue that a valid reassignment of benefits from J.T. to Dr. White’s
professional corporation or a transfer of ownership existed. At most, they suggested in a
request for reconsideration that there might be a plausible explanation or an appropriate
relationship without ever arguing or submitting evidence to establish as much. CMS Ex.
4 at 1-2.

Dr. White testified that he believed CMS had approved his arrangement with J.T.,
consistent with his statement during his interview with A.B. P. Ex. 1 at 2; CMS Ex. | at
52. Petitioners argue that “to meet its burden, CMS must put forward prima facie
evidence that [Dr. White] knowingly permitted the misuse of his billing number.” P. Br.
at 4 (emphasis in original). The plain language of section 424.535(a)(7), however, does
not require a supplier to have knowingly permitted the misuse of his billing number;
rather, it requires only that the provider knowingly allowed another to use his billing
number absent a valid reassignment or change of ownership. Whether Dr. White
understood his actions to have justified revocation or constitute misuse is of no import
under the plain language of the regulation. Moreover, Dr. White is ultimately and always
responsible for the accuracy of his claims. He cannot avoid responsibility by deflecting
blame to a biller. Louis J. Gaefke, DPM, DAB No. 2554 at 5-6 (2013); 73 Fed. Reg.
36,448, 36,455 (June 27, 2008) (“[P]roviders and suppliers are responsible for the claims
they submit or the claims submitted on their behalf.”). I have found Dr. White permitted
J.T. to submit claims for services under Dr. White’s professional corporation’s billing
number without a valid reassignment or change of ownership. For that reason, CMS had
a legal basis to revoke Petitioners’ Medicare enrollments and billing privileges.
V. Conclusion

CMS was authorized to revoke the Medicare enrollments and billing privileges of
Petitioners, Kermit E. White, M.D. and Kermit E. White M.D., P.C., effective August 15,
2014, because CMS has proven Petitioners knowingly allowed another doctor to directly
bill the Medicare program using their Medicare billing number.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Countryside Rehabilitation and Healthcare Center
(CCN: 10-5587),

Petitioner,
v.
Centers for Medicare & Medicaid Services,
Respondent.
Docket No. C-14-1485
Decision No. CR4547

Date: March 15, 2016

DECISION

Countryside Rehabilitation and Healthcare Center (Countryside or Petitioner) challenges
the Centers for Medicare & Medicaid Services’ (CMS) determination that it was not in
substantial compliance with the Medicare program participation requirement that a
skilled nursing facility (SNF) must not admit residents with mental illnesses or
intellectual disabilities without an assessment as to the residents’ need for the SNF’s
services. 42 C.F.R. § 483.20(e), (m). Countryside does not challenge CMS’s finding of
substantial noncompliance with 42 C.F.R. § 483.60(b), (d), (e) (label, storage, and
records of drugs and biologicals). However, Countryside does challenge the penalties
imposed, which are a $200 per-day civil money penalty (CMP) from March 7, 2014,
through May 1, 2014, and the denial of payment for new admissions (DPNA) from April
24, 2014, through May 1, 2014.

For the reasons explained below, I reverse CMS’s finding that Countryside was not in
substantial compliance with 42 C.F.R. § 483.20(e), (m), affirm CMS’s finding that
Countryside was not in substantial compliance with 42 C.F.R. § 483.60(b), (d), (e),

modify the duration of the $200 per-day CMP that CMS imposed on Countryside to April
17, 2014, through May 1, 2014, and affirm CMS’s imposition of a DPNA from April 24,
2014, through May 1, 2014.

I. Background

The Social Security Act (Act) sets forth requirements for an SNF’s participation in the
Medicare program and a nursing facility’s (NF) participation in the Medicaid program,
and authorizes the Secretary of Health and Human Services (the Secretary) to promulgate
regulations implementing those statutory provisions. 42 U.S.C. §§ 1395i-3, 1396r. The
Secretary’s regulations are found at 42 C.F.R. Parts 483 and 488. To participate in the
Medicare program, an SNF must maintain substantial compliance with program
requirements. To be in substantial compliance, an SNF’s deficiencies may “pose no
greater risk to resident health or safety than the potential for causing minimal harm.”

42 C.F.R. § 488.301. “Noncompliance” means “any deficiency that causes a facility to
not be in substantial compliance.” 42 C.F.R. § 488.301.

The Secretary contracts with state agencies to conduct periodic surveys to determine
whether SNFs are in substantial compliance. 42 U.S.C. § 1395aa(a); 42 C.F.R. § 488.10.
The Act authorizes the Secretary to impose enforcement remedies against SNFs that do
not comply with Medicare participation requirements. 42 U.S.C. § 1395i-3(h)(2). The
regulations specify enforcement remedies that CMS may impose if a facility is not in
substantial compliance those requirements. 42 C.F.R. § 488.406. Among other
enforcement remedies, CMS may impose a per-day CMP for the number of days a
facility is not in substantial compliance or a per-instance CMP for each instance of the
facility’s noncompliance. 42 C.F.R. § 488.430(a). A per-day CMP, which CMS imposed
in this case, may range from $50 to $3,000 per day for less serious noncompliance. CMS
may also impose a DPNA. 42 C.F.R. § 488.417. If CMS imposes a CMP based on a
noncompliance determination, then the facility may request a hearing before an
administrative law judge to challenge the noncompliance finding and enforcement
remedy. 42 U.S.C. §§ 1320a-7a(c)(2), 1395i(h)(2)(B)(ii)); 42 C.F.R. §§ 488.408(g),
488.434(a)(2)(viii), 498.3(b)(13).

Countryside is a long term care facility located in Palm Harbor, Florida, which
participates as an SNF in the Medicare program and an NF in the Medicaid program.
Hearing Request § 1. CMS determined that Countryside was noncompliant with
Medicare program participation requirements based on three surveys that the Florida
Agency for Health Care Administration (survey agency) conducted, which were
completed on January 14, 2014, February 19, 2014, and April 17, 2014. CMS Exhibits
(Exs.) 1, 6-8; Petitioner (P.) Exs. 7, 8. Based on the January 2014 survey and the
February 2014 revisit survey/complaint survey, CMS issued an initial determination on
April 9, 2014, in which it imposed a $200 per-day CMP effective January 14, 2014; the
per-day CMP continued until Countryside returned to substantial compliance. CMS Ex.
8 at 1-3. The notice also informed Countryside that CMS would impose a discretionary
DPNA beginning April 24, 2014, if it did not return to substantial compliance before that
date, and termination from the Medicare program, if it did not return to substantial
compliance by July 14, 2014. CMS Ex. 8 at 2.

The survey agency completed a second revisit survey/standard survey on April 17, 2014.
The surveyors determined that Petitioner corrected the deficiencies, cited during the
January and February 2014 surveys, as of March 7, 2014. CMS Ex. 30; P. Ex. 9.
Therefore, the initial period during which CMS imposed enforcement remedies was
January 14, 2014, through March 6, 2014. However, this CMP was resolved when
Petitioner waived its right to appeal these enforcement remedies in exchange for a 35%
waiver reduction in the CMP amount imposed from January 14 through March 6. Joint
Stipulation of Facts and Issues at 3.

CMS also conducted a standard survey on April 17, 2014, and identified three new
deficiencies:

1. 42 C.F.R. § 483.20(e), (m) (preadmission screening requirements) (F-Tag 285,
scope and severity (s/s) of E (pattern, no actual harm with potential for more than
minimal harm that is not immediate jeopardy));

2. 42 C.F.R. § 483.35(i)(3) (disposing of garbage properly) (F-Tag 372, s/s of C
(widespread, no actual harm with potential for minimal harm)); and

3. 42 C.F.R. § 483.60(b), (d), and (e) (label, storage, and records of drugs and
biologicals) (F-Tag 431, s/s of D (isolated, no actual harm with potential for more
than minimal harm that is not immediate jeopardy)).

CMS Ex. 1; Joint Stipulation of Facts and Issues at 1.

On May 13, 2014, CMS issued another initial determination stating that, based on
Petitioner’s noncompliance identified during the April 17, 2014 survey, the previously
imposed CMP of $200 per day, would continue to accrue at $200 per day, effective April
17, 2014. CMS Ex. 6. The notice also informed Petitioner that the DPNA, which went
into effect on April 24, 2014, would remain in effect. CMS Ex. 6 at 2.

On June 2, 2014, the survey agency conducted a revisit survey and, based on this survey,
CMS determined that Petitioner returned to substantial compliance on June 2, 2014.
CMS Ex. 5. However, CMS subsequently changed the substantial compliance date to
May 2, 2014. CMS Ex. 3.

Petitioner timely requested a hearing challenging the deficiencies cited in the April 17,
2014 survey, and the associated $200 per-day CMP and discretionary DPNA remedies
imposed. I issued an Acknowledgement and Prehearing Order that established a
prehearing exchange schedule for the parties. Prior to the initial prehearing exchanges,
counsel for the parties filed a very helpful joint stipulation concerning facts and issues in
the case. In relevant part, the parties stipulated that the enforcement remedies in dispute
are the $200 per-day CMP from March 7, 2014, to May 2, 2014, and the DPNA from
April 24, 2014, to May 2, 2014. Further, Petitioner only disputes the noncompliance
finding under 42 C.F.R. § 483.20(e), (m), but no longer disputes deficiencies under

42 C.F.R. §§ 483.35(i)(3) and 483.60(b), (d), (e). Joint Stipulation of Facts and Issues at
3.

CMS filed its pre-hearing brief (CMS Br.) along with 30 exhibits (CMS Exs. 1-30) and
Petitioner filed its pre-hearing brief (P. Br.) and 10 exhibits (P. Exs. 1-10). In compliance
with my prehearing order, the parties filed written direct testimony for their proposed
witnesses. CMS offered a state surveyor (CMS Ex. 29) as a witness. Petitioner offered
its Administrator (P. Ex. 1) and Admissions Coordinator (P. Ex. 2) as witnesses. The
parties requested to cross-examine these witnesses.

II. Decision on the Record

I admit all of the proposed exhibits into the record because neither party objected to any
of them.

I scheduled a hearing in this case for July 28, 2015. However, just prior to the hearing,
counsel for the parties waived cross-examination of the opposing party’s witnesses and
requested that I issue a decision on the written record. I cancelled the hearing and set a
final briefing schedule. The parties filed closing briefs (CMS Closing Br. and P. Closing
Brief). Petitioner confirmed its waiver of its right to an oral hearing. P. Closing Br. at 1.
Therefore, I issue this decision based on the written record. 42 C.F.R. § 498.66.

III. Issues

1. Whether Petitioner was in substantial compliance with the Medicare program
participation requirement at 42 C.F.R. § 483.20(e), (m).

2. Whether the imposition of a $200 per day CMP from March 7, 2014, through
May 1, 2014, is reasonable, and whether a DPNA from April 24, 2014, through
May 1, 2014, is appropriate.

IV. Jurisdiction
I have jurisdiction to hear and decide this case. 42 U.S.C. §§ 1320a-7a(c)(2),

1395i(h)(2)(B)(ii)); 42 C.F.R. §§ 488.330(c)(3), 488.408(g)(1), 498.3(a)(3)(ii),
498.3(b)(13).
V. Findings of Fact, Conclusions of Law, and Analysis’

1. None of the residents identified in the Statement of Deficiencies suffered from a
mental illness or an intellectual disability.

The survey agency’s Statement of Deficiencies indicates that Countryside failed to meet
42 C.F.R. § 483.20(e), (m) because, “[b]ased on resident record review and staff
interview, [Countryside] failed to ensure ten of ten resident records reviewed (#191, #10,
#15, #79, #152, #175, #179, #195, #198 and #199) had completed Level I Pre Admission
Screen and Resident Review (PASRR) screens prior to their admission to the nursing
facility.”? CMS Ex. 1 at 1-2; see also CMS Ex. 29 §§ 3-5. Countryside’s deficiency is
summed up in testimony by a survey agency employee:

[T]he PASRR [Level I] screen is a mandatory pre-admission
resident assessment process to determine the appropriateness
of the resident’s placement and the proper plan of care based
on the resident’s mental condition. The PASRR screen is
required to ensure the safety of the resident being admitted
and the other residents already residing in the facility.

[Countryside] failed to comply with this requirement by
admitting those 10 residents before completing the PASSR
screen. At the time each of these residents was admitted, the
facility did not have a comprehensive determination on the
mental condition of the resident. For some residents, the
PASRR screen was not completed for 10 - 17 days after they
had been admitted. Such practice posed potential for more
than minimal harm to the residents.

CMS Ex. 29 ff 6-7.

In response to this deficiency, Countryside agreed that all ten residents’ records included
PASSR forms completed after Countryside admitted the residents. However,
Countryside asserted that all of the identified residents had PASSR Level I forms
completed by a discharging provider prior to admission to Countryside, but that the
discharging providers had failed to provide the completed PASSR Level I forms to

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

> ‘The acronym PASRR is currently accurate; however, before a 1996 statutory change,
the acronym for this review was PASARR. St. Catherine’s Care Center of Findlay, Inc.,
DAB No. 1964, n. 7 (2005).
Countryside. P. Br. at 4-5. The only exception was Resident 79, whose PASSR form
was completed on the day of his admission to Countryside. P. Br. at 4n.2; P. Ex. 1 ¥ 13.
Petitioner submitted copies of the completed PASSR Level I forms that it obtained from
the discharging providers when it implemented its plan of correction subsequent to
receiving the Statement of Deficiencies. P. Br. at 5 n.3; P. Ex. 1 § 12.

In this proceeding, Countryside provided testimony to explain why it did not have copies
of timely completed PASSR Level I forms in the residents’ records. Countryside
normally asks all providers seeking to have a patient admitted to Countryside whether the
provider completed the correct PASSR forms, and “[n]o admissions are agreed to by
[Countryside’s] admission personnel unless they have received assurances that the
resident has been screened and is eligible for admission.” P. Ex. 1 47; see also P. Ex. 2
47. Countryside asserts that under Florida law, discharging hospitals are responsible for
completing the PASSR Level I form. P. Ex. 1 47; P. Ex. 4 at 1. However, some
providers fail to provide the PASRR Level I form. P. Ex. 1 § 8; P. Ex. 2 4 7. If the
provider does not provide a copy of the PASSR Level I form by the day on which the
resident is admitted, Countryside continues to request the provider to send it. P. Ex. 1 4
8. Despite this, some providers never provide the completed form. P. Ex. 2 47.

CMS responded to Countryside’s position in this case by arguing that: the PASRR Level
I forms allegedly completed by discharging providers are not authenticated; Countryside
provided no written procedures concerning how it obtains PASRR Level I forms from
discharging providers; Countryside provided no evidence that it followed its alleged
procedures for obtaining PASRR Level I forms for the residents identified in the
Statement of Deficiencies; and Residents 152, 179, 195, and 199 were not directly
referred for admission from a hospital. CMS Closing Br. at 6-10.

The following is a summary of the record related to admission dates and completion of
PASRR Level I forms for each resident identified in the Statement of Deficiencies.

a. Countryside admitted Resident 10 on March 17, 2014, from a hospital.
CMS Ex. 10 at 1; see also CMS Ex. | at 3. The PASRR Level I
documentation located in the resident’s record at the time of the survey was
not completed until April 1, 2014. CMS Ex. 10 at 3; see also CMS Ex. | at
3. Countryside obtained PASRR Level I documentation from the hospital
dated March 17, 2014, the date of the resident’s admission to Countryside.
P. Ex. 6 at 6.

b. Countryside admitted Resident 15 on December 20, 2013, from a hospital.
CMS Ex. 14 at 1; see also CMS Ex. | at 3. The PASRR Level I
documentation located in the resident’s record at the time of the survey was
not completed until December 26, 2013. CMS Ex. 14 at 3; see also CMS
Ex. | at 3. Countryside obtained PASRR Level I documentation from the
ospital dated December 15, 2014. P. Ex. 6 at 8.

. Countryside admitted Resident 79 on April 7, 2013, from a hospital. CMS
Ex. 15 at 1; see also CMS Ex. 1 at 3-4. There was no PASSR Level I
document in the resident’s record related to this admission. CMS Ex. | at
4. Resident 79 was readmitted to Countryside on January 3, 2014, from a
ospital. CMS Ex. 15 at 1; see also CMS Ex. | at 4. The PASRR Level I
documentation located in the resident’s record at the time of the survey was
not completed until January 14, 2014. CMS Ex. 15 at 3; see also CMS Ex.
1 at 4. Countryside obtained PASRR Level I documentation from the
ospital dated April 7, 2013, and January 3, 2014. P. Ex. 6 at 11, 31.

. Countryside admitted Resident 152 on March 18, 2014, following a

ospital stay shortly before admission. CMS Ex. 16 at 1; CMS Ex. | at 4.
The PASRR Level I documentation located in the resident’s record at the
time of the survey was not completed until April 4, 2014. CMS Ex. 16 at 1,
3; see also CMS Ex. 1 at 4. Countryside obtained PASRR Level I
documentation from the hospital dated March 11, 2014. P. Ex. 6 at 14.

. Countryside admitted Resident 175 on December 5, 2013, from a hospital.
CMS Ex. 17 at 1; see also CMS Ex. 1 at 4. The PASRR Level I
documentation located in the resident’s record at the time of the survey was
not completed until December 10, 2013. CMS Ex. 17 at 3; see also CMS
Ex. 1 at 5. Countryside obtained PASRR Level I documentation from the
ospital dated December 4, 2014. P. Ex. 6 at 17.

Countryside admitted Resident 179 on January 23, 2014, from a non-
ospital setting. CMS Ex. 18 at 1; see also CMS Ex. | at5. The PASRR
Level I documentation located in the resident’s record at the time of the
survey was not completed until January 27, 2014. CMS Ex. 18 at 3; see
also CMS Ex. 1 at 5. Countryside provided PASRR Level I documentation
from “CHCC” dated January 12, 2014. P. Ex. 6 at 19-20.

. Countryside admitted Resident 191 on March 7, 2014, from an acute care
ospital. CMS Ex. 19 at 1; see also CMS Ex. | at 3. The PASRR Level I
documentation located in the resident’s record at the time of the survey was
not completed until March 17, 2014. CMS Ex. 19 at 3; see also CMS Ex. 1
at 3. Countryside obtained PASRR Level I documentation from the

ospital dated March 7, 2014, the date of the resident’s admission to
Countryside. P. Ex. 6 at 3.

h. Countryside admitted Resident 195 on March 21, 2014, following a

hospital stay shortly before admission. CMS Ex. 20 at 1; see also CMS Ex.
1 at 5. The PASRR Level I documentation located in the resident’s record
at the time of the survey was not completed until March 25, 2014. CMS
Ex. 20 at 3; see also CMS Ex. | at 5. Countryside obtained PASRR Level I

documentation

from the hospital dated March 21, 2014. P. Ex. 6 at 23.

i. Countryside admitted Resident 198 on April 10, 2014, from a hospital.

CMS Ex. 21 at
documentation

1; see also CMS Ex. 1 at 5. The PASRR Level I
located in the resident’s record at the time of the survey was

not completed until April 11, 2014. CMS Ex. 21 at 3; see also CMS Ex. |
at 6. Countryside obtained PASRR Level I documentation from the
hospital dated November 13, 2013. P. Ex. 6 at 26.

j. Countryside admitted Resident 199 on April 9, 2014. CMS Ex. 22 at 1; see
also CMS Ex. | at 3. The PASRR Level I documentation located in the
resident’s record at the time of the survey was not completed until April 10,
2014. CMS Ex. 22 at 3; see also CMS Ex. | at 3; CMS Ex. 22 at 1.
Countryside obtained PASRR Level I documentation from “MPH” dated

April 9, 2014.

P. Ex. 6 at 6.

Although there are disputes between the parties related to the dates when PASRR Level I

evaluations occurred with re
Deficiencies, it is undisputed

ation to the residents identified in the Statement of
that none of the ten residents had a mental illness or an

intellectual disability that would have affected their admission to Countryside. CMS
Closing Br. at 11; CMS Ex. 13 at 3, CMS Ex. 14 at 3; CMS Ex. 15 at 3; CMS Ex. 16 at 3;

CMS Ex. 17 at 3; CMS Ex.
CMS Ex. 22 at 3; P. Ex. 1
Therefore, I find that none o:

8 at 3; CMS Ex. 19 at 3; CMS Ex. 20 at 3; CMS Ex. 21 at 3;
2; P. Ex. 6 at 3, 6, 8, 11, 14, 17, 20, 23, 26, 28, 31.
the ten identified residents were admitted to Countryside

with a mental illness or intel

ectual disability.

2. Petitioner was in substantial compliance with Medicare program participation

requirements at 42 C.

F.R. § 483.20(m) because none of the residents identified

in the Statement of Deficiencies suffered from a mental illness or an intellectual

disability.

The Statement of Deficiencies asserts that Countryside violated the following regulation:

(m) Preadmission screening for mentally ill individuals and
individuals with intellectual disability.

(1) A nursing facility must not admit, on or after January 1,

1989, any new

resident with—
(i) Mental illness as defined in paragraph (f)(2)(i) of this
section, unless the State mental health authority has
determined, based on an independent physical and mental
evaluation performed by a person or entity other than the
State mental health authority, prior to admission,

(A) That, because of the physical and mental condition of the
individual, the individual requires the level of services
provided by a nursing facility; and

(B) If the individual requires such level of services, whether
the individual requires specialized services; or

(ii) Intellectual Disability, as defined in paragraph (f)(2)(ii) of
this section, unless the State intellectual disability or
developmental disability authority has determined prior to
admission—

(A) That, because of the physical and mental condition of the
individual, the individual requires the level of services
provided by a nursing facility; and

(B) If the individual requires such level of services, whether
the individual requires specialized services for intellectual
disability.

(2) Definition. For purposes of this section—
(i) An individual is considered to have mental illness if the

individual has a serious mental illness as defined in
§483.102(b)(1).

(ii) An individual is considered to be mentally retarded if the
individual is mentally retarded as defined in §483.102(b)(3)
or is a person with a related condition as described in 42 CFR
435.1010 of this chapter.

42 C.F.R. § 483.20(m).?

> The Secretary originally promulgated this provision as section 483.20(f), effective
March 23, 1998; however, the Secretary relocated this provision to section 483.20(m).
62 Fed. Reg. 67,174, 67,211 (Dec. 23, 1997); 56 Fed. Reg. 48,826, 48,872 (Sept. 26,
1991).
10

Although CMS admits that none of the ten residents identified in the Statement of
Deficiencies had a mental illness or an intellectual disability, CMS argues that
Countryside’s failure to have completed PASRR Level I documentation in the residents’
records at the time of the state survey supports a violation under 42 C.F.R. § 483.20(m).
CMS’s argues that the Secretary’s regulations implementing the PASRR requirement
provide that a state may delegate responsibility to perform PASRR Level I evaluations to
NFs and that a Florida regulation obligates NFs to perform the PASRR Level I screening
and maintain a record of that screening for several years. CMS Closing Br. at 3-5, 9-11.

Petitioner argues that the PASRR regulations are separate from the regulations governing
SNFs and, in any event, they place duties on state agencies and not SNFs concerning the
completion of PASSR Levels I and II screening. P. Br. at 5-7. As argued by Petitioner:

Instead, CMS’ proposed deficiency is based entirely on its
belief that the other regulatory component of . . . 42 C.F.R.
§483.20(m), requires a facility to “ensure” a PASSR [sic]
screen is done. Subsection (m)(1) does not mention anything
about nursing homes “ensuring” that PASRR screens are
completed prior to a resident’s admission. It simply prohibits
admission of any resident with [mental illness] or [intellectual
disabilities] unless such resident has a Level II evaluation.

P. Br. at 7. Therefore, according to Petitioner, “the appropriate inquiry [under section
483.20(m)] would be to determine if the facility admitted a resident with [Intellectual
disabilities] or [mental illness].” P. Br. at 8. As explained below, I agree with Petitioner
that 42 C.F.R. § 483.20(m) is meant to enforce the requirement that facilities not admit
residents who have mental illness or intellectual disabilities without PASRR Level II
evaluations that conclude those residents need the services provided by a facility.

The primary statutory provision mandating PASRR is located in section 1919(b)(3)(F) of
the Act. 42 U.S.C. § 1396r(b)(3)(F). This statute is nearly identical to the requirements
in 42 C.F.R. § 483.20(m).* Indeed, the Secretary promulgated 42 C.F.R. § 483.20(m) to
implement section 1919(b)(3)(F). 56 Fed. Reg. 48,826, 48,847 (Sept. 26, 1991). Section
1919(e)(7)(A)(i) of the Act requires states to establish PASRR programs that will conduct
the necessary evaluations required under section 1919(b)(3)(F). Id. § 1396r(e)(7)(A)(i).
Significantly, and perhaps emphatically, section 1919(b)(3)(F) and (e)(7)(A)(i) each
prohibit states from delegating their responsibility to conduct PASRR evaluations to NFs.
Id. § 1396r(b)(3)(F), (e)(7)(B)(4).

* Although PASRR is a Medicaid requirement, it applies to SNFs that are also Medicaid
enrolled NFs. 57 Fed. Reg. 56,450, 56,453 (Nov. 30, 1992). Countryside is such a
facility and subject to 42 C.F.R. part 483, subpart B and the PASRR requirement.
Hearing Request §[ 1.
11

The Secretary promulgated regulations to implement the PASRR requirement. 42 C.F.R.
part 483, subpart C. Consistent with the statute, the PASRR regulations make it an
obligation of the states to implement a program to ensure preadmission screening of
individuals for mental illness or intellectual disabilities before an NF admits them as
residents. 42 C.F.R. § 483.104-106. The regulations also created two levels of PASRR
functions. Jd. § 483.128. As described in the regulations:

The State's PASARR program must identify all individuals
who are suspected of having [mental illness] or [intellectual
disabilities] as defined in §483.102. This identification
function is termed Level I. Level II is the function of
evaluating and determining whether NF services and
specialized services are needed.

Id. § 483.128(a). Consistent with the Act, the Secretary prohibited states from delegating
to NFs the PASRR “evaluation and determination functions.” Jd. § 483.106(e)(1)(iii).
As explained in the final rule establishing the PASRR regulations:

Since nursing facilities have a direct interest in the eligibility
determinations that are to be made for those individuals
subject to the PASARR requirements, there is a potential
conflict of interest in permitting them to make these
determinations. Thus, it was the Committee’s view in 1987—
as it is today—to prohibit nursing facilities (or their related
entities) to participate, in any way, in the PASARR process.

57 Fed. Reg. 56,450, 56,460 (Nov. 30, 1992). However, the Secretary placed no
prohibition on a state delegating the Level I function to NFs.

We believe it is necessary to clarify that this new provision in
no way impairs our authority to require that NFs conduct
Level I screenings. Level I identification is, in effect, a pre-
PASARR activity designed to determine who is subject to
PASARR. We also wish to clarify that the statute prohibits
NFs and similar “entities” from conducting PASARR.

Id. at 56,460 (emphasis added); see also 57 Fed. Reg. at 56,482 (“With regard to whether
a State may require a facility to perform a Level I screen, we believe it is well within the
authority of a State to require that hospitals and nursing facilities identify individuals who
require screening under PASARR.”). In further response to public comments challenging
the Secretary’s authority to permit states to delegate the Level I function to NFs, the
Secretary stated:
12

We do not agree with the commenters who suggest that
requiring Level I screens is not within the scope of our
authority. We have elsewhere noted, and courts have
accepted, the fact that the requirement in section 1919(e)(7)
of the Act for screening presupposes the existence of a
mechanism for identifying persons for whom a screening
is necessary. We also believe that it is within the authority of
States implementing these regulations to require that this
review be done by NFs.

It is also clear to us that some commenters misunderstood the
purpose of the Level I screening step. Its purpose is to
identify for further screening those individuals for whom
it appears that a diagnosis of mental illness or mental
retardation is likely. ... It is the purpose of Level II
screening to make the appropriate finding based on an expert
evaluation.

First, OBRA ‘90 prohibited States from delegating any of
their PASARR responsibilities to NFs. We do not believe
that this provision in any way hinders States from using NFs
to perform Level I identifications. The actual PASARR is
accomplished through Level II.

57 Fed. Reg. at 485-486 (emphasis added).

Therefore, the Level I function is not actually PASRR screening, but merely a
preliminary mechanism for identifying individuals for whom PASRR screening is
necessary. As the Secretary stated, it was necessary to establish a method to determine
which individuals need a PASRR evaluation. Because the Level I function is not actually
PASRR screening, states may delegate to NFs the responsibility to perform that function.
If the Level I function were PASRR screening, both the Act and regulations would
prohibit that delegation. Because the Level I function is not actually PASRR, an NF’s
failure to comply with a state requirement that it conduct and keep Level I documentation
for the residents it admits is not a violation of 42 C.F.R. § 483.20(m).
13

A facility only violates 42 C.F.R. § 483.20(m) when it admits a resident with mental
illness or intellectual disabilities when no PASRR Level II evaluation has been
completed. In the present case, there is no dispute that none of the ten residents identified
in the Statement of Deficiencies had mental illness or intellectual disabilities. Therefore,
I conclude that Countryside was in substantial compliance with 42 C.F.R. § 483.20(m).°

3. Petitioner was in substantial compliance with Medicare program participation
requirements at 42 C.F.R. § 483.20(e) because none of the residents identified in
the Statement of Deficiencies required PASSR Level I evaluations and, in any
event, there is no evidence that any of Petitioner’s actions caused duplicative
testing or effort.

The Statement of Deficiencies indicated that Countryside was not in substantial
compliance with 42 C.F.R. § 483.20(e). The regulations states:

Coordination. A facility must coordinate assessments with
the preadmission screening and resident review program
under Medicaid in part 483, subpart C to the maximum extent
practicable to avoid duplicative testing and effort.

This requirement is primarily aimed at coordinating PASRR Level II evaluations with
other testing that is needed for residents with mental illnesses or intellectual disabilities.
See 62 Fed. Reg. 67,174, 67,200-67,201 (Dec. 23, 1997). As indicated above, this case
does not involve PASSR Level II screenings. Further, CMS makes no argument as to
how Petitioner failed to be in substantial compliance with this Medicare program
participation requirement. Therefore, I conclude that Petitioner was in substantial
compliance with 42 C.F.R. § 483.20(e).

4. I conclude that a $200 per-day CMP is reasonable, but modify the duration of
the $200 per-day CMP to April 24, 2014, through May 1, 2014, because
Petitioner was in substantial compliance with 42 C.F.R. § 483.20(e) and (m).

Based on my findings and conclusions above, I modify the duration of the CMP imposed
from March 7, 2014, through April 16, 2014. Because the alleged noncompliance with
42 C.F.R. § 483.20(e), (m) was the only noncompliance cited for the period prior to the
April 17 survey, there is no longer any basis to impose a penalty back to March 7, 2014.

> CMS argues that Florida regulations require Countryside to conduct the PASRR Level
I screening and keep documentation of that screening in the resident’s records for five
years. See Fla. Admin. Code R. 59G-1.040. It is possible that Countryside violated
Florida Medicaid regulations; however, this tribunal has no authority to enforce Florida
law.
14

See CMS Ex. | at 2-7, 10-12; see also Joint Stipulation of Facts and Issues at 3.
However, as explained below, there is a basis to affirm the $200 per-day CMP from April
17, 2014, to May 1, 2014.

As noted earlier, during the April 17, 2014 survey, the surveyors also cited Petitioner
with two additional deficiencies that it does not challenge: 42 C.F.R. § 483.35(i)(3)
(disposing of garbage properly) (F-Tag 372, s/s of C); and 42 C.F.R. § 483.60(b), (d), and
(e) (label, storage, and records of drugs and biologicals) (F-Tag 431, s/s of D). These two
deficiencies are now administratively final. 42 C.F.R. § 498.20(b)(2).

The more serious of the two conceded deficiencies is the violation of 42 C.F.R.
§ 483.60(b), (d), and (e) (label, storage, and records of drugs and biologicals). The
Statement of Deficiencies states:

Based on observation, interview, and record review,
[Countryside] failed to store biologicals and medications with
current unexpired dating to maintain the pharmaceutical
integrity of time sensitive biologicals in two . . . of two
treatment carts, three . . . of five medication carts and one...
of two medication rooms.

CMS Ex. | at 9-10. Some of the surveyor observations include expired medications;
medication without an open or use by date, and defaced manufacturers expiration date;
unopened bottle with expiration date torn off; expired creams which appeared to be in
use; topical medications more than seven-months expired; expired inhalant medication;
expired suppositories; and expired over-the-counter medication that was yet to be used.
Petitioner’s own policy and procedure for expired medications instructed that all bottles
maintain an expiration date on the label, that the staff should record the date opened on
the medication container, and that staff not retain medications or biologicals longer than
recommended. CMS Ex. 1 at 12. These findings evidenced Petitioner’s systemic failure
to properly monitor medications. CMS Ex. | at 8-12.

To determine whether a CMP is reasonable, I apply the factors listed in 42 C.F.R.

§ 488.438(f): 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 resident care, comfort
or safety. The absence of culpability is not a mitigating factor. The factors in 42 C.F.R.
§ 488.404 include: 1) the scope and severity of the deficiency; 2) the relationship of the
deficiency to other deficiencies resulting in noncompliance; and 3) the facility’s prior
history of noncompliance in general and specifically with reference to the cited
deficiencies. I consider whether the evidence supports a finding that the amount of the
15

CMP is at a level reasonably related to an effort to produce corrective action by a
provider with the kind of deficiencies found, and in light of the section 488.438(f)
factors.

In regard to the amount of the per-day CMP, the deficiencies at 42 C.F.R. § 483.60(b),
(d), (e) are sufficient to support the $200 per-day CMP from April 17, 2014, through May
1, 2014. It must be noted that the $200 amount is close to the minimum daily amount
that CMS can impose absent immediate jeopardy. 42 C.F.R. § 488.438(a)(1)(ii). Further,
just in this case alone, Petitioner has evidenced a history of substantial noncompliance.

P. Exs. 7, 8. Further, Petitioner has not made any argument that its financial condition
will not permit payment of a $200 per-day CMP lasting approximately two weeks in
duration. Petitioner’s conduct in relation to section 483.60 appeared to show indifference
to ensuring that drugs were properly labeled because there were numerous instances of
this violation observed by the surveyors.

5. CMS had a legitimate basis to impose a DPNA from April 24, 2014, through
May 1, 2014, because Petitioner was noncompliant with 42 C.F.R. § 483.60, and
I do not have authority to reverse that decision.

Petitioner asserts that CMS had no basis to impose a DPNA in this case. However, CMS
may impose a DPNA any time there is a breach of substantial compliance. 42 C.F.R.

§ 488.417(a); see Ridgecrest Healthcare v. CMS, DAB No. 2598 (2014) (holding that
“42 C.F.R. § 488.417(a)[] authoriz[es] a DPNA when a facility is not in substantial
compliance with the participation requirements”). Based on the violations of 42 C.F.R.
§ 483.60, CMS had a legitimate basis to impose a DPNA, and I have no authority to
reverse that discretionary decision. 42 C.F.R. § 498.3(c)(13).

Order
Based on the foregoing, I hereby order the following:

1) CMS’s determination that Petitioner was not in substantial compliance with
42 C.F.R. § 483.60(b), (c), (d) is AFFIRMED;
16

2) CMS’s determination that Petitioner was not in substantial compliance with
42 CFR. § 483.20(e), (m) is REVERSED;

3) CMS’s imposition of a $200 per-day CMP from March 7, 2014, to May 1, 2014, is
MODIFIED to be a $200 per-day CMP from April 17, 2014, to May 1, 2014.

/s/
Scott Anderson
Administrative Law Judge