Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

Grace Living Center - Stillwater,
(CCN: 37-5178),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1841
Decision No. CR4331

Date: October 16, 2015

DECISION

Petitioner, Grace Living Center - Stillwater, was not in substantial compliance with
program participation requirements from June 25, 2014 through August 26, 2014, based
on violations of 42 C.F.R. §§ 483.10(b)(11) and 483.25 from the survey completed on
May 28, 2014 survey and a violation of 42 C.F.R. § 483.13(c)(2)-(4) ' from the survey
completed on August 13,2014. There is a basis for the imposition of an enforcement
remedy. The enforcement remedy of a denial of payment for new admissions (DPNA)
for the period June 25 through August 26, 2014, is reasonable.

I. Background

Petitioner is located in Stillwater, Oklahoma and participates in Medicare as a skilled
nursing facility (SNF) and the state Medicaid program as a nursing facility (NF). On
May 28, 2014, a complaint investigation and survey was completed by the Oklahoma
State Department of Health, Protective Health Services (state agency) and Petitioner was
found not in substantial compliance with program participation requirements due to

' Citations are to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
violations at 42 C.F.R. §§ 483.10(b)(11) (Tag F157°) and 483.25 (Tag F309). Centers for
Medicare & Medicaid Services (CMS) Exhibits (Exs.) 1,5.

CMS notified Petitioner on July 1, 2014, that it was imposing the following enforcement
remedies based on the May 28, 2014 survey findings: termination of Petitioner’s
provider agreement, unless the facility achieved substantial compliance before November
28, 2014; a civil money penalty (CMP) in the amount of $350 per day, effective May 28,
2014 and continuing until further notice; and a DPNA beginning June 25, 2014 and
continuing until further notice. CMS Ex. 1; Petitioner’s Exhibit (P. Ex.) 2. Petitioner
requested Informal Dispute Resolution (IDR). CMS notified Petitioner on August 7,
2014, that the IDR related to the May 28, 2014 survey resulted in rescission of the CMP
but the threat of termination and the DPNA effective June 25, 2014, were unchanged.
CMS Ex. 2; P. Ex. 5.

Petitioner requested a hearing before an administrative law judge (ALJ) on August 28,
2014. Petitioner requested review of the CMS determinations announced in its notices to
Petitioner dated July 1, 2014 and August 7, 2014, including the deficiencies cited by the
survey that ended on May 28, 2014, specifically Tags F157 and F309 and the related
DPNA.

On September 5, 2014, CMS notified Petitioner that a complaint survey conducted on
August 13, 2014, found that Petitioner was not in substantial compliance due to five
regulatory violations: 42 C.F.R. § 483.13(c)(1)(ii)-(iii), (c)(2)-(4) (Tag F225);>

483 .20(d)(3) and 483.10(k)(2) (Tag F280); 483.25 (Tag F309); 483.25(a)(3) (Tag F312)
and 483.65 (Tag F441). CMS imposed a directed plan of correction and advised

> This “Tag” designation is used in CMS Publication 100-07, State Operations Manual
(SOM), app. PP — Guidance to Surveyors for Long Term Care Facilities
(http://www.cms.hhs.gov/Manuals/IOM/list.asp). The “Tag” refers to the specific
regulatory provision allegedly violated and CMS’s related policy guidance to surveyors.
Although the SOM does not have the force and effect of law, the provisions of the Act
and regulations interpreted clearly do have such force and effect. Ind. Dep’t of Pub.
Welfare v. Sullivan, 934 F.2d 853 (7th Cir. 1991); Northwest Tissue Ctr. v. Shalala, 1
F.3d 522 (7th Cir. 1993). Thus, while the Secretary may not seek to enforce the
provisions of the SOM, she may seek to enforce the provisions of the Act or regulations
as interpreted by the SOM.

> The allegations in the Statement of Deficiencies (SOD) do not reflect an alleged
violation of 42 C.F.R. § 483.13(c)(1)(ii)-(iil) and the citation to those provisions are in
error. Rather the allegations are that only 42 C.F.R. § 483.13(c)(2)-(4) was violated.
Petitioner that the DPNA that was effective beginning June 25, 2014 continued, and that
termination would occur November 28, 2014, unless Petitioner returned to substantial
compliance prior to that date. CMS Exs. 3, 15. CMS advised Petitioner of its right to
request a hearing before an ALJ no later than November 4, 2014. CMS Ex. 3 at 2. There
is no dispute that Petitioner did not request ALJ review of the August 13, 2014 survey
either by filing a new request for hearing or by amending its pending request for hearing
filed on August 28, 2014.

On October 2, 2014, CMS notified Petitioner that Petitioner achieved substantial
compliance on August 27, 2014. CMS rescinded the termination but the DPNA from
June 25, 2014 through August 26, 2014 was not changed. CMS Ex. 4; P. Exs. 6,7.

The case was assigned to me for hearing and decision on September 19, 2014, and an
Acknowledgement and Prehearing Order (Prehearing Order) was issued at my direction.
On February 23, 2015, I notified the parties that the case was scheduled for hearing on
May 6 and 7, 2015 by video teleconference. On February 24, 2015, Petitioner waived
oral hearing and agreed to a decision on the briefs and documentary evidence. Although
CMS stated that it was not willing to waive an oral hearing in the parties’ Joint Status
Report filed February 20, 2015, CMS did not object to Petitioner’s waiver or show cause
why an oral hearing was necessary pursuant to 42 C.F.R. § 498.66(b)(2). On March 16,
2015, I accepted Petitioner’s waiver of oral hearing and set a briefing schedule.

On April 30, 2015, the parties filed opening briefs (CMS Br. and P. Br.). On June 1,
2015, CMS filed its reply brief (CMS Reply). On June 4, 2015, Petitioner waived filing a
reply brief. CMS filed CMS Exs. | through 15 and Petitioner filed P. Exs. | through 10.
No objections have been made to my consideration of the exhibits submitted and CMS
Exs. | through 15 and P. Exs. | through 10 are admitted as evidence.

II. Discussion
A. Issues

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

Whether the remedy imposed is reasonable.
B. Applicable Law
The statutory and regulatory requirements for participation of a SNF in Medicare are
found at section 1819 of the Social Security Act (Act) and at 42 C.F.R. pt. 483. Section

1819(h)(2) of the Act authorizes the Secretary to impose enforcement remedies against a
SNF for failure to comply substantially with the federal participation requirements
established by sections 1819(b), (c), and (d) of the Act.4 The Act requires that the
Secretary terminate the Medicare participation of any SNF that does not return to
substantial compliance with participation requirements within six months of being found
not to be in substantial compliance. Act § 1819(h)(2)(C). The Act also requires that the
Secretary deny payment of Medicare benefits for any beneficiary admitted to a SNF, if
the SNF fails to return to substantial compliance with program participation requirements
within three months of being found not to be in substantial compliance — commonly
referred to as the mandatory or statutory DPNA. Act § 1819(h)(2)(D). The Act grants
the Secretary discretionary authority to terminate a noncompliant SNF’s participation in
Medicare, even if there has been less than 180 days of noncompliance. The Act also
grants the Secretary authority to impose other enforcement remedies, including a
discretionary DPNA, CMPs, appointment of temporary management, and other remedies
such as a directed plan of correction. Act § 1819(h)(2)(B).

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

§ 488.301 (emphasis in original). A deficiency is a violation of a participation
requirement established by sections 1819(b), (c), and (d) of the Act or the Secretary’s
regulations at 42 C.F.R. pt. 483, subpt. B. Noncompliance refers to any deficiency that
causes a facility not to be in substantial compliance. 42 C.F.R. § 488.301. State survey
agencies survey facilities that participate in Medicare on behalf of CMS to determine
whether the facilities are complying with federal participation requirements. 42 C.F.R.
§§ 488.10-.28, 488.300-.335. The regulations specify the enforcement remedies that
CMS may impose if a facility is not in substantial compliance with Medicare
requirements, including a discretionary DPNA. 42 C.F.R. § 488.406.

The Act and regulations make a hearing before an ALJ available to a long-term care
facility against which CMS has determined to impose an enforcement remedy. Act

§§ 1128A(c)(2), 1866(h); 42 C.F.R. §§ 488.408(g), 498.3(b)(13). A facility has a right to
appeal a “certification of noncompliance leading to an enforcement remedy.” 42 C.F.R.
§§ 488 .408(g)(1); 488.330(e), 498.3. However, the choice of remedies, or the factors

* Participation of a NF in Medicaid is governed by section 1919 of the Act. Section
1919(h)(2) of the Act gives enforcement authority to the states to ensure that NFs comply
with their participation requirements established by sections 1919(b), (c), and (d) of the
Act.
CMS considered when choosing remedies, are not subject to review. 42 C.F.R.

§ 488 .408(g)(2). A facility may only challenge the scope and severity level of
noncompliance determined by CMS if a successful challenge would affect the range of
the CMP that may be imposed or impact the facility’s authority to conduct a nurse aide
training and competency evaluation program. 42 C.F.R. § 498.3(b)(14), (16), (d)(10)(i).
The CMS determination as to the level of noncompliance, including the finding of
immediate jeopardy, “must be upheld unless it is clearly erroneous.” 42 C.F.R.

§ 498.60(c)(2); Woodstock Care Ctr., DAB No. 1726 at 9, 38 (2000), aff’d, 363 F.3d 583
(6th Cir. 2003). The Departmental Appeals Board (the Board) has long held that the net
effect of the regulations is that a provider has no right to challenge the scope and severity
level assigned to a noncompliance finding, except in the situation where that finding was
the basis for an immediate jeopardy determination. See, e.g., Ridge Terrace, DAB No.
834 (2002); Koester Pavilion, DAB No. 1750 (2000).

The hearing before an ALJ is a de novo proceeding, that is, “a fresh look by a neutral
lecision-maker at the legal and factual basis for the deficiency findings underlying the
remedies.” Life Care Ctr. of Bardstown, DAB No. 2479 at 33 (2012) (citation omitted).
The Board has long held that the petitioner bears the burden of persuasion to show by a
preponderance of the evidence that it was in substantial compliance with participation
requirements or any affirmative defense. Batavia Nursing & Convalescent Inn, DAB No.
911 (2004); Batavia Nursing & Convalescent Ctr., DAB No. 1904, aff'd, Batavia
Nursing & Convalescent Ctr. v. Thompson, 129 F. App’x 181 (6th Cir. 2005); Emerald
Oaks, DAB No. 1800 (2001); Cross Creek Health Care Ctr., DAB No. 1665 (1998);
Hillman Rehab. Ctr., DAB No. 1611 (1997) (remand to ALJ), DAB No. 1663 (1998)
(after remand), aff’d, Hillman Rehab. Ctr. v. United States, No. 98-3789 (GEB), 1999
WL 34813783 (D.N.J. May 13, 1999). However, only when CMS makes a prima facie
showing of noncompliance, is the facility burdened to show, by a preponderance of the
evidence on the record as a whole, that it was in substantial compliance or had an
affirmative defense. Evergreene Nursing Care Ctr., DAB No. 2069 at 4 (2007).

The standard of proof, or quantum of evidence required, is a preponderance of the
evidence. CMS has the burden of coming forward with the evidence and making a prima
facie showing of a basis for imposing an enforcement remedy. The Board has stated that
CMS must come forward with “evidence related to disputed findings that is sufficient
(together with any undisputed findings and relevant legal authority) to establish a prima
facie case of noncompliance with a regulatory requirement.” Evergreene Nursing Care
Ctr., DAB No. 2069 at 7; Batavia Nursing & Convalescent Ctr., DAB No 1904. “Prima
facie” means generally that the evidence is “[s]ufficient to establish a fact or raise a
presumption unless disproved or rebutted.” Black’s Law Dictionary 1228 (8th ed. 2004).
In Evergreene Nursing Care Ctr., the Board explained its “well-established framework
for allocating the burden of proof on the issue of whether a SNF is out of substantial
compliance” as follows:

CMS has the burden of coming forward with evidence related
to disputed findings that is sufficient (together with any
undisputed findings and relevant legal authority) to establish
a prima facie case of noncompliance with a regulatory
requirement. If CMS makes this prima facie showing, then
the SNF must carry its ultimate burden of persuasion by
showing, by a preponderance of the evidence, on the record
as a whole that it was in substantial compliance during the
relevant period.

DAB No. 2069 at 7.
C. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold text followed by my findings of fact and
analysis. I have carefully considered all the evidence and the arguments of both parties,
though not all may be specifically discussed in this decision. I discuss in this decision the
credible evidence given the greatest weight in my decision-making.° I also discuss any
evidence that I find is not credible or worthy of weight. The fact that evidence is not
specifically discussed should not be considered sufficient to rebut the presumption that I
considered all the evidence and assigned such weight or probative value to the credible
evidence that I determined appropriate within my discretion as an ALJ. There is no
requirement for me to discuss the weight given every piece of evidence considered in this
case, nor would it be consistent with notions of judicial economy to do so. Charles H.
Koch, Jr., Admin. L. and Prac. § 5:64 (3d ed. 2013).

There are two surveys involved in this case, the survey completed on May 28, 2014 and
the survey completed on August 13, 2014. Petitioner was cited with the following
deficiencies that amounted to noncompliance based on the complaint survey completed
on May 28, 2014: 42 C.F.R. §§ 483.10(b)(11) (Tag F157, scope and severity level (s/s)
D®); and 483.25 (Tag F309, s/s H). CMS Exs. 1,5. Petitioner was cited by the survey

> “Credible evidence” is evidence that is worthy of belief. Black’s Law Dictionary 596
(8th ed. 2004). The “weight of evidence” is the persuasiveness of some evidence
compared to other evidence. Id. at 1625.

® Scope and severity levels are used by CMS and a state when selecting remedies. The
scope and severity level is designated by an alpha character, A through L, selected by
CMS or the state agency from the scope and severity matrix published in the SOM, chap.
7, § 7400.5 (Sep. 10, 2010). A scope and severity level of A, B, or C indicates a
deficiency that presents no actual harm but has the potential for minimal harm, which is
(Footnote continued next page.)
completed on August 13, 2014 with five deficiencies all at a scope and severity of D:

42 CFR. § 483.13(c)(2)-(4) (Tag F225); 483.20(d)(3) and 483.10(k)(2) (Tag F280);
483.25 (Tag F309); 483.25(a)(3) (Tag F312) and 483.65 (Tag F441). CMS Exs. 3, 15.
CMS imposed a DPNA based on the noncompliance found by the May 8, 2014 survey.
CMS Ex. 1. CMS determined to continue the DPNA previously imposed beginning June
25, 2014, based on the noncompliance found by the survey that ended on August 13.
CMS Ex. 3.

Under Conclusions of Law | and 2 I discuss that Petitioner failed to request ALJ review
of the determination of noncompliance by the August 13, 2014 survey. The
noncompliance under Tag F225 from the August 13, 2014 survey is an adequate basis for
the imposition of a DPNA from June 25, 2014 through August 26, 2014. Therefore it is
not necessary for me to determine whether or not noncompliance under Tag F157 and
Tag F309 is a basis for the imposition of a DPNA during part of the same period,
specifically June 25, 2014 through June 28, 2014.’

1. The violation of 42 C.F.R. § 483.13(c)(2)-(4) (Tag F225), at scope
and severity of D, cited by the survey that ended August 13, 2014, is
administratively final and binding, and not subject to review by me.

2. The noncompliance under Tag F225 during the period May 26, 2014
through August 26, 2014 is a basis for the imposition of a DPNA for the
period June 25 through August 26, 2014.

A determination by CMS is final and binding unless a timely request for a hearing is
filed. 42 C.F.R. §§ 498.20(b); 498.25(b); 498.32(b). A request for hearing must be filed

(Footnote continued.)

an insufficient basis for imposing an enforcement remedy. Facilities with deficiencies of
a level no greater than C remain in substantial compliance. 42 C.F.R. § 488.301 .A
scope and severity level of D, E, or F indicates a deficiency that presents no actual harm
but has the potential for more than minimal harm that does not amount to immediate
jeopardy. A scope and severity level of G, H, or I indicates a deficiency that involves
actual harm that does not amount to immediate jeopardy. Scope and severity levels J, K,
or L indicate deficiencies that constitute immediate jeopardy to resident health or safety.
The matrix, which is based on 42 C.F.R. § 488.408, specifies which remedies are
required and optional at each level based upon the frequency of the deficiency.

’ Petitioner argues that the DPNA should end on June 28, 2014 because the revisit survey
completed on September 16, 2014, determined that Petitioner corrected the
noncompliance under Tags F157 and F309 effective June 29, 2014. P. Ex. 6 at 4.
within 60 days of receipt of the CMS notice that it is imposing enforcement remedies,
unless that time is extended by the ALJ for good cause shown. 42 C.F.R. § 498.40.
Petitioner does not deny that it received the September 5, 2014 CMS notice that the
August 13, 2014 survey determined that Petitioner was not in substantial compliance and
that the DPNA continued based on that noncompliance. CMS Ex. 3. Petitioner does not
mention the August 13, 2014 survey and the September 5, 2014 notice in its request for
hearing, in its prehearing brief, or in its brief on the merits. I conclude that Petitioner did
not request a hearing, either by filing a new request for hearing or seeking to amend its
previously filed hearing request, related to the alleged noncompliance cited by the survey
completed on August 13, 2014, or the enforcement remedy related to the noncompliance,
specifically the DPNA that was continued.

Of the five deficiency citations by the August 13, 2014 survey, only one alleged
noncompliance beginning on May 26, 2014. The noncompliance cited as a violation of
42 CFR. § 483.13(c)(2)-(4) (Tag F225) at a scope and severity of D alleged that on May
26, 2014, a resident had bruising under the left breast. The surveyors alleged that the
bruising was an injury of unknown origin and, therefore, investigation and reporting were
required by the regulation. The surveyors alleged that the Director of Nursing (DON)
and the Administrator could find no record of an investigation or report to the state and
the Administrator agreed that a report should have been made. CMS Ex. 15 at 4-5. The
surveyors determined that the regulatory violation posed a risk for more than minimal
harm to all of Petitioner’s residents. CMS Ex. 15 at 2. Because Petitioner did not contest
the alleged noncompliance cited under Tag F225, the surveyors’ findings as adopted by
CMS on September 5, 2014 (CMS Ex. 3) are final and binding.

A revisit survey was conducted at Petitioner’s facility on September 16, 2014. The
surveyors determined that Petitioner completed correction of the noncompliance cited
under Tag F225, and all the other Tags cited by the August 13, 2014 survey, on August
27,2014. P. Ex. 6 at 2. Petitioner did not amend its pending request for hearing, file a
new request for hearing, or argue in any of its briefs that I should conclude that it was in
substantial compliance with Tag F225 during the period May 26, 2014 to August 27,
2014. CMS notified Petitioner on October 2, 2014, that it accepted the state agency
finding that Petitioner returned to substantial compliance with Medicare participation
requirements on August 27, 2014, and that the DPNA was imposed for the period June
25, 2014 through August 26, 2014. P. Ex. 7. Petitioner failed to raise any issue as to
whether the noncompliance under Tag F225 was a basis for the imposition of a DPNA or
whether a DPNA was reasonable if based only on noncompliance under Tag F225.

I conclude that the uncontested CMS determination of noncompliance under Tag F225,
which began on May 26, 2014 and continued until corrected on August 27, 2014, was an
independent basis for the DPNA imposed by CMS from June 25, 2014 through August
26,2014. The reasonableness of the DPNA as an enforcement remedy is discussed
hereafter. Because the noncompliance under Tag F225 cited by the August 13, 2014
survey is an adequate basis for the imposition of a DPNA, consideration of the alleged
noncompliance under Tags F157 and F309 challenged by Petitioner is not necessary.
However, I briefly discuss both deficiencies for completeness.

3. CMS has made a prima facie showing that Petitioner violated
42 CFR. § 483.10(b)(11) (Tag F157).

4. The violation of 42 C.F.R. § 483.10(b)(11) posed a risk for more
than minimal harm and amounted to noncompliance.

5. Petitioner has failed to rebut the prima facie showing of
noncompliance or establish an affirmative defense.

Petitioner timely requested a hearing and preserved its right to review of the
noncompliance alleged by the May 28, 2014 survey, specifically the noncompliance cited
under Tags F157 and F309. Both citations involve Resident | and the material facts are
not disputed. It is also not disputed that a revisit survey completed on September 16,
2014, determined that Petitioner corrected the noncompliance under Tags F157 and F309
as of June 29, 2014. P. Ex. 6 at 4. The noncompliance under Tags F157 and F309 could
not have been the basis for the imposition of any enforcement remedy, including the
DPNA, after it was corrected on June 29, 2014. 42 C.F.R. §§ 488 .402(b) (enforcement
remedies applied on the basis of noncompliance), 488.417(a) and (b) (DPNA may be
imposed when a facility is not in substantial compliance), 488.417(c) (payment resumes
when a facility achieves substantial compliance and it can maintain substantial
compliance).

a. Facts

Resident 1 was a 60 year old male at the time of incident that is the subject of the alleged
noncompliance. Resident | suffered from diabetes, end-stage renal disease, acute renal
failure, and he required regular dialysis. CMS Ex. 12 at 3, 35-52.

Resident 1 received dialysis three times each week on Tuesday, Thursday, and Saturday.
He was scheduled to be picked up from the facility at 6:00 a.m., to arrive at the dialysis
clinic at 6:45 a.m., and get his dialysis treatment from 7:00 a.m. until 10:30 a.m. and then
be picked up from the dialysis clinic at 10:45 a.m. for return to the facility. CMS Ex. 12
at 55. On Saturday May 17, 2014, Resident 1 was scheduled to be transported to the
dialysis clinic. The arrangements for transportation were made by the Veteran’s
Administration (VA) through Core Transit. Because Resident | had refused
transportation to dialysis by the VA on a previous occasion, the VA cancelled Resident
1’s transportation on May 17 and did not notify Petitioner of the cancellation. P. Br. at 3.
At 9:05 a.m., the DON received a text message from Resident 1’s nurse that Resident 1
did not have a ride to his dialysis appointment. The DON told the nurse to find a staff
10

member to take Resident | to his dialysis appointment. Resident 1’s nurse indicated that
the dialysis center would close shortly and that it was too late to take Resident 1. It is
undisputed that Resident 1 failed to receive dialysis on May 17, 2014. The facility staff
contacted the dialysis clinic, which is directed by a nephrologist, and received
instructions to monitor Resident 1 for signs and symptoms of fluid overload and to send
the resident to the hospital if such symptoms were identified. P. Ex. 8 at 78-79.

Petitioner points to no evidence that Petitioner made any effort on May 17, May 18, or
May 19 to arrange for Resident | to receive dialysis. The next regularly scheduled
dialysis appointment was not until Tuesday, May 20, 2014. When Resident | exhibited
symptoms of fluid overload on May 18, Petitioner contacted Resident 1’s physician and
made multiple attempts to transfer Resident 1 to the emergency room, however Resident
1 refused. Petitioner’s staff noted that Resident | refused to allow Petitioner to contact
his wife. CMS Ex. 12 at 64; P. Ex. 8 at 3.

On May 19 Resident 1 was transported to the emergency room due to edema, confusion,
and decreased level of consciousness. CMS Ex. 12 at 5, 66; P. Ex. 8 at 11. Shortly after
arriving in the emergency room, Resident | experienced respiratory failure and was
intubated. CMS Ex. 12 at 9. Resident 1 was assessed in the emergency room as
suffering an acute exacerbation of chronic renal failure and acute volume overload with
acute carbon dioxide narcosis. CMS Ex. 12 at 9. The surveyors attributed Resident 1’s
decline to his failure to receive dialysis on May 17,2014. CMS Ex. 5. Petitioner has not
presented evidence to show that Resident 1’s decline in his condition was not due to the
missed dialysis on May 17, 2014.

There is no evidence and Petitioner does not assert that Resident 1’s family or physician
were immediately notified or consulted on May 17, 2014, when the resident missed his
dialysis appointment. CMS Ex. 12 at 1-96. The evidence shows that Resident 1’s
physician was not consulted until May 18, 2014, when Resident 1’s physician ordered
that the resident be sent to the emergency room. P. Ex. 8 at 3.

b. Analysis

I conclude that CMS made a prima facie showing that Petitioner violated 42 C.F.R.
§ 483.10(b)(11) in the case of Resident 1 and that the violation posed a risk for more than
minimal harm. I further conclude that Petitioner failed to rebut the prima facie showing.

A long-term care facility is required to recognize certain resident rights specified by the
Act and the Secretary’s regulations. Section 483.10(b)(11)(i) of 42 C.F R. entitled
“Resident rights” requires:

(11) Notification of changes. (i) A facility must immediately inform
the resident; consult with the resident’s physician; and if known,
11

notify the resident’s legal respresentative (sic) or an interested
family member when there is —

(A) An accident involving the resident which results in injury
and has the potential for requiring physician intervention;

(B) A significant change in the resident’s physical, mental, or
psychosocial status (i.e., a deterioration in health, mental, or
psychosocial status in either life-threatening conditions or
clinical complications);

(C) A need to alter treatment significantly (i.e., a need to
discontinue an existing form of treatment due to adverse
consequences, or to commence a new form of treatment); or

ision to transfer or discharge the resident from the
facility as specified in Sec. 483.12(a).

42 CFR. § 483.10(b)(11)(i). The language of the regulation is very specific that the
facility “must immediately inform the resident; consult with the resident’s physician;
and .. . notify the resident’s legal respresentative (sic) or an interested family member.”
42 C.F.R. § 483.10(b)(11)(i) (emphasis added). The regulation creates a distinction
between informing the resident and family and the requirement that Petitioner “must
immediately . .. consult with the resident’s physician” when there is: a significant
change in the resident’s physical, mental, or psychosocial status (meaning a deterioration
in the resident’s condition); an accident that may require physician intervention; a need to
alter treatment; or a decision to transfer or discharge the resident to another facility or
institution. Id. (emphasis added). It is clear from the regulatory language that the
requirement to consult is not discretionary and requires more than merely informing or
notifying the physician. The preamble to the final rule reflects the drafters’ specific
intention that the facility should “inform” the resident of the changes that have occurred
but should “consult with the physician about actions that are needed.” 56 Fed. Reg.
48,826, 48,833 (Sept. 26, 1991).

Thus, it is clear from the language of the regulation and its history that the requirement of
the regulation to consult with the physician means more than to simply notify the
physician. Consultation implies the requirement for a dialogue with and a responsive
directive from the resident’s physician as to what actions are needed; it is not enough to
merely notify the physician. Nor is it enough to leave a message for the physician. The
regulation also requires notification and consultation “immediately” upon perceiving a
change in condition of the resident, the occurrence of an accident that may require
physician intervention, or the occurrence of any of the other triggers in the regulation.
The use of the term “immediately” in the regulatory requirement indicates that
12

consultation is expected to be done as soon as the change is detected, without any
intervening interval of time. It does not mean that the facility can wait hours or days
before notification of the resident and his or her representative and consultation with the
physician. The preamble to the final rule indicates that originally the proposed rule
granted the facility up to 24 hours in which to consult with the resident’s physician and to
notify the legal representative or family. However, after the receipt of comments that
time is of the essence in such circumstances, the final rule amended that provision to
require that the physician be consulted and the legal representative or family be notified
immediately. 56 Fed. Reg. 48,826, 48,833 (Sept. 26, 1991). The point of using the word
“immediately” is to recognize that in such situations, a delay could result in a situation
where a resident is beyond recovery or dies. The Board has been consistent in its
interpretation of the regulation that consultation with a physician must occur
immediately, that is, without delay, after a significant change is detected or observed.
Magnolia Estates Skilled Care, DAB No. 2228 at 9 (2009).

Furthermore, if we balance the relative inconvenience to a physician and the facility staff
to consult with the possibility for dire consequences to the resident if the physician is not
consulted, it seems that any inconvenience certainly is inconsequential and outweighed
by the potential for significant harm if the facility fails to consult the physician. The
regulation is entitled “Resident rights,” and the requirements of this specific regulation
provide that every resident has the right to a dignified existence and access to and
communication with persons and services inside and outside the facility. Therefore, the
regulatory requirements make inconsequential any inconvenience under the regulation to
the resident’s physician or the facility staff when compared to the protection and
facilitation of the rights of the resident. See 56 Fed. Reg. 48,826, 48,834. Finally, the
regulation does not allow the facility to pick and choose whom to notify and whom to
consult. Rather, it requires the facility to immediately inform the resident, consult the
physician, and notify the resident’s legal representative or interested family member. The
regulation also directly burdens the facility to consult and notify and does not permit a
facility to rely upon a notification or consultation being accomplished by the resident or a
third party such as an emergency room.

The surveyors allege in the SOD for the survey completed on May 28, 2014, that
Petitioner violated 42 C.F.R. § 483.10(b)(11) (Tag F157) because Petitioner’s staff failed
to notify the family and consult with Resident 1’s physician when Resident 1 missed a
scheduled dialysis treatment. CMS Ex. 5 at 2. It is undisputed that Resident 1 was
ordered to have dialysis three times a week, Tuesday, Thursday, and Saturday, because of
his renal failure and end-stage renal disease. It is also undisputed that Resident 1 missed
his dialysis appointment on May 17, 2014. It is also undisputed that Petitioner failed to
immediately consult with Resident 1’s physician and failed to notify Resident 1’s family
of the missed dialysis appointment until shortly before Resident 1 was sent to the hospital
approximately 48 hours after his missed appointment. The missed dialysis appointment
on Saturday, May 17, triggered the need to alter Resident 1’s treatment significantly
13

within the meaning of 42 C.F.R. § 483.10(b)(11)(i)(C). The Tuesday, Thursday,
Saturday, schedule reflected the physician’s determination that the resident could go
without dialysis for up to three days, e.g., Saturday to Tuesday. Because of the missed
dialysis appointment the resident would be without dialysis for at least five days until his
next appointment, exceeding the maximum three days ordered by the physician.
Therefore, Petitioner needed to have Resident 1’s dialysis schedule altered significantly
to permit dialysis or, at minimum, physician intervention to determine how best to
address the situation.

Due to Resident 1’s renal failure and end-stage renal disease, Resident 1 was at risk for
more than minimal harm due to the missed dialysis appointment as determined by the
surveyors. The action of Petitioner’s staff reflects that there was a known risk to
Resident 1 prompting the call to the dialysis center to receive instructions. The
instructions received by staff further reflect the risk for more than minimal harm, as those
instructions were for staff to monitor Resident | for signs and symptoms of fluid overload
and to send the resident to the hospital if such symptoms were present. P. Ex. 8 at 78-79.
The evidence shows that Petitioner’s staff did not immediately consult with Resident 1’s
physician to determine what alterations in Resident’s | treatment were needed as a result
of the missed dialysis treatment. I conclude that the undisputed facts constitute a prima
facie showing of noncompliance based on a violation of 42 C.F.R. § 483.10(b)(11) and
there was more than minimal harm due to the violation. The surveyors alleged a scope
and severity level of D for Tag F157, that is, there was a risk for more than minimal harm
without actual harm or immediate jeopardy. The facts support a finding that Resident |
suffered actual harm and possibly even immediate jeopardy because Resident was sent to
the emergency room, experienced respiratory failure shortly after arrival in the
emergency room, and had to be intubated. However, it is not necessary for me to
conclude that there was either actual harm or immediate jeopardy to conclude that there
was noncompliance. It is enough for me to conclude that there was a risk for more than
minimal harm.

Petitioner failed to rebut CMS’s prima facie case. Petitioner argues that missing Resident
1’s dialysis appointment was not Petitioner’s fault because the VA cancelled the Resident
1’s transportation arrangements without notifying Petitioner that it would be doing so.

By the time Petitioner realized that the VA would not be transporting Resident | to his
dialysis appointment, Petitioner argues it was too late to provide alternate transportation
because the dialysis center would be closing soon. For purposes of this deficiency, the
reason Resident | missed his appointment is irrelevant. What is relevant is whether
Petitioner immediately consulted with Resident’s 1’s physician. The evidence shows that
Resident 1’s physician was not immediately consulted on May 17 when Resident 1
missed his dialysis. In fact, the resident’s physician was not notified until May 18, 2014,
when staff consulted the physician and he ordered that the resident be sent to the hospital.
CMS Ex. 12 at 64; P. Ex. 8 at 3. Resident | refused to go to the hospital on May 18,
2014, and there is no evidence that the physician was consulted at that time. On May 19,
14

2014, when the resident became less responsive, Petitioner’s records show that staff then
sent the resident to the emergency room based on the order given on May 18. CMS Ex.
12 at 66; P. Ex. 8 at 11.

Petitioner argues that the dialysis clinic had a nephrologist and that the nephrologist

would have been aware that Resident 1 had missed his appointment. P. Br. at 7.
Petitioner fails to show however, that the dialysis clinic nephrologist had any treating
relationship with Resident 1. A dialysis facility must have a medical director trained in
nephrology and the director must have at least 12 months of experience. 42 C.F.R.

§ 494.140(a). The medical director’s responsibilities are administrating the dialysis
clinic not being the treating physician for all of the dialysis patients. 42 C.F.R.

§ 494.150. Petitioner’s argument fails because the regulation clearly states that
Petitioner must consult with the “resident’s physician,” a physician who is intimately
aware of the resident’s complete medical history and condition, not the director of a
dialysis center who has no treating relationship with Resident 1. There is no dispute that
Petitioner’s staff did not immediately consult on May 17, 2014, with Resident 1’s treating
physician about the resident’s missed dialysis appointment. CMS Ex. 12 at 64, 76; CMS
Ex. 5 at 3.

Petitioner also argues that Resident | refused to allow contact with his family. The
evidence shows that the question of whether or not to contact family did not arise until
May 18, after the physician was consulted and ordered that the resident be sent to the
hospital. Therefore, the evidence does not support an argument that the resident
prevented immediate family contact. More important is the fact that the resident did not
prevent immediate consultation with his physician which is sufficient to support the
conclusion that there was noncompliance under Tag F157.

6. CMS has made a prima facie showing that Petitioner violated
42 CFR. § 483.25 (Tag F309).

7. The violation of 42 C.F.R. § 483.25 posed a risk for more than
minimal harm and amounted to noncompliance.

8. Petitioner has failed to rebut the prima facie showing of
noncompliance under Tag F309 or establish an affirmative defense.

a. Facts
This deficiency is cited based on the facts already set forth related to Resident 1.
b. Analysis

The regulation requires that:
15

Each resident must receive and the facility must provide the
necessary care and services to attain or maintain the highest
practicable physical, mental, and psychosocial well-being, in
accordance with the comprehensive assessment and plan of
care.

42 CFR. § 483.25.

The surveyors allege that Petitioner failed to ensure that Resident 1 received
transportation to a scheduled dialysis appointment which resulted in actual harm to
Resident 1. The surveyors allege that due to the missed dialysis appointment on May 17,
2014, the resident had to be sent to the emergency room on May 19, 2014 due to a
decreased level of consciousness, increased confusion, and possible fluid overload. The
resident had to be intubated at the hospital. CMS Ex. 5.

CMS alleges under Tag F309 that Petitioner violated the quality of care requirement by
failing to immediately address Resident 1’s need for dialysis when it was determined that
he missed his scheduled dialysis on May 17,2014. The evidence that a physician ordered
certain care and services triggers a rebuttable presumption that the care and services
ordered are necessary care and services within the meaning of 42 C.F.R. § 483.25. The
absence of evidence, such as documentation or testimony of the care giver, that ordered
care and services were actually delivered, triggers an inference that care or services were
not provided as ordered. There is no dispute that the dialysis was a necessary care or
service ordered by Resident 1’s physician. There is no dispute that Resident | did not
receive dialysis on May 17. There is no dispute that Petitioner’s staff did not consult
Resident 1’s physician for orders on how the resident’s care needed to be changed in light
of the missed dialysis appointment. Ultimately, the missed dialysis required Resident 1’s
hospitalization on May 19, 2014, due to his decreased level of consciousness, confusion,
and possible fluid overload, symptoms I conclude reflect actual harm. Accordingly, I
conclude CMS has made a prima facie showing of a violation of 42 C.F.R. § 483.25
which amounted to noncompliance.

The burden is upon Petitioner to rebut the CMS prima facie showing or to establish an
affirmative defense. The quantum of evidence required is a preponderance of the
evidence. Petitioner’s defense is that it was not its fault that the transport was cancelled.
Petitioner argues that the transportation company cancelled Resident 1’s transportation
due to Resident 1’s noncompliant behavior prior to May 17, 2014 and had not informed
Petitioner of the cancellation. P. Br. at 3, 6. This argument does not excuse Petitioner’s
failure to deliver necessary care and services. Petitioner’s obligation to provide care and
services remained even if Resident 1’s transportation arrangements fell apart through no
fault of the facility. Further, Petitioner’s staff was aware that the resident missed his
appointment on May 17, 2014, but waited until May 18, 2014 ,, when the resident started
16

to display symptoms of possible fluid overload, to contact the resident’s physician for
orders.

Petitioner asserts that Resident | was noncompliant with regard to receiving care,
including dialysis treatment and transport to dialysis, refused to be taken to the hospital
for treatment, and refused to allow the facility to contact his wife to update her on his
condition. A resident has the right to refuse treatment. 42 C.F.R. § 483.10(b)(4).
However, this is not a case where the resident refused dialysis. In this case the resident’s
transportation was cancelled and Petitioner failed to ensure that the resident was provided
alternative means to timely obtain dialysis or other treatment ordered by the resident’s
physician. “Whether a facility employs its own staff and equipment or contracts for
services and equipment to provide care and services, the regulatory obligation . . .
remains with the facility.” Ft. Madison Health Ctr., DAB No. 2403 at 9 (2011).

9. The duration of the DPNA from June 25, 2014 through August 26,
2014 is reasonable.

Ihave concluded that Petitioner was not in substantial compliance from May 26, 2014
through August 26, 2014. Ifa facility is not in substantial compliance with program
participation requirements, CMS has the authority to impose one or more of the
enforcement remedies listed in 42 C.F.R. § 488.406, including a discretionary DPNA.
CMS had authority to impose a discretionary DPNA because Petitioner was not in
substantial compliance, and I have no authority to review the choice of that remedy.

42 CFR. § 488.408(g)(2). A DPNA may be imposed for the period during which a SNF
is not in substantial compliance. 42 C.F.R. §§ 488.402(b) (enforcement remedies applied
on the basis of noncompliance), 488.417(a) and (b) (DPNA may be imposed when a
facility is not in substantial compliance), 488.417(c) (payment resumes when a facility
achieves substantial compliance and it can maintain substantial compliance). CMS was
authorized to impose a DPNA and the duration of the DPNA from June 25, 2014 through
August 26, 2014 is reasonable as a matter of law.

III. Conclusion

For the foregoing reasons, Petitioner was not in substantial compliance with program
participation requirements from June 25, 2014 through August 26, 2014 and there is a
basis for the imposition of the enforcement remedy, a DPNA, from June 25, 2014
through August 26, 2014.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Angela J. Whitman,

(O.1. File No. H-15-4-0469-9),
Petitioner,

v.

The Inspector General.

Docket No. C-15-2446
Decision No. CR4322

Date: October 15, 2015

DECISION

Petitioner, Angela J. Whitman, worked as a nurse at a regional medical center in
Colorado. She stole the narcotic Fentanyl from her employer and was convicted of
unlawful possession of a controlled substance. Pursuant to section 1128(a)(3) of the
Social Security Act (Act), the Inspector General (IG) has excluded her from participating
in Medicare, Medicaid, and all federal health care programs for a period of five years.

For the reasons discussed below, I find that the IG is authorized to exclude Petitioner, and
that the statute mandates a minimum five-year exclusion.

Background
In a letter dated April 30, 2015, the IG advised Petitioner Whitman that, because she had

been convicted of a felony offense related to fraud, theft, embezzlement, breach of
fiduciary responsibility or other financial misconduct in connection with the delivery of a
healthcare item or service, the IG was excluding her from participating in Medicare,
Medicaid, and all federal health care programs for a period of five years. Petitioner
requested review.

The parties have submitted their written arguments. (IG Br.; P. Br.). Attached to
Petitioner’s brief is a typed attachment. (P. Attach.). With his brief, the I.G. submitted
seven exhibits (IG Exs. 1-7); Petitioner submitted five exhibits (P. Exs. 1-5). The IG
submitted a reply. In the absence of any objections, I admit into evidence I.G. Exs. 1-7
and P. Exs. 1-5.

The parties agree that an in-person hearing is not necessary. IG Br. at 4; P. Attach. at 2.
Discussion

Petitioner must be excluded from program participation for
a minimum of five years because she was convicted of a
felony relating to fraud and theft in connection with the
delivery of a healthcare item or service.!

Section 1128(a)(3) provides that an individual or entity convicted of felony fraud, theft,
embezzlement, breach of fiduciary responsibility, or other financial misconduct in
connection with the delivery of a health care item or service must be excluded from
participation in federal health care programs for a minimum of five years. See 42 C.F.R.
1001.101(c).

Petitioner Whitman was a nurse at a regional medical center and had access to the
center’s narcotics. She appropriated the narcotic drug, Fentanyl, claiming that she was
administering it to patients. In fact, she was using it for herself. 1.G. Ex. 7. She was
charged with felony counts of possessing a controlled substance, obtaining a controlled
substance by fraud or deceit, and theft. IG Ex. 6. She pled guilty to one felony count of
possessing a controlled substance. IG Exs. 2,4, 5. On October 30, 2014, the Colorado
court entered a deferred judgment against her, sentenced her to 50 hours of community
service, and ordered her to pay $ 4,716.50 in fines and costs. IG Exs. 1,3, 4.

Petitioner’s felony conviction was thus plainly related to theft and fraud in connection
with the delivery of a health care item (drugs). She stole narcotics from her employer
(and patients) and fraudulently claimed that she was administering them to the patients
who needed them. I.G. Ex. 7 at 2; see I.G. Ex. 6; .G. Ex. 4 at 2,5. She is therefore
subject to exclusion.

' IT make this one finding of fact/conclusion of law.
Petitioner, however, argues that the deferred judgment was not a conviction so long as
she complied with the probation agreement.

Under the Act and regulations, a person is “convicted” when “a judgment of conviction
has been entered” regardless of whether that judgment has been expunged or otherwise
removed. Act § 1128(i)(1); 42 C.F.R. § 1001.2(a)(2). Further, individuals who
participate in “deferred adjudication or other program or arrangement where judgment of
conviction has been withheld” are also “convicted” within the meaning of the statute.
Act § 1128(4)(4); 42 C.F.R. § 1001.2(definition of convicted at (d)). Based on these
provisions, the Departmental Appeals Board (Board) characterizes as “well established”
the principle that a “conviction” includes “diverted, deferred and expunged convictions
regardless of whether state law treats such actions as a conviction.” Henry L. Gupton,
DAB No. 2058 at 8 (2007), aff’d sub nom. Gupton v. Leavitt, 575 F. Supp. 2d 874 (E.D.
Tenn. 2008).

The Board explained why, in these I.G. proceedings, the federal definition of
“conviction” must apply. That definition differs from many state criminal law
definitions. For exclusion purposes, Congress deliberately defined “conviction” broadly
to ensure that exclusions would not hinge on the state criminal justice policies. Quoting
the legislative history, the Board explained:

The rationale for the different meanings of “conviction” for
state criminal law versus federal exclusion law purposes
follows from the distinct goals involved. The goals of
criminal law generally involve punishment and rehabilitation
of the offender, possibly deterrence of future misconduct by
the same or other persons, and various public policy goals.
[footnote omitted] Exclusions imposed by the I.G., by
contrast, are civil sanctions, designed to protect the
beneficiaries of health care programs and the federal fisc, and
are thus remedial in nature rather than primarily punitive or
deterrent... . In the effort to protect both beneficiaries and
funds, Congress could logically conclude that it was better to
exclude providers whose involvement in the criminal system
raised serious concerns about their integrity and
trustworthiness, even if they were not subjected to criminal
sanctions for reasons of state policy.

Gupton, DAB No. 2058, at 7-8.
Petitioner also explains that she took the drugs because she was addicted to them. Since
her conviction, she has successfully undergone drug treatment and complied fully with
the conditions of her probation. I accept these assertions as true; however they are not
bases for overturning a mandatory exclusion.

Because Petitioner’s conviction falls squarely within the statutory and regulatory
definition of “conviction,” she is subject to exclusion. An exclusion brought under
section 1128(a)(3) must be for a minimum period of five years. Act § 1128(c)(3)(B); 42
C.F.R. § 1001.2007(a)(2).

Conclusion

For these reasons, I conclude that the I.G. properly excluded Petitioner from participation
in Medicare, Medicaid and all federal health care programs, and I sustain the five-year
exclusion.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Care Pro Home Health, Inc.
(NPI: 1023278686;
PTAN: 74-7693),
Petitioner,
v.
Centers for Medicare & Medicaid Services.

Docket No. C-15-1362
Decision No. CR4321

Date: October 15, 2015

DECISION

The Centers for Medicare & Medicaid Services (CMS) revoked the Medicare enrollment

and

illing privileges of Care Pro Home Health, Inc. (herein “Petitioner”) after it

concluded that Petitioner was not operational at the practice location on file with CMS

and

its administrative contractor, Palmetto GBA. The CMS Provider Enrollment

Oversight Group upheld the revocation in a reconsidered determination, and Petitioner
requested a hearing to dispute the revocation. I affirm CMS’s revocation of Petitioner’s

Me

icare enrollment and billing privileges.

I. Background

Petitioner is a home health agency that was enrolled as a provider of services in the

Me

licare program. CMS Exhibit (Ex.) 1 at 1,8. Palmetto GBA, in a November 4, 2014

letter, informed Petitioner that its Medicare billing privileges were revoked retroactively
to July 16, 2014. CMS Ex. 3. Palmetto explained the following in its letter:
CMS has determined, upon on-site review, that Care Pro
Home Health Inc. is no longer operational to furnish
Medicare covered items or services and is not meeting
Medicare enrollment requirements under statute or regulation
to supervise treatment of or to provide Medicare covered
items or services for Medicare patients. On July 16, 2014 a
site visit was conducted at 205 Oleander Dr. Desoto, TX
75115-1470. It was found that Care Pro Home Health Inc. is
no longer operating from this location.

CMS Ex. 3 at 1.

On November 11, 2014, Petitioner requested reconsideration of the revocation, at which
time Petitioner explained: “We are sorry that we forgot to notify Palmetto GBA/CMS of
the change in facility address” and “we regret to realize that we failed to notify CMS of
our change of address when we moved to a medical office building in [the] city of
Lancaster on Nov[ember] 4, 2013.” CMS Ex. 1 at 6. Petitioner sent the correspondence
on letterhead containing the Desoto, Texas address, but Petitioner also included the new
facility address in Lancaster at 2700 W. Pleasant Run Road, # 380, Lancaster, Texas. In
its correspondence, Petitioner stated that it had notified the Texas Department of Aging
and Disability Services (DADS) thirty days in advance of its relocation. CMS Ex. | at 6.
Petitioner submitted with its reconsideration request a Notification of Change issued by
DADS, dated November 14, 2014, showing that its change of address from the Desoto,
Texas address to the Lancaster, Texas address, was effective October 25, 2013.' CMS
Ex. | at 10. Petitioner also submitted a copy of its lease for the new location in
Lancaster, Texas, along with a November 5, 2014 “Web Submission History Report”
from the Provider Enrollment, Chain and Ownership System showing an activity
description that “Provider is Reactivating a Deactivated Medicare Enrollment Record.”
CMS Ex. | at 11-14; P. Ex. 3.

CMS’s Provider Enrollment Oversight Group issued a reconsidered determination on
December 19, 2014, that determined that the Desoto, Texas location was
“nonoperational” at the time of a site visit on July 16, 2014, and listed the basis for
revocation as “42 C.F.R. § 424.535(a)(5): On-site Review.” CMS Ex. | at 1. The
reconsidered decision acknowledged that Petitioner contended that it had informed
DADS of its new location, but explained that the provider did not attempt submission of a

' The evidence regarding the precise date of the change of address is inconsistent.
Petitioner submitted a declaration of Eucharia Pitts, the owner and chief financial officer
of Petitioner, that indicates that Petitioner relocated on October 25, 2013. P. Ex. 1.
However, in its reconsideration request, Petitioner contended that it relocated on
November 4, 2013. P. Ex. 6. This slight discrepancy regarding the date Petitioner
relocated is not material to the issue before me.
new form CMS-85SA to Palmetto GBA until November 18, 2014, which is well after the
failed attempt at an on-site visit and determination that the facility at the location of the
on-site visit was not operational. CMS Ex. | at 1.

On February 17, 2015, Petitioner requested an administrative law judge hearing to
dispute the revocation of its Medicare enrollment and billing privileges.

In an order dated March 9, 2015, Administrative Law Judge Keith W. Sickendick, who
presided over this case prior to its reassignment to me on September 9, 2015, directed the
parties to submit pre-hearing briefs addressing all issues of law and fact, along with any
proposed exhibits. The order advised each party to provide a list of any witnesses it
proposes to call at an oral hearing if oral hearing is not waived.

CMS submitted its pre-hearing brief, along with four proposed exhibits. Petitioner
submitted twelve proposed exhibits with its pre-hearing brief and a motion for summary
judgment.” CMS and Petitioner submitted several identical documents, and for
identification purposes, duplicative exhibits will be referred to herein only by the exhibit
numbers furnished by CMS.

CMS objects to the admission of a portion of P. Ex. 2 and the entirety of P. Exs. 5,7, 8,
and 10 as inadmissible new evidence. For reasons that will be discussed below, I exclude
P. Ex. 2 in its entirety, and P. Exs. 5,7, 8, and 10. Additionally, I find that P. Ex. 12 is not
properly treated as evidence; I take judicial notice of but will not admit P. Ex. 12 as
evidence. In the absence of further objections, I admit into evidence CMS Exs. 1-4 and
P. Exs. 1,3,4,6,9, and 11.

CMS has not requested an in-person hearing to cross-examine any witnesses. Petitioner
initially expressed a desire to cross-examine Tanesha Norman, a provider enrollment
manager who supplied a declaration that was submitted by CMS at CMS Ex. 4. See
Petitioner’s May 8, 2015 Request to Cross Examine CMS’s Witness. However, the
parties subsequently and jointly reported, in a July 2, 2015, status report, that Petitioner
waived a video teleconference hearing. The parties also requested that Administrative
Law Judge Sickendick allow them an opportunity to submit additional briefing. Joint
Status Report, submitted July 2,2015. A July 9, 2015 Order by Administrative Law
Judge Sickendick directed a briefing schedule and indicated that the case would be
decided on the record if it was determined that an oral hearing is unnecessary. Petitioner
and CMS filed their briefs (Pet. Br. and CMS Br.) on August 7 and 8, 2015, respectively.*

2 Inaruling dated June 5, 2015, Administrative Law Judge Sickendick denied
Petitioner’s motion for summary judgment.

> Along with its brief, Petitioner submitted Petitioner’s Proposed Findings of Fact and
Conclusions of Law.
On August 17, 2015, Petitioner filed an Objection to CMS’s Evidence in which it
objected to the Declaration of Tanesha Norman that was submitted on April 8, 2015.4
Both parties filed reply briefs (CMS Reply and P. Reply) on September 4, 2015.

I consider the record in this case to be closed, and the matter is ready for a decision on the
merits. See Civil Remedies Division Procedures (CRDP) §§ 19(c), (d).

II. Issue

Whether CMS has a legitimate basis to revoke Petitioner’s Medicare enrollment and
billing privileges because Petitioner was not operational at the practice location on file
with CMS when an inspector attempted to conduct a site visit.

III. Jurisdiction

Ihave jurisdiction to decide this case. 42 C.F.R. §§ 405.803(a), 424.545(a)(1),
498 .3(b)(17), 498.5(1)(2); see also 42 U.S.C. § 1395cc(j)(8).

IV. Findings of Fact, Conclusions of Law, and Analysis”

To participate in the Medicare program as a provider, a provider must complete a form
CMS-855A enrollment application, which requires disclosure of the provider’s address.
See 42 C.F.R. § 424.510(a). Once enrolled, a provider must report, within 90 days, any
changes in its enrollment information, including its address. 42 C.F.R. § 424.516(e)(2).
CMS may require periodic revalidations and perform site visits to verify the provider’s
enrollment information, the provider’s compliance with Medicare enrollment
requirements, and that the provider is operational. 42 C.F.R. §§ 424.510(d)(8),
424.515(c), 424.517(a). If CMS determines that a provider is not operational, then CMS
may revoke the provider’s Medicare enrollment and billing privileges retroactive to the
date that CMS determined that the provider was not operational. 42 C.F.R.

§§ 405.800(b)(2), 424.535(a)(5)(i), (g).

1. Petitioner has not shown good cause for offering new
documentary evidence that it did not submit at the initial

* T observe that Petitioner, in its objection, incorrectly asserts that “CMS did not file an
opening brief or additional evidence pursuant to [Judge Sickendick’s July 9, 2015]
order.” This statement is patently incorrect, as CMS filed a timely opening brief on
August 8, 2015.

° My numbered findings of fact and conclusions of law appear in bold and italics.
or reconsideration determination phases, and there is no
basis to admit this evidence into the record.

Petitioner submitted five proposed documentary exhibits (P. Exs. 2,5, 7,8, and 10) that it
did not previously submit at either the initial or reconsideration determination levels. In
addition, Petitioner submitted another proposed exhibit (P. Exs. 12) that is not
appropriately treated as “evidence.”® These six proposed exhibits will not be admitted
into the record.

Petitioner submitted the following documents that were not previously submitted: P. Ex.
2 (described as “DADS Change of Address License”); P. Ex. 5 (described as a “Notice of
Overpayment’); P. Ex. 7 (described as “DADS Relocation CMS Approval Letter’); P.
Ex. 8 (described as “Palmetto Update Address Letter’’); and P. Ex. 10 (described as
“Letter to CMS Deputy Regional Administrator David R. Wright”).

CMS argues that Petitioner did not previously submit these documents and that Petitioner
has not shown good cause for failing to present them earlier, as required by 42 C.F.R.

§ 498.56(e). CMS’s Objections to Petitioner’s Exs. I find the bases for the objections to
be persuasive.

I must examine new documentary evidence that is offered by a provider or supplier and
determine whether good cause exists for receiving that evidence. 42 C.F.R.

§ 498.56(e)(1). I must exclude any new documentary evidence at the administrative law
judge level of appeal if I do not find good cause for Petitioner’s failure to offer that
evidence at the initial or reconsideration determination levels. 42 C.F.R.

§ 498.56(e)(2)(ii). While “good cause” is not defined in the regulations, the term has
been interpreted to mean an event beyond a party’s control that prevents the party from
offering the evidence timely. See, e.g., City Crown Home Health Agency, Inc., DAB
CR3130 at 4 (2014). With regard to P. Ex. 2, CMS has objected to pages 2 through 4 of
that proposed exhibit. As a preliminary matter, I observe that, page | of that proposed
exhibit has been admitted into evidence as CMS Ex. | at 10. However, the copy of the
document that has been admitted does not bear the handwritten markings that appear on
page | of Petitioner’s proposed exhibit. On its exhibit list, CMS described CMS Ex. 1 as
“Reconsideration decision dated December 19, 2014 with evidence considered by the
hearing officer.” Petitioner did not object to this description. As such, page | of P. Ex. 2

6 I do not consider P. Ex. 11 to constitute evidence. However, the excerpt from Chapter
15 of the Medicare Program Integrity Manual submitted as P. Ex. 11 differs from the
current online version of the same manual, and therefore I have admitted it into evidence.
The current online version of the Medicare Program Integrity Manual can be found at
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads
/pim83c15.pdf (last visited October 9, 2015).
is not a verbatim copy of the document that was provided to CMS at the time of the
request for reconsideration, and I will not admit it into evidence. With regard to pages 2
through 4 of P. Ex. 2, those pages pertain to a paperwork and payment submitted to
DADS for a change of address that was reported on September 23, 2013, which pre-dates
the date of the request for reconsideration by more than one year. Therefore, the dates of
the documents clearly suggest that they were in existence at the time of the initial and
reconsidered determinations. Petitioner has not alleged any factor amounting to good
cause for why it did not submit pages 2 through 4 earlier, and I see no basis to find good
cause to allow the submission of documents that were in existence prior to the initial and
reconsidered determinations.

With respect to P. Exs. 2,5, 7,8, and 10, Petitioner argues that “[t]he evidence was not
available at the time the request for reconsideration was filed, and only become [sic]
relevant after the reconsideration decision was issued and during the federal district court
litigation with CMS and Palmetto.” Petitioner’s Motion and Notice of Motion for
Summary Judgment at 3. Petitioner alleges that these exhibits were submitted because
“[oJnly recently and after the reconsideration request was submitted did CMS begin to
allege the provider’s noncompliance with 42 C.F.R. § 424.516(e) or the Petitioner’s
alleged failure to update address records with Palmetto.”” Id. Noncompliance with 42

§ 424.516(e) was not the basis for the revocation of Petitioner’s billing privileges; rather,
an inability by CMS to perform an unannounced on-site review, pursuant to 42 C.F.R.

§ 424.535(a)(5), was the basis for the revocation. Pursuant to 42 C.F.R. § 498.5(1) and
(2), an entity that is dissatisfied with a reconsidered determination is entitled to a hearing
before an administrative law judge, and the last determination of CMS or its agent,
namely the reconsidered determination, is the determination that is subject to
administrative law judge review. See Neb Group of Arizona LLC, DAB No. 2573 at 7
(2014); Benson Ejindu, d/b/a Joy Medical Supply, DAB No. 2572 at 5 (2014) (the
reconsideration determination is the agency action that is subject to review). Thus, even
if CMS now alleges, as Petitioner asserts, that Petitioner’s billing privileges should be
revoked on a different basis than was found in the reconsidered determination, I will limit

7 Petitioner’s allegation that the issue of its failure to update its enrollment was not raised
until after the reconsideration request is simply untrue. In its November 11, 2014 request
for reconsideration, Petitioner brought this issue to the attention of CMS. Specifically,
Petitioner informed CMS that it “failed to notify CMS” of its change of address and
“forgot to notify Palmetto GBA/CMS of the change in facility address.” CMS Ex. | at 6.
Subsequently, the December 19, 2014 reconsidered determination explained that
Palmetto GBA was not notified of the relocation until November 18, 2014, which is well
after the site inspector determined that the Desoto location was not operational.
my review to the basis or bases for revocation that are provided in the December 19,
2014 reconsidered determination.*

As such, Petitioner has not asserted how there is good cause for the belated submission of
these documents or how their inclusion in the record will have any relevance to my
review of the reconsidered determination. Thus, even if I could accept these exhibits and
admit them as evidence, Petitioner has not shown how they would support its appeal.

Additionally, Petitioner has submitted a decision by another administrative law judge
from the Departmental Appeals Board’s Civil Remedies Division (P. Ex. 12). I will take
judicial notice of the decision; however, it is not properly classified as “evidence” and
will not be admitted as an exhibit?

® The purported relevance of P. Exs. 5,7, 8 and 10 is unclear to me. P. Ex. 5 references
an overpayment that was created after Petitioner’s billing privileges were revoked;
however, the existence of an overpayment has no bearing on my review of the
reconsidered determination. Likewise, P. Ex. 7 is a January 30, 2015 letter from DADS,
but this correspondence does not in any way indicate that Petitioner was operational at
the location of record with the CMS contractor at the time of the attempted site visit. P.
Ex. 8 is dated May 21, 2013, and I am unable to discern this document’s relevance to any
issue that is presently before me. I reject Petitioner’s citation to this document as
authority for its proposition that it is the Medicare contractor’s policy “to request that a
provider update information when it learns the practice location reflected in the on-file
enrollment application is not current.” P. Br. at 9. Finally, Petitioner, at P. Ex. 10, has
submitted a letter from its attorney to the CMS Deputy Regional Administrator in which
the attorney expresses an intent to file a lawsuit. I am unable to glean any evidentiary
significance from this correspondence.

° P.Ex. 12 isa copy of the administrative law judge decision in Gibraltar Healthcare
Services, LLC, DAB CR3422 (2014). I observe that the Gibraltar decision is based on a
dissimilar set of facts, in that Administrative Law Judge Carolyn Cozad Hughes found
that CMS had improperly revoked a Medicare supplier number because the petitioner had
“properly advised the Medicare contractor of its change in location.” Gibraltar
Healthcare Services, LLC, at 11. This decision is available on the Civil Remedies
Division’s website. See
http://www.hhs.gov/dab/decisions/civildecisions/2014/cr3422.pdf (last visited October 9,
2015). Moreover, I reiterate that CMS did not revoke Petitioner’s enrollment and billing
privileges based on Petitioner’s failure to timely notify CMS of its change of address.
Instead, Palmetto GBA revoked Petitioner’s enrollment and billing privileges based on a
finding that Petitioner was not operational at the address on file. Accordingly, this
decision is not relevant.
For the reasons stated above, I decline to admit P. Exs. 2,5, 7,8, 10, and 12.

2. A Palmetto inspector attempted to conduct a site visit on
July 16, 2014, at the address on file for Petitioner (205
Oleander Dr., Desoto, Texas); however, that location
was not open to the public or staffed to allow the
inspector to enter the office.

Petitioner does not dispute that it was not operational at the location of the attempted site
visit on July 16, 2014. P. Ex. 6; Petitioner’s Proposed Findings of Fact and Conclusions
of Law. Furthermore, Petitioner does not dispute that it had not notified CMS of its
relocation until November 2014. CMS Ex. | at 11; Petitioner’s Proposed Findings of
Fact and Conclusions of Law (paragraph 14). Petitioner was enrolled in the Medicare
program with its address listed as 205 Oleander Dr., Desoto, Texas. CMS Ex. | at 1;
CMS Ex. 2 at 1; CMS Ex. 4 at 1-2. It is also undisputed that, on or about October 25,
2013, Petitioner moved its office to 2700 W. Pleasant Run Road in Lancaster, Texas.
CMS Ex. | at 1,6, 10. CMS does not challenge Petitioner’s argument that it timely
notified the Texas DADS of its relocation to Lancaster, Texas, and I see no evidence to
refute that timely notice of such was provided to the Texas DADS. However, the issue
before me is not whether the Texas DADS was notified of the relocation, or even whether
Petitioner timely notified CMS of its change in address, but rather, whether the office
location on file with Medicare was operational at the time of the July 16, 2014 on-site
review. Petitioner has not disputed that, at the time of the July 16, 2014 on-site review,
its Desoto, Texas, office was not operational.’ Furthermore, Petitioner has
acknowledged that it had relocated its office more than eight months prior to the
unannounced on-site review and that the address on file with CMS as of July 16, 2014,
was the then-closed Desoto location. CMS Ex. | at 6.

On July 16, 2014, between 3:30 pm and 4:30 pm, an inspector with Palmetto GBA
attempted to conduct an unannounced site inspection of Petitioner’s office at 205
Oleander Drive in Desoto, Texas. CMS Ex. 2 at 1. The inspector wrote in his inspection
report that when he arrived at that location, which is a private residence, the homeowner
told him that Petitioner had relocated to 2700 Pleasant Run Road, Suite 380, in Lancaster,
Texas. CMS Ex. 2 at 1. The inspector noted in his report that Petitioner: was not open

10 declaration of Eucharia Pitts, the owner and chief financial officer of Petitioner, was
received and admitted as P. Ex. 1. The declarant reported that Petitioner relocated to its
new location in Lancaster, Texas, on October 25, 2013. The declarant indicated that
Petitioner’s address was updated with the Texas DADS, but did not assert that the
address on file with CMS or Palmetto was the new location in Lancaster. In addition, the
declarant did not report that the location in Desoto, Texas, was open at the time of the on-
site visit on July 16,2014. P. Ex. 1.
for business; did not have employees/staff present; did not have customer activity; and
did not appear to be operational. CMS Ex. 2 at 1.

3. CMS had a basis to revoke Petitioner ’s Medicare billing
privileges pursuant to 42 C.F.R. § 424.535(a)(5) because
the July 16, 2014 on-site visit showed that Petitioner was
not operational at the location on file with CMS.

Petitioner acknowledges that it left the 205 Oleander Drive location on or about October
25,2013, which was more than eight months prior to the inspector’s attempted on-site
visit. CMS Ex. | at 6, 10; Petitioner’s Proposed Findings of Fact and Conclusions of
Law. Petitioner argues that on July 16, 2014, it was operational at a different address in
Lancaster, Texas. Petitioner stresses that it timely completed a change of location form
for DADS. CMS Ex. | at 6; P. Br. (passim). Petitioner has also asserted that the
inspector had knowledge of its new location at the time of the site visit, as the
homeowner at the Oleander Drive location had shared that information with the
inspector. See CMS Ex. 2 at 1; P. Ex. 1.

A provider is considered to be “operational” when it:

has a qualified physical practice location, is open to the public
for the purpose of providing health care related services, is
prepared to submit valid Medicare claims, and is properly
staffed, equipped, and stocked (as applicable, based on the
type of facility or organization, provider or supplier specialty,
or the services or items being rendered), to furnish these items
or services.

42 CFR. § 424.502. CMS may revoke a currently enrolled provider’s Medicare billing
privileges, when upon on-site review, it determines that the provider is “[n]o longer
operational to furnish Medicare-covered items or services.” 42 C.F.R. § 424.535(a)(5)(i).
Even if Petitioner was open and staffed at its Lancaster, Texas, location on July 16, 2014,
the regulatory definition of the term “operational” refers to the “qualified physical
practice location” of a provider. 42 C.F.R. § 424.502. The Medicare enrollment
application directs that a provider report all practice locations and states that “the
‘primary practice location’ must be associated with the [National Provider Identifier] that
the provider intends to use to bill for Medicare services” (see form CMS-855A), and a
provider must provide “[c]omplete, accurate and truthful responses to all information
requested within each section [of the enrollment application] as applicable to the provider
or supplier type.” 42 C.F.R. § 424.510(d)(2)(ii). CMS may perform on-site inspections
to verify that the enrollment information submitted by a provider is accurate and to
determine compliance with Medicare requirements. 42 C.F.R. § 424.517(a). This means
that CMS will inspect the “qualified physical practice location” that has been provided by
10

the provider and is currently on file with CMS. See, e.g., JIB Enterprises, LLC, DAB
CR3010 at 9 (2013). As the regulatory drafters explained,

when CMS or our contractor determines that a provider . . . is
no longer operating at the practice location provided to
Medicare on a paper or electronic Medicare enrollment
application that the revocation should be effective with the
date that CMS or our contractor determines that the provider
or supplier is no longer operating at the practice location.

73 Fed. Reg. 69,725, 69,865 (Nov. 19, 2008) (emphasis added).

In the present matter, there is undisputed evidence that Petitioner was not open to the
public or properly staffed and thus not operational at the 205 Oleander Drive, Desoto,
Texas location, which was the address Petitioner had on file with CMS at the time of the
July 16, 2014 attempted on-site visit. I conclude that CMS had a legal basis to revoke
Petitioner’s billing privileges pursuant to 42 C.F.R. § 424.535(a)(5)(i).

V. Conclusion

1 affirm the revocation of Petitioner’s Medicare enrollment and billing privileges
effective July 16,2014.

/s/
Leslie C. Rogall
Administrative Law Judge