Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Erica L. Pedersen, ) Date: November 28, 2007

)
Petitioner, )
)

-Vv.- ) Docket No. C-07-474

) Decision No. CR1700
The Inspector General. )
)

DECISION

This matter is before me in review of the determination by the Inspector General (I.G.) to
exclude Petitioner pro se Erica L. Pedersen from participation in Medicare, Medicaid, and
all other federal health care programs. The LG. relies on the discretionary authority to do
so conveyed to him by section 1128(b)(4)(A) of the Social Security Act (Act), 42 U.S.C.
§ 1320a-7(b)(4)(A). The predicate for the I.G.’s action is the suspension of Petitioner’s
license to practice nursing in Pennsylvania. The I.G. has filed a Motion for Summary
Affirmance.

The undisputed material facts in this case support the I.G.’s imposition of the exclusion.
The I.G. has set the period of exclusion to be concurrent with the period during which
Petitioner’s license to practice practical nursing in Pennsylvania remains suspended, the
minimum period of exclusion required by law. For those reasons, I grant the I.G.’s
Motion for Summary Affirmance.

I. Procedural Background

Petitioner pro se Erica L. Pedersen is a practical nurse and was licensed to practice
nursing in the Commonwealth of Pennsylvania. Between 2004 and July 6, 2006, a
disciplinary proceeding against Petitioner was pending before the State Board of Nursing
of the Commonwealth of Pennsylvania, and that disciplinary proceeding concerned
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Petitioner’s professional competence and professional performance. On July 6, 2006, the
State Board of Nursing entered its Final Order suspending Petitioner’s license to practice
practical nursing in Pennsylvania for a period of at least three years.

On March 30, 2007, the I.G. notified Petitioner that she was to be excluded from
participation in Medicare, Medicaid, and all other federal health care programs until she
should regain her license to practice as a practical nurse in Pennsylvania, based on the
authority set out in section 1128(b)(4) of the Act. Petitioner perfected her appeal of the
1.G.’s action by her pro se letter of May 21, 2007.

I held the prehearing conference required by 42 C.F.R. § 1005.6(a) on July 2, 2007. The
Order of July 3, 2007 summarized the discussions held in the conference and
contemplated that this case could be resolved by summary disposition on the parties’
briefs and documentary exhibits. The cycle of briefing and this record closed for
purposes of 42 C.F.R. § 1005.20(c) on November 5, 2007, under the circumstances set
out in the Orders of October 9, 2007 and July 3, 2007.

The evidentiary record on which I decide this case contains eight exhibits. The I.G. has
proffered I.G.’s Exhibits 1-6 (1.G. Exs. 1-6). Petitioner has not objected to the admission
of these exhibits, and they are admitted as designated. Petitioner has proffered
Petitioner’s Exhibits 1-2 (P. Ex. 1-2), and all are admitted as designated in the absence of
objection from the I.G.

II. Issues

The issues before me are limited to those noted at 42 C.F.R. § 1001.2007(a)(1). In the
specific context of this record, they are:

1. Whether the LG. has a basis for excluding Petitioner from participating
in Medicare, Medicaid, and all other federal health care programs pursuant
to section 1128(b)(4)(A) of the Act; and

2. Whether the length of the exclusion is unreasonable.

The I.G.’s position on both issues is correct. Section 1128(b)(4)(A) of the Act supports
Petitioner’s exclusion from all federal health care programs, for her license to practice
practical nursing in Pennsylvania has been suspended for reasons bearing on her
professional competence and professional performance. Petitioner’s exclusion during the

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period that her license to practice practical nursing in Pennsylvania remains suspended is
the minimum period established by section 1128(c)(3)(E) of the Act, 42 U.S.C. § 1320a-
7(c)(3)(E), and is therefore reasonable as a matter of law.

Ill. Controlling Statutes and Regulations

Section 1128(b)(4)(A) of the Act, 42 U.S.C. § 1320a-7(b)(4)(A), authorizes the exclusion
from participation in Medicare, Medicaid, and all other federal health care programs of
any individual or entity “whose license to provide health care has been revoked or
suspended by any State licensing authority . . . for reasons bearing on the individual’s or
entity’s professional competence, professional performance, or financial integrity.” The
terms of section 1128(b)(4)(A) are restated in similar regulatory language at 42 C.F.R.

§ 1001.501(a)(1).

The terms of 42 C.F.R. § 1001.2007(d) provide that in exclusion appeals in this forum:

When the exclusion is based on the existence of a criminal conviction or a
civil judgment imposing liability by (a) Federal, State or local court, a
determination by another Government agency, or any other prior
determination where the facts were adjudicated and a final decision was
made, the basis for the underlying conviction, civil judgment, or
determination is not reviewable and the individual or entity may not
collaterally attack it either on substantive or procedural grounds in this
appeal.

An exclusion based on section 1128(b)(4)(A) of the Act is discretionary. If the
LG. exercises his discretion to proceed with the sanction, then the mandatory
minimum period of exclusion to be imposed under section 1128(b)(4)(A) of the
Act “shall not be less than the period during which the individual’s or entity’s
license to provide health care is revoked, suspended, or surrendered...” Act,
section 1128(c)(3)(E), 42 U.S.C. § 1320a-7(c)(3)(E). Regulatory language at 42
C.F.R. § 1001.501(b)(1) affirms the statutory provision.

IV. Findings and Conclusions
I find and conclude as follows:
1. Between 2004 and July 6, 2006, a disciplinary proceeding against Petitioner was

pending before the State Board of Nursing of the Commonwealth of Pennsylvania.
1G. Exs. 3, 4, 5.
4

2. The disciplinary proceeding described above in Finding 1 concerned Petitioner’s
professional competence and professional performance. I.G. Exs. 3, 4, 5.

3. On July 6, 2006, the State Board of Nursing of the Commonwealth of
Pennsylvania entered its Final Order suspending Petitioner’s license to practice
practical nursing in Pennsylvania for a period of at least three years, for reasons
earing on her professional competence and professional performance. I.G. Ex. 5.

4. On March 30, 2007, the I.G. notified Petitioner that she was to be excluded from
participation in Medicare, Medicaid, and all other federal health care programs
until she should regain her license to practice as a practical nurse in Pennsylvania,
ased on the authority set out in section 1128(b)(4) of the Act. I.G. Ex. 1.

5. On May 21, 2007, Petitioner perfected this appeal from the I.G.’s action by filing a
timely hearing request.

6. Because Petitioner’s license to practice practical nursing in Pennsylvania was
suspended for reasons bearing on her professional competence and professional
performance, as set out in Findings 1-3 above, a basis exists for the I.G.’s exercise
of his discretionary authority, pursuant to section 1128(b)(4)(A) of the Act, to
exclude Petitioner from participation in Medicare, Medicaid, and all other federal
ealth care programs.

7. The exclusion of Petitioner during the period that her license to practice as a
practical nurse in Pennsylvania remains suspended is for the minimum period
prescribed by law and is therefore as a matter of law not unreasonable. Act,
section 1128(c)(3)(E); 42 C.F.R. § 1001.501(b)(1).

8. There are no remaining disputed issues of material fact and summary disposition is
appropriate in this matter. Michael J. Rosen, M.D., DAB No. 2096 (2007); Thelma
Walley, DAB No. 1367 (1992); 42 C.F.R. § 1005.4(b)(12).

V. Discussion

Two essential elements must be proven in order to support an exclusion based on section
1128(b)(4)(A) of the Act. First, the I.G. must prove that the license to provide health care
of the individual to be excluded has been revoked or suspended by a State licensing
authority. Second, the I.G. must prove that the license was revoked or suspended for
reasons bearing on the individual’s professional competence, professional performance,
or financial integrity. Leonard R. Friedman, M.D., DAB No. 1281 (1991); Mark C.
5

Sorensen, M.D., DAB CR1664 (2007); Thomas I. DeVol, Ph.D., DAB CR1652 (2007);
Sherry J. Cross, DAB CR1575 (2007); Michele R. Rodney, DAB CR1332 (2005);
Edmund B. Eisnaugle, D.O., DAB CR1010 (2003); Marcos U. Ramos, M.D., DAB
CR788 (2001); Allison Purtell, M.D., DAB CR781 (2001).

The I.G.’s evidence establishes both essential elements conclusively. Petitioner’s license
to practice practical nursing was suspended by the State Board of Nursing on July 6,
2006, and it was suspended on the explicit basis of her frequent lapses into alcohol abuse.
LG. Exs. 3, 4,5, 6. The State Board of Nursing expressly concluded that Petitioner “is
unable to practice the profession with reasonable skill and safety to patients by reason of
... addiction to drugs or alcohol... .” I.G. Ex. 3, at 2-3. That a license suspension or
revocation based on substance abuse is a revocation for reasons bearing on the
individual’s professional competence or professional performance is particularly well-
settled in this forum. Lori E. Miller, DAB CR961 (2002); Tracey Gates, R.N., DAB
CR708 (2000), aff'd DAB No. 1768 (2001); Roy Cosby Stark, DAB CR676 (2000); aff'd
DAB 1746 (2000); Wilbur D. Hilst, M.D., DAB CR621 (1999).

Petitioner admits that the proceedings against her took place and that they resulted in the
suspension of her license. Her defense to the I.G.’s action takes the form of a vigorous
and articulate attack on the fairness of those proceedings and on the scientific soundness
of the test relied on by the State Board of Nursing in suspending her license. Her briefing
and exhibits mount a careful and well-documented discussion of the testing protocol, the
specific circumstances under which she took the test, and the reliability of the test itself;
she admits, however, that she did not contest the State Board of Nursing’s final action,
and thus did not take the opportunity to impeach the test results before that body.

Those arguments may in theory have merit, but this is not the forum in which they may be
raised. Valid or not, all Petitioner’s arguments share this characteristic: they all
constitute collateral attacks on the State Board of Nursing’s action, and the settled rule is
that such collateral attacks on the soundness or the validity of a state action are
impermissible in this forum. Judy Pederson Rogers and William Ernest Rogers, DAB
No. 2009 (2006); Hassan M. Ibrahim, M.D., DAB No. 1613 (1997); George Iturralde,
M.D., DAB No. 1374 (1992); Olufemi Okonuren, M.D., DAB No. 1319 (1992); see also
Mark C. Sorensen, M.D., DAB CR1664. Those cases are supported by the controlling
regulation, 42 C.F.R. § 1001.2007(d). Nor may the effect of Petitioner’s acquiescence in
the state action be avoided by the claim that she was unaware of its consequences. Stella
Remedies Lively, DAB CR1369 (2005); Steven Caplan, R.Ph., DAB CR1112 (2003),
aff'd Steven Caplan v. Thompson, CIV No. 04-00251 (D. Haw. Dec. 17, 2004).

6

Petitioner also challenges the proposed period of exclusion as harsh and unreasonably
long. But section 1128(c)(3)(E) of the Act mandates that any period of exclusion based
on section 1128(b)(4) must not be less than the period during which the individual’s or
entity’s license to provide health care is revoked, suspended, or surrendered. Thus, if the
LG. is authorized to impose an exclusion pursuant to section 1128(b)(4), that exclusion is
reasonable as a matter of law if it is concurrent with the period during which the
individual’s license to provide health care is revoked, suspended, or surrendered. Tracey
Gates, R.N., DAB No. 1768; Mark C. Sorensen, M.D., DAB CR1664; Thomas I. DeVol,
Ph.D., DAB CR1652; Julia Maria Nash, DAB CR1277 (2005); Maureen Felker, DAB
CR1110 (2003); April Ann May, P.A., DAB CR1089 (2003); Djuana Matthews Beruk,
D.D.S., DAB CR950 (2002). That is the period of exclusion the I.G. proposes in this case,
and it is reasonable as a matter of law.

Resolution of a case by summary disposition is appropriate when there are no disputed
issues of material fact and when the undisputed facts, clear and not subject to conflicting
interpretation, demonstrate that one party is entitled to judgment as a matter of law.
Michael J. Rosen, M.D., DAB No. 2096; Thelma Walley, DAB No. 1367. Summary
disposition is authorized by the terms of 42 C.F.R. § 1005.4(b)(12). This forum looks to
FED. R. CIV. P. 56 for guidance in applying that regulation. Robert C. Greenwood, DAB
No. 1423 (1993). The material facts in this case are undisputed, clear, and unambiguous,
and support summary disposition as a matter of law.

VI. Conclusion

For the reasons set out above, the I.G.’s Motion for Summary Affirmance should be, and
itis, GRANTED. The I.G.’s exclusion of Petitioner Erica L. Pedersen from participation
in Medicare, Medicaid, and all other federal health care programs is SUSTAINED,
pursuant to the terms of section 1128(b)(4)(A) of the Act, 42 U.S.C. § 1320a-7(b)(4)(A).
That exclusion remains in effect, by operation of section 1128(c)(3)(E) of the Act, 42
U.S.C. § 1320a-7(c)(3)(E), while her license to practice as a practical nurse in
Pennsylvania remains suspended.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In re CMS LCD Complaint:

Date: November 21, 2007

Ambulance Services (Ground
Ambulance); Non-Invasive Venous
Studies Docket No. C-07-444

Decision No. CR1698

DECISION DISMISSING LCD COMPLAINT

An aggrieved Medicare beneficiary (Aggrieved Party or Beneficiary) challenges portions
of the Local Coverage Determinations (LCDs) for Ambulance Services (Ground
Ambulance) (L14295) and Non-Invasive Venous Studies (L18491) issued by the
Medicare Contractor, TrailBlazer Health Enterprises (Contractor). For the reasons
discussed below, I dismiss his complaint as unacceptable.

Discussion

The Centers for Medicare & Medicaid Services (CMS) administers the Medicare program
(Social Security Act (Act), §§ 1102, 1871, 1874), and contracts with carriers and
intermediaries (Medicare contractors) to act on its behalf in determining and making
payments to providers and suppliers of Medicare items and services. Act, §§ 1816, 1842.
To this end, Medicare contractors issue written determinations, called LCDs, addressing
whether, on a contractor-wide basis, a particular item or service is covered. Act, §
1869(f)(2)(B). A Medicare beneficiary who has been denied coverage for an item or
service based on an LCD may challenge that LCD before an administrative law judge
(ALJ). In reviewing that challenge, the ALJ is instructed to defer to the “reasonable
findings of fact, reasonable interpretations of law, and reasonable applications of fact to
law” by CMS and its contractors. Act, § 1896(f)(2)(A)(i)(IID); 42 C.F.R. § 426.110.
2

On February 4, 2007, the Beneficiary in this case was transported to the hospital in an
ambulance. At the hospital, a doctor ordered an extremity study for him. Thereafter,
owever, in a document titled “Medicare Summary Notice,” dated April 20, 2007, CMS
advised him that neither the ambulance services nor the extremity study were Medicare
approved. The letter stated that the Beneficiary could be billed $445.00 for the
ambulance services; however, it indicated that he would not be billed for the extremity
study. The notice refers to two LCDs used in making the determination, L14295 and
L18491.

On May 9, 2007, the Beneficiary sent a letter challenging the two LCDs: Ambulance
Services (Ground Ambulance) (L14295) and Non-Invasive Venous Studies (L18491).
Because | found that his complaint did not satisfy regulatory requirements, I sent him
notice of the complaint’s deficiencies and afforded him an extended period of time in
which to amend the unacceptable complaint. See 42 C.F.R. § 426.410. In support of his
claim, the Beneficiary has submitted a written statement and the medical records from his
ospital stay.

Only an aggrieved party may initiate a review of an LCD. 42 C.F.R. § 426.320(a).

An aggrieved party is a Medicare beneficiary (or his estate) who is entitled to Medicare
Part A or Part B benefits, is in need of coverage for a service that is denied based on an
applicable LCD, and has obtained from his treating physician documentation of that need.
42 C.F.R. § 426.110.

Here, with respect to L18491 (Non-Invasive Venous Studies), the Beneficiary received
the service and has not been required to pay for it. He therefore does not fall within the
regulatory definition “in need of coverage for service that is denied,” and may not initiate
review of that LCD. (In fact, the Beneficiary may not even have intended to challenge
L18491.)

On the other hand, the Beneficiary has been denied coverage for ambulance services

ased on an LCD that provides a “patient whose condition permits transport in any type
of vehicle other than an ambulance would not qualify for services under Medicare.” LCD
for Ambulance Services (Ground Ambulance) — T-1B-R17 (L14295), available at
ttp://www.cms.hhs.gov/med/viewled.asp?led_id=14295&lcd_version=40&show=all.

To challenge this LCD he must file an acceptable complaint, which includes (among
other items) a treating physician written statement, a statement explaining what service is
needed and why the beneficiary thinks the provisions of the LCD are not valid, and
clinical or scientific evidence for the challenged LCD. 42 C.F.R. § 426.400(c).
Petitioner’s amended complaint does not include a treating physician written statement,

3

although he includes medical records from his hospital stay. While medical records can
fulfill the requirements for a treating physician written statement, they must indicate that
the aggrieved party needed the services in question. These medical records are silent on
that issue.

Further, the Beneficiary has not explained why the provisions of the LCD are
unreasonable, nor has he provided clinical or scientific evidence to support such a claim.
This may well be because he does not mean to challenge the LCD’s reasonable
requirement that ambulance services be necessary; instead he seems to argue that he fell
within the LCD’s definition — he needed the service because his condition at the time did
not permit any other form of transit. But I have no authority to determine whether he
personally qualified for the service. That is for another judge to decide in a different
forum. 42 C.F.R. §§ 426.325(b)(11), 426.405(d)(7); see also In the Case of: Appeal of
CMS LCD Complaint: Pneumatic Compression Devices, DAB No. 2082 (2007) (“the
LCD challenge process does not replace the claims appeal process in which a beneficiary
may contest an individual claims denial directly”). I may only determine whether the
LCD itself is reasonable. 42 C.F.R. §§ 426.325(a), 426.405(c).

Conclusion

Because the Beneficiary’s complaint is unacceptable, I dismiss it.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the case of: )
) DATE: November 20, 2007
In re CMS LCD COMPLAINT: )
Intravenous Immune Globulin (IVIG) - _ ) Docket No. C-07-737
(L11961). ) Decision No.CR1697
)
DECISION

I dismiss the hearing request in this case because the complaining beneficiary did not file
an acceptable complaint establishing her to be an aggrieved party. Specifically, the
complaining beneficiary did not explain if or how she was denied coverage for items or
services based on application of a local coverage determination (an LCD).'

I. Background

On September 5, 2007, the complaining beneficiary filed a document with the Civil
Remedies Division of the Departmental Appeals Board which was docketed and assigned
to me for a hearing and a decision. The Civil Remedies Division staff, evidently
concluding that the case might involve an LCD, assigned a caption to the case designating
it as an LCD complaint.

I reviewed the hearing request and, based on my review, I asked the staff attorney
assigned to work with me on the case to communicate with the complaining beneficiary
in order to ascertain more precisely the nature of her complaint. The complaining
beneficiary filed two e-mails on October 11, 2007. On October 19, 2007, I sent a letter to
the beneficiary in which I asked her to provide me with more information concerning the
nature of her complaint. In that letter I defined the ambit of my authority to hear and

' In order to protect the privacy of the beneficiary whose complaint is at issue here
I am omitting any personal identifying information from this decision.
2

decide cases involving LCD coverage. I asked the complaining beneficiary to provide me
with evidence showing that she had been denied Medicare coverage on one or more
claims based on coverage limitations stated in an LCD. The complaining beneficiary
responded to my letter with an e-mail dated November 8, 2007.

I designate as exhibits the complaining beneficiary’s two October 11, 2007 e-mails and
the November 8, 2007 e-mail. They are identified as LCD Ex. | (the October 11, 2007
e-mail sent at 5:07 a.m.); LCD Ex. 2 (the October 11, 2007 e-mail sent at 5:28 p.m.); and
LCD Ex. 3 (the November 8, 2007 e-mail). I receive LCD Exs. 1-3 into the record.

II. Issues, findings of fact and conclusions of law
A. Issue

The issue in this case is whether the complaining beneficiary established that she was an
aggrieved party as is defined at 42 C.F.R. § 426.110.

B. Findings of fact and conclusions of law

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

1. The complaining beneficiary did not establish that she is an aggrieved
party.

A jurisdictional prerequisite to my hearing and deciding a case involving a challenge to

an LCD is that the complaining beneficiary file an acceptable complaint establishing that
he or she is an aggrieved party. 42 C.F.R. §§ 426.110; 426.400. An “aggrieved party” is
defined at 42 C.F.R. § 426.110 to mean a Medicare beneficiary who, among other things:

Is in need of coverage for a service that is denied based on an applicable
LCD ..., regardless of whether the service was received.

In other words, my authority is limited by regulation to deciding the reasonableness of an
LCD only in the case where a complaining individual can establish that he or she has had
coverage for a service denied based on application of an LCD.

The complaining beneficiary in this case failed to make the requisite showing. In her
hearing request she asserted that she is a Medicare beneficiary who has been prescribed
infusions of a product in order to treat a blood disorder. She averred that she had not
been denied coverage for these items or services by the Medicare program. However, she
3

complained that providers of services have refused to provide the prescribed items or
services. According to her, providers asserted to her, falsely, that they cannot provide her
with covered items or services due to lack of availability of the prescribed product.

Neither in her hearing request nor in her October 11, 2007 e-mails did the complaining
beneficiary state a precise reason why various providers had refused to give her the
prescribed item or service. LCD Exs. 1, 2. She asserted that “no one wants to provide the
medicine” that had been prescribed to her. LCD Ex. 2. And, she suggested that providers
might be reluctant to provide her with the prescribed substance because they had
concluded that the reimbursement they received from Medicare for it was insufficient.
She asserted, “[t]he papers [referring to requested documentation concerning the basis for
her hearing request] I am looking for say that I can appeal if I believe that Medicare is not
paying enough for the services... ‘the amount paid’. This is a major part of the
discrimination ... the facilities do not believe they are paid enough. They tell me that I
am a non-profit patient and they can not afford to treat me.” LCD Ex. 1.

However, although the complaining beneficiary asserted that providers had refused to
furnish her with a covered item or service, she did not assert that she had been denied
coverage due to the operation of an LCD. Hearing request; LCD Exs. 1,2. In my
October 19, 2007 letter to the complaining beneficiary I explained to her that she had an
obligation to establish that she was an aggrieved party and I asked that she provide me
with any information that she had showing that she was denied benefits based on the
limitations imposed by an LCD. I suggested to her that she might supply me with a
denial of benefits form which stated that her claims for items or services had been denied
based on the limitations imposed by an LCD. I suggested, alternatively, that she might
supply me with a letter to her from a Medicare carrier explaining that her claims for items
or services had been denied based on limitations imposed by an LCD.

The complaining beneficiary’s response to my October 19 letter is her November 8, 2007
e-mail. LCD Ex. 3. In this e-mail she explained that her problem was that the payments
for the item or service that she had been prescribed were so low “that no provider wants
to take orders to provide the infusions .. . I need to receive.” Jd. She also averred that “I
do not believe I have ever said that Medicare has denied me” the item or service that had
been prescribed to her. Jd.

What is apparent from the complaining beneficiary’s hearing request and subsequent
statements is that she is not contending that she has been denied benefits by the Medicare
program based on the operation of an LCD but that she has been denied services by
individual providers because they have decided that the reimbursement they would
receive from Medicare for the prescribed item or service is inadequate to give them the
profit that they seek. That assertion is not a basis for me to provide the complaining
4

beneficiary with a hearing because it establishes no link between her inability to find a
provider willing to provide the prescribed item or service and the coverage limitations of
an LCD. As the complaining party acknowledges, she has not been told at any time by
the Medicare program or its representatives that her prescribed item or service is not
covered by Medicare.

I have no authority to hear and decide a dispute between a provider and the Medicare
program over the reimbursement amount that the provider will receive for a covered item
or service unless that reimbursement amount is directly addressed by an LCD and unless
the LCD operates to deny coverage to a beneficiary. That is not the case here, and
therefore, the complaining beneficiary is not an aggrieved party. Consequently, I have no
authority to give her a hearing.”

2. I must dismiss the complaining beneficiary’s hearing request because
she is not an aggrieved party.

I must dismiss a hearing request if it is not filed by an aggrieved party. 42 C.F.R.
§ 426.444(b)(3). Consequently, I must dismiss the complaining beneficiary’s request
because she has not established that she is an aggrieved party.

/s/
Steven T. Kessel
Administrative Law Judge

> Tam not suggesting that the complaining beneficiary is without recourse, only
that I have no authority to hear her complaint as a challenge to an LCD.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Isla Dorene Weber, ) Date: November 20, 2007

)
Petitioner, )
)

-Vv.- ) Docket No. C-07-641

) Decision No. CR1696
The Inspector General. )
)

DECISION

Pursuant to section 1128(b)(4) of the Social Security Act (Act), the Inspector General
(1.G.) has excluded Petitioner, Isla Dorene Weber, from participation in Medicare,
Medicaid, and all federal health care programs until she obtains a valid Florida nursing
license. Petitioner appeals. I find that Petitioner’s Florida nursing license was revoked
for reasons bearing on her professional competence and performance, so the I.G.
appropriately excluded her from program participation.

Discussion

In a letter dated May 31, 2007, the I.G. advised Petitioner that she was excluded from
participation in Medicare, Medicaid, and all federal health care programs because her
license to provide health care as a practical nurse in the State of Florida had been
revoked, suspended or otherwise lost or was surrendered while a formal disciplinary
proceeding was pending before the Florida Board of Nursing (State Board) for reasons
bearing on her professional competence, professional performance, or financial integrity.
LG. Ex. 1, at 1. Petitioner timely requested review and the matter has been assigned to
me for resolution.
2

I held a telephone prehearing conference on August 30, 2007, during which Petitioner
conceded that her state license has been revoked, but contested whether that revocation
was related to her professional competence, professional performance, or financial
integrity. Order and Schedule for Filing Briefs and Documentary Evidence (Order) at 1
(August 31, 2007). During that conference I noted that, based on the documentation and
the representations of the parties, it appeared that the dispute here is legal, not factual, so
the matter could be resolved based on the written record, without need for an in-person
hearing. I directed the parties to include with their submissions a request for an in-person
hearing if they believed that material facts are in dispute, and such testimony is necessary.
Order at 2. Neither party has suggested that an in-person hearing is necessary.

The I.G. has submitted four exhibits (1.G. Exs. 1-4). Petitioner included with her
submission a number of documents, none marked as exhibits. We have therefore marked
her documents as P. Exs. 1-3. I admit into evidence I.G. Exs. 1-4 and P. Exs. 1-3.

1. Because the state licensing authority suspended Petitioner’s nursing
license for reasons bearing on her professional competence or
performance, the I.G. may appropriately exclude her from participation in
Medicare, Medicaid, and other federally funded health care programs.'

The statute authorizes the Secretary to exclude from participation in any federal health
care program an individual whose license to provide health care “has been revoked or
suspended by any State licensing authority” for reasons bearing on the individual’s
“professional competence, professional performance, or financial integrity.” Act,

§ 1128(b)(4)(A). See also 42 C.F.R. § 1001.501.

The record establishes that, by order dated October 27, 2006, the State Board revoked
Petitioner’s nursing license, based on charges that she abandoned her patients, and was
non-compliant with the Intervention Project for Nurses. I.G. Ex. 3. According to the
order “her continued practice of nursing represents a threat to the public health and
safety.” Jd. at 2.

Petitioner does not deny the State Board’s actions, but challenges the facts underlying the
State Board’s conclusions. She also complains that she attempted to contest the license
revocation, but was told that it was too late.

' My findings of fact and conclusions of law are set forth, in italics and bold, in
the discussion captions of this opinion.
3

Iam bound by the State Board’s final determination. Where, as here, an exclusion is
based on the existence of a determination made by another governmental agency, the
basis for the underlying determination is not reviewable. 42 C.F.R. § 1001.2007(d); Roy
Cosby Stark, DAB No. 1746 (2000). I am required to determine the reasons for the State
Board’s actions, but not whether its reasoning was valid. Here, the State Board
unquestionably revoked Petitioner’s nursing license because of her professional
competence and performance. I must therefore sustain the exclusion.

2. The exclusion period may not be less than the period during which
Petitioner’s nursing license is revoked.

Neither I nor the I.G. have much discretion in determining the duration of an exclusion
under section 1128(b)(4), since that duration is set by statute. For a person excluded
under section 1128(b)(4), the statute requires that the period of exclusion “shall not be
less than the period during which the individual’s or entity’s license. . .is. ..revoked.”
Act, section 1128(c)(3)(E). I therefore have no authority to change the length of the
exclusion period. Tracey Gates, R.N., DAB No. 1768, at 9 (2001).

Conclusion

For the above reasons, I conclude that the I.G. properly excluded Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs so long as
her nursing license is revoked.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Renal Care Partners of Hialeah, ) Date: November 20, 2007

(CCN: 10-2785), )
)
Petitioner, )
)

-V.- ) Docket No. C-07-387

) Decision No. CR1695
Centers for Medicare & Medicaid )
Services. )
)

DECISION

Located in Hialeah, Florida, Petitioner, Renal Care Partners of Hialeah (Petitioner or
facility), was, until recently, an end stage renal disease (ESRD) facility that supplied
dialysis services under the Medicare program. Following surveys completed on March 7
and 29, 2007, the Centers for Medicare & Medicaid Services (CMS) determined that the
facility did not meet requirements for Medicare participation because of deficiencies that
posed an immediate and serious threat to patient health and safety. CMS terminated
Petitioner’s Medicare participation and Petitioner has appealed.

For the reasons set forth below, I find that Petitioner was not in substantial compliance
with the Medicare conditions for coverage and sustain CMS’s determination to terminate
its Medicare provider agreement.'

' Although the facility’s deficiencies unquestionably posed immediate jeopardy to
resident health and safety, I need not make that finding in order to sustain termination. 42
C.F.R. § 405.2180(a); see Discussion, below.
I. Background

Statutory and Regulatory Framework. Section 1881 of the Social Security Act (Act)
extends Medicare coverage to ESRD patients. The Act establishes the general scheme by
which participating individuals qualify and facilities deliver ESRD services;
implementing regulations fill in the details and are found at 42 C.F.R. Subpart U,

§§ 405.2100 - 405.2184.

Medicare classifies most healthcare delivery entities as either “providers” or “suppliers.”
42 C.F.R. § 488.1. Although classified as “suppliers,” ESRD facilities are subject to the
same application, survey, certification, and enforcement requirements that apply to
“providers.” 42 C.F.R. § 488.3(a)(2); Maher A. A. Azer (Florence Dialysis Center, Inc.),
DAB CR994 (2003); Renal Services Group of El Centro, DAB CR482 (1997); SRA, Inc.,
d/b/a/ St. Mary Parish Dialysis Center, DAB CR341 (1994). Thus, in order to qualify as
an approved supplier of Medicare services, an ESRD must be surveyed on-site as if it
were a provider of Medicare services, so that its compliance with the requirements of
Subpart U can be assessed and certified. Each facility must be surveyed at least once
every 12 months, and more often, if necessary, to ensure that identified deficiencies are
corrected. 42 C.F.R. § 488.20(a).

To participate in and receive payment from Medicare, an ESRD facility must satisfy all
the provisions of section 1881 of the Act and it must be in substantial compliance with
Subpart U’s conditions for coverage. 42 C.F. R. § 405.2180; 42 C.F.R. § 488.3(a). A
“condition for coverage” represents a broad category of services. Each condition is
contained in a single regulation, which is divided into subparts called standards. See 42
C.F.R. § 488.26(b). With one exception,” the failure of an ESRD supplier to meet one or
more of the conditions for coverage set forth in Subpart U will result in termination of
Medicare coverage for the services furnished by the supplier. 42 C.F.R. § 405.2180(a).

If a facility is deficient with respect to one or more standards, it may participate in the
Medicare program only if: a) it has submitted an acceptable plan of correction for
achieving compliance within a reasonable period of time acceptable to the Secretary; and
b) the deficiencies “neither jeopardize the health and safety of patients nor are of such
character as to seriously limit the provider’s capacity to render adequate care.” 42 C.F.R.
§ 488.28. Ifthe facility meets these criteria, the state agency/CMS may grant it a
“reasonable time” in which to achieve compliance. Ordinarily that amount of time is 60

> Where an ESRD facility does not participate in and pursue the goals of its ESRD
network, as required by 42 C.F.R. § 405.2134, CMS may impose an alternative sanction.
42 C.F.R. § 405.2181.
3

days but depends on the nature of the deficiency and the survey agency’s judgment as to
the capabilities of the facility to provide adequate and safe care. 42 C.F.R. § 488.28(c).
Nothing in this or any other regulation authorizes a period of correction where a facility is
found out of compliance at the condition level.

CMS has established “ESRD networks in which the approved ESRD facilities
collectively provide necessary care for ESRD patients.” Act, § 1881(c); 42 C.F.R.

§ 405.2110. Among other responsibilities, the network conducts its own on-site reviews
to identify facilities that fail to provide appropriate care. 42 C.F.R. § 405.2112(i).

Procedural Background. In its 2006 Dialysis Facility Report, the University of Michigan
Kidney Epidemiology and Cost Center reported that, from 2002 through 2005, this
facility had a whopping 63% annual observed death rate among its patients.
Considering the characteristics of the patient population, a rate of 26% would have been
expected (i.e., the facility had 146% more deaths than expected). CMS Ex. 7, at 3.
Because of this high mortality rate, as well as the facility’s poor performance on other
outcome measures (adequacy of treatment, anemia management, vascular access
management, and hospitalizations), and the facility’s repeated failure to improve
(notwithstanding the network’s efforts), Florida’s ESRD network recommended that
CMS impose sanctions. CMS Ex. 3, at 1; CMS Ex. 5, at 1; CMS Ex. 6; see also CMS Ex.
7; CMS Ex. 24, at 2-3 (Payne Decl.); see Act, § 1881(c)(2)(G).

Responding to the network’s recommendation, surveyors from CMS and the Florida
Agency for Healthcare Administration (State Agency) conducted a complete
recertification survey from March 5-7, 2007. CMS Ex. 24, at 3 (Payne Decl.). The
surveyors determined that the facility was not in substantial compliance with four
conditions for coverage — 42 C.F.R. § 405.2136 (governing body and management), 42
C.F.R. § 405.2140 (physical environment), 42 C.F.R. § 405.2161 (director of renal
dialysis facility), and 42 C.F.R. § 405.2162 (staff of a renal dialysis facility) — and that its
deficiencies posed immediate jeopardy to patient health and safety. CMS Ex. 3.
Petitioner does not contest these survey findings. Petitioner’s Closing Brief (P. Cl. Br.) at
1.

By letter dated March 16, 2007, CMS reminded Petitioner that to participate in the
Medicare program as a supplier of services, a renal dialysis facility “must meet all of the
Medicare Conditions of Coverage for Renal Dialysis Facilities, and be free of hazards to
patient health and safety.” CMS Ex. 1, at 1. The letter said that, unless the immediate
threat to patient health and safety was removed, CMS would terminate Petitioner’s
Medicare provider agreement effective April 3, 2007. CMS further directed Petitioner to
submit a plan of correction within ten days in order to ensure a revisit survey before April
4

3, 2007. The letter urged that Petitioner “immediately and thoroughly address the
deficient practices outlined in the attached [survey] document as well as the problems
reported to you by the [ESRD] network after their January visit to your facility.” CMS
Ex. 1, at 3. The letter specifically warned:

You must send us a letter of credible allegation and an
acceptable plan of correction (PoC) within ten days of
receipt of this notice in order to ensure a revisit by or
before April 3, 2007. Upon written notification of how and
when you actually corrected all serious deficiencies, CMS
will evaluate the information provided and, if it seems
possible another survey may result in a finding of compliance,
we will try to arrange it before the termination date. The
decision will be based on all the facts surrounding the
termination, and a new survey may be authorized before the
impending termination date even though not required by law
or our procedures.

(Emphasis in original) CMS Ex. 1, at 1.

Petitioner submitted its plan of correction. Notwithstanding the above warning, it listed
completion dates later than April 3 — the proposed termination date. One of the
surveyors, Glenda Payne, RN, is also CMS’s ESRD technical advisor and nurse
consultant for two regions covering 13 states (including Florida). She called the facility
to advise its management that CMS could not authorize a revisit without a credible
allegation that the facility had achieved substantial compliance; to avoid termination, the
facility had to correct in time for the State Agency to conduct a revisit survey prior to the
termination date. CMS Ex. 24, at 3 (Payne Decl.) Petitioner therefore amended its plan,
promising to complete most of its corrections by March 28, 2007. CMS Ex. 4. The State
Agency then scheduled a revisit. CMS Ex. 24, at 3 (Payne Decl.); P. Ex. 26, at 2 (Allen
Decl.).

> Robert Allen, who is vice-president of operations for Renal CarePartners, Inc.,
complains that, on one day’s notice, Surveyor Payne required the facility to amend its
completion dates, and make all identified corrections. In fact, the March 16 notice letter
warned that the facility had to achieve compliance before the termination date.
Moreover, as the letter states, nothing in the statute or regulations requires that CMS
resurvey prior to termination, particularly where, as here, the facility’s deficiencies
“jeopardize health and safety,” or “are of such character to seriously limit the provider’s
capacity to render adequate care.” 42 C.F.R. § 488.28(b). I note also that many of the
facility’s problems were cited by the ESRD network during its January 2007 visit, and
5

On March 29, 2007, the surveyors re-visited the facility and concluded that its substantial
noncompliance with four conditions for coverage (42 C.F.R. §§ 405.2136, 405.2140,
405.2161, and 405.2162) continued, and that its deficiencies still posed immediate
jeopardy to patient health and safety. In an April 2, 2007 letter, CMS informed Petitioner
that it was terminating Medicare coverage because of the facility’s continuing deficient
practices at an immediate jeopardy level of severity. CMS Ex. 2.

On April 19, 2007, Petitioner requested an expedited hearing before an administrative law
judge (ALJ). On May 2, 2007, I held a pre-hearing conference, during which I proposed,
in light of Petitioner’s request for an expedited hearing, a shortened briefing schedule.
The parties were directed to submit their written arguments, exhibits, and written
declarations of witnesses. CMS submitted a brief (CMS Br.) with 30 exhibits (CMS Exs.
1-30). Petitioner submitted a brief (P. Br.) with 27 exhibits (P. Exs. 1-27). Following
receipt of the parties’ submissions, I held another pre-hearing conference on June 20,
2007, during which the parties agreed that this matter could be resolved on the basis of
written submissions without the need for an in-person hearing. I directed the parties to
submit closing briefs, with reply briefs to follow in two weeks. The parties accordingly
submitted closing briefs, followed by reply briefs. With its closing brief (CMS Cl. Br.),
CMS submitted an additional exhibit, CMS Ex. 31. With its reply brief, Petitioner
submitted three attachments (Tabs A-C) from CMS manuals, and an additional five
exhibits (P. Exs. 28-32). Following these submissions, CMS filed a surreply and
Petitioner replied to the surreply, both of which I have accepted. In the absence of
objections, I admit into evidence CMS Exs. 1-31 and Petitioner’s Exs. 1-32.

II. Issues

The sole issue before me is whether, based on the survey findings, CMS was authorized
to terminate Petitioner’s Medicare participation.

earlier. CMS Ex. 1, at 3; CMS Ex. 6; CMS Ex. 7.
III. Discussion

A, Without affording it an opportunity to correct, CMS may terminate a
facility’s program participation if the facility does not maintain
substantial compliance with Medicare Conditions for Coverage.*

As a threshold matter, Petitioner all but concedes that it was not in substantial compliance
at the time of the March 7 survey; it does not contest CMS’s determination as to the level
of its noncompliance at that time. However, Petitioner complains that it “was not allowed
a reasonable time to return to substantial compliance.” P. at 3. Petitioner’s underlying
assumption is incorrect; in fact, neither the statute nor regulations afford a substantially
deficient facility the opportunity to correct its deficiencies before a penalty — including
termination — is imposed.

The Act itself simply authorizes the Secretary to terminate if he determines that a facility
“has consistently failed to cooperate with network plans and goals... .” Act,
§1881(c)(3). And the subpart U regulations mandate termination where a condition for
coverage is not met. 42 C.F.R. § 405.2180(a) (“failure . . . to meet one or more of the
conditions for coverage ... will result in termination ....). Section 488.28 of 42 C.F.R.,
however, says that, under certain circumstances, deficient providers or suppliers, other
than skilled nursing facilities (SNFs) and nursing facilities (NFs), will be afforded a
reasonable opportunity to correct.° The facility must not have any condition-level
deficiencies. If its deficiencies are standard-level, they may not, “individually or in
combination,” jeopardize the health and safety of patients nor be of such character as to

4 My findings of fact and conclusions of law are set forth, in italics and bold, in
the discussion captions of this opinion.

* Elsewhere, the regulations provide that whenever CMS finds a SNF or NF
substantially noncompliant, it may impose a remedy without affording an opportunity to
correct, notwithstanding its (or a state agency’s) routine practice of allowing facilities
such an opportunity. See 59 Fed. Reg. 56,171 (Nov. 10, 1994) (“[N]either the Act nor the
Constitution require that providers have the opportunity to correct deficiencies before
sanctions are imposed.”); see also Rosewood Living Center, DAB No. 2019, at 9 (2006);
Beechwood Sanitarium, DAB No. 1824, at 15 (2002); 42 C.F.R. § 488.456(b) (may
terminate whether or not there is immediate jeopardy); 42 C.F.R. § 488.410 (must
terminate within 23 calendar days if ongoing immediate jeopardy not removed); 42
C.F.R. § 488.438(e) (no review of CMS’s determination to impose a remedy against a
substantially noncompliant facility).
7

seriously limit the facility’s capacity to render adequate care. The amount of time
afforded for correction depends on the nature of the deficiency and the state survey
agency’s judgment as to facility’s capacity to provide adequate and safe care. Ordinarily,
the facility is expected to achieve compliance within 60 days, but, in individual situations
where the state survey agency considers 60 days unreasonable, it may recommend that the
Secretary grant additional time for correction.°

Here, the facility is not entitled to the opportunity to correct described in 42 C.F.R.
§ 488.28. The March 7 survey findings — which Petitioner does not now challenge — were
voluminous and alarming. Among them:

. Six of six staff members assigned responsibility for testing the water
used for dialysis treatment failed to demonstrate competency,
“exposing all of the patients to the risk of sustaining possible,
probable, or actual harm from exposure to chloramine and chlorine,
resulting in hemolysis, harm and death. All patients would be
exposed at once with the possibility of mass casualties.”

. The facility had no system in place to ensure prompt response to
critical laboratory values; for example, serum potassium levels for
those patients using an altered potassium bath were not closely
monitored, and care was not delivered in accordance with physician
orders.’

. Staff responsible for mixing bicarbonate, adding electrolytes, and
cleaning the bicarbonate tank were not following facility policies and
procedures to ensure safe cleansing and creation of bicarbonate
solution for use during patient dialysis.

® CMS’s declination to afford a facility the opportunity to correct or, if it allows an
opportunity to correct, the amount of time it allows are probably not reviewable in this
forum. My jurisdiction is limited to “initial determinations,” which include whether the
services of a supplier continue to meet the conditions for coverage (42 C.F.R.
§ 498.3(b)(6); see 42 C.F.R § 405.2182(b)), but not determinations as to the opportunity
to correct. 42 C.F.R. § 498.3(b).

7 This specific deficiency was not corrected at the March 29 survey. See
Discussion Part B infra.
. Administrative staff and the medical director had not developed an
effective quality management program to monitor care, and to
address and improve their low performance on measured patient
outcomes such as mortality, which presented the risk of continued
poor outcomes for all patients treated at the facility (e.g., a mortality
rate almost two and a half times higher than expected based on the
patient population). Among a long list of specific examples, the
facility had no organized system to review each patient death for a
potential relationship to the treatment provided.

. No action was noted in response to a patient’s reported potassium
blood level of 8.7 (which is extraordinarily high).*

. The physical environment was not properly maintained.’

. The facility did not have a program to identify equipment requiring
repair or service, presenting potential hazards to patients and
personnel. Among other specific findings, an electronic meter used
to measure the chlorine level in water was dusty; its bottles were
stained, precluding accurate testing; it was not calibrated.

. The facility had no functional alarm for water quality and did not
ensure that patients would be protected from potential harm during
times that deionization tanks were used as the primary water
treatment, with the potential to harm all patients on treatment when
the tanks were in use.

CMS Ex. 3, at 1, 2, 4, 7-9, 9, 13-14, 15-16, and 17-18, respectively.

® This specific deficiency is related to the absence of a system for responding to
critical lab values. See Discussion Part B infra.

° During the March 29 survey, the surveyors concluded that this deficiency had
not been corrected. Among other findings, the employee bathroom still lacked hot water.
See Discussion Part C infra.
9

These represent only a fraction of the findings; the list goes on and on. CMS Ex. 3. It
shows that the facility had condition-level deficiencies that immediately jeopardized
patient health and safety. Nothing in the statute or regulations provides a facility with this
level of noncompliance the opportunity to correct.'°

I recognize that, notwithstanding the plain language of 42 C.F.R. § 488.28, CMS has
decided to afford even egregiously deficient facilities the opportunity to correct, although,
as here, with a shortened time line for correction. This is apparently wholly within the
agency’s discretion, and Petitioner can hardly complain that CMS has been more
generous to it than called for in the statute or regulations.

Petitioner nevertheless suggests that it should have been given at least 60 days for
correction, pointing to selected provisions of the State Operations Manual (SOM), and
claiming that, prior to the March 29 survey, its deficiencies no longer posed immediate
jeopardy to patient health and safety. I note first that to continue its participation, the
facility still has to achieve substantial compliance, and removal of the immediate jeopardy
finding (even if true) would not entitle the facility to an extended period in which to
achieve that compliance.'!

'© | find this level of noncompliance particularly alarming in light of the fact that,
since at least 2005, the ESRD network had purportedly been working with the facility,
providing technical assistance and tools for quality improvement. The results of the
March 2007 surveys seem to confirm the network’s conclusion that the facility’s action
plans “have not reflected the urgency of the situation.” CMS Ex. 6, at 1.

'' Petitioner argues that it received inadequate notice as to the basis for its
termination. P. Reply Br. at 3, et seg. While the notice letter says that CMS will
terminate “unless the immediate threat to patient health and safety is removed,” it also
says that to participate in the Medicare program a renal dialysis facility “must meet all of
the Medicare Conditions for Coverage for Renal Dialysis Facilities, and be free of
hazards to patient health and safety.” CMS Ex. 1, at 1. The letter instructs the facility to
“immediately and thoroughly address the deficient practices” set forth in the survey
document. /d. at 3. It warns the facility that its plan of correction must explain how the
facility has corrected “all serious deficiencies,” and warns that CMS will not even
schedule a survey unless “it seems possible another survey may result in a finding of
compliance.” (Emphasis added) Jd. at 1. CMS also provided the facility with a detailed

10

Second, Petitioner bases its claim on a purported oral remark from the state surveyor.
According to Petitioner, Surveyor Arlene Schweitzer told the facility administrator that
the immediate jeopardy had been removed. P. Ex. 26, at 2 (Allen Decl.); P. Ex. 27, at 3
(Fernandez Decl.). But the state surveyor was not empowered to decide whether the
immediate jeopardy had been removed. Only the Secretary (for whom CMS acts) has the
final authority to make that determination. 42 C.F.R. § 488.18(c). Under no
circumstances would the determination be made by a single state surveyor, and any
purported representations she made would not bind CMS. See Heckler v. Community
Health Services of Crawford County, 467 U.S. 51 (1984).”

Third, once a finding of substantial noncompliance has been made, the presumption is
that the facility’s level of noncompliance continues until the facility establishes that it has
corrected, which ordinarily requires a resurvey. Certainly, considering the nature of the
March 7 survey findings, the immediate jeopardy determination would not have been
removed unless CMS made that determination following a revisit survey. See, e.g.,
Asbury Center at Johnson City, DAB No. 1815, at 19-20 (2002).'* In fact, as shown by
the March 29 survey results, the facility had not removed the immediate jeopardy. CMS
Ex. 5.

statement of deficiencies. CMS Ex. 3. I am therefore satisfied that Petitioner received
adequate notice of its specific deficiencies, and well understood (or should have) that, in
order to continue its Medicare participation, it had to bring itself into substantial
compliance with program requirements. I note also that Petitioner had a duty to
familiarize itself with the legal requirements for Medicare participation. Heckler v.
Community Health Services of Crawford County, 467 U.S. 51, 64 (1984).

® In Crawford County, the Supreme Court expressed particular skepticism at the
Medicare supplier’s purported reliance on oral advice. Crawford County at 65.

'S T need not address the issue because, under any standard of review, the facility
did not meet the requirements for participation in the Medicare program, but for this
reason, the Hillman analysis (Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd
Hillman Rehabilitation Ctr. v. HHS, No. 98-3789 (GEB) (D. N.J. May 13, 1999)) may not
apply here, where everyone agrees that the facility was not in substantial compliance at
the time of the March 7 survey. The presumption is that the noncompliance continues
until the facility establishes otherwise, so CMS would not necessarily bear any additional
burden of going forward.
11

Fourth, even assuming that, based on the surveyor’s remarks, Petitioner genuinely
believed that its deficiencies no longer posed immediate jeopardy, nothing suggests that it
was prejudiced by that belief. The facility was still substantially noncompliant. As it
knew, or should have known, it could only continue its participation in the Medicare
program if it corrected its deficiencies and achieved substantial compliance. The
surveyor’s purported mis-statements therefore should not have changed Petitioner’s
course of action.

Finally, if there were a misunderstanding as to whether the immediate jeopardy had been
removed, the evidence suggests that Petitioner was not without fault in creating that
impression. As discussed below, Petitioner made representations as to the steps it had
taken to correct, which misled CMS into accepting its plan of correction in the first place.

With respect to Petitioner’s complaints that, in imposing termination, CMS and the state
agency did not follow certain provisions of the SOM, particularly as to the time tables for
termination, I note that such manual provisions offer guidance to the state agency, but
their provisions do not change the Medicare participation requirements set out in the
regulations, by which Iam bound. Alden-Princeton Rehabilitation & Health Care
Center, DAB No. 1873, at 8 (2003); Beverly Health and Rehabilitation Center —
Williamsburg, DAB No. 1748, at 8 (2000). Moreover, Petitioner’s citations to the SOM
are selective. In its instructions for processing immediate jeopardy terminations, the
manual says that the “processing times given here are the maximum allowed. Do not
postpone or stop the procedure unless compliance is achieved and documented through
onsite verification.” SOM § 3010B (P. Cl. Br. Attach. A) (Emphasis added). It seems,
then, that CMS’s actions were in accord with these provisions of the SOM.

B. The facility had no system in place for tracking laboratory test
samples, and therefore was not able to respond promptly to critical lab
results, which puts the facility out of substantial compliance with
Medicare Conditions for Coverage (42 C.F.R. §§ 405.2136, 405.2161, and
405.2162).

Patients requiring renal dialysis are particularly vulnerable to alterations in their blood
chemistry. Among other reasons, blood tests are necessary to assess the effectiveness of
the dialysis. A monthly blood test measures blood urea nitrogen (BUN), an indicator of
the overall level of waste products in the patient’s system. CMS Ex. 26, at 10.

As the parties agree, blood potassium levels are important and must be monitored.
Dialysis patients are more likely to have abnormal levels, which can lead to muscle
cramps or weakness, nausea, diarrhea, dehydration, low blood pressure, confusion,
paralysis, irregular heart beat, and even cardiac arrest. The only way to monitor blood
potassium levels is to take a blood sample and send it to the lab for analysis. Based on
12

the lab results, adjustments may be made to the patient’s dialysate. CMS Ex. 26, at 9.'* If
the levels are too low, potassium can be added; if too high, it should be removed. Of
course, in order to make the necessary adjustments, staff must first draw the blood, send it
to the lab, receive back the test results, review the test results, and advise the treating
physician of changes. The physician may then change his orders in response to the
patient’s altered condition. CMS Ex. 30, at 3-4 (Schweitzer Decl.).

At the time of the March 7 survey, the surveyors noted that the necessary tracking and
response were not occurring in any reliable, systematic way; staff were not responding to
critical lab values and were not monitoring the patient’s dialysis treatment plan. Asa
result, vulnerable patients were put at increased risk for adverse outcomes, including even
death.

The survey report cites specific examples of patients with abnormal potassium levels
whose lab values were not adequately monitored. Possibly the most egregious involved
Patient #10. The laboratory results of a December 7, 2006 blood draw showed that
Patient #10’s potassium level was a dangerously high 8.7 (normal ranges 3.4 to 5.0),
which the lab characterized as “absurd.” Laboratory staff were apparently so concerned
about the result that on December 9 (a Saturday) they called the facility to notify staff of
the elevated level. Yet no documentation suggests that anyone notified the physician of
these results nor that the test was repeated to verify or refute the results. Id. at 36-37.

In its plan of correction, the facility said that, although it had in place computer programs
for monitoring patient care, not all of its nursing staff were using them. Therefore, “in
order to maintain continuity and to maintain up to date records, the nurses have returned
to a process utilizing Kardex’s for daily treatment orders.” Jd. at 37 (Emphasis added).
Under this system, the physician writes his orders and the nurse transcribes it on to a
patient-specific card, called a Kardex. Changes in treatment orders, start and stop dates
for medications, dosage changes, dialysate changes, and changes in the parameters of
treatment are all recorded on the Kardex, according to the plan of correction. The facility
also assured CMS that its administrator would check weekly to verify that the process
was being followed, and would review weekly the information in the Kardex and
compare it to the physician orders to verify accuracy. Id.

'4 Dialysate is the fluid in the dialyzer that helps remove wastes and extra fluid
from the patient’s blood.
13

When the surveyors arrived for the March 29 survey, the Kardex system was not
operational. Although each patient file apparently contained a Kardex, the cards were all
completely blank except for the patient’s name. CMS Ex. 19; see also P. Cl. Br. at 46
(“the cards were not blank. They had patient names. .. .” ).'°

Even if the cards had been filled out, it does not follow that the facility had an effective
system in place. The system had to be operational. That means that staff should have
been able to determine: whether blood had been drawn as ordered; whether the blood
sample had been sent to the lab with the appropriate order for testing; whether the lab had
returned the test results; whether appropriate staff had reviewed the test results; whether
they had notified the physician of any changes; and whether the physician has responded
by issuing new orders.

Surveyor Schweitzer tested the effectiveness of the facility’s “system” by reviewing the
patient records for the facility’s five patients who had been identified as requiring altered
potassium dialysate.

Patient #1 had a March 17, 2007 physician order for weekly lab tests of potassium level.
CMS Ex. 14, at 1. The record contained no evidence that the blood samples had been
drawn. Surveyor Schweitzer saw no lab test results for the two weeks prior to the survey.
CMS Ex. 30, at 4-5. The facility simply continued to give the patient a 4.0 level dialysate
ath, without knowing the patient’s potassium blood levels.

Patient #2 had a March 24, 2007 physician order for weekly potassium levels. CMS Ex.
5. A blood sample should have been drawn on March 27, based on the facility’s
practices, but at the time of the survey, the clinical record contained no evidence that a
lood sample had been drawn, nor could staff produce any evidence that the blood had
een drawn. Again, the facility simply continued to administer a higher level of dialysate
ath, without regard to what the patient’s levels might have been.

Patient #3 had a March 13, 2007 order for weekly potassium levels. CMS Ex. 16, at 1.
On March 17, 2007, the physician ordered a 1.0 dialysate bath, based on the patient’s
serum potassium level of 6.3. But on March 27, the facility neglected to include a request
for potassium level when they sent the patient’s blood sample to the lab. The facility
continued to administer the lower concentration dialysate bath, again without regard to
what the patient’s potassium levels might have been.

'S Petitioner attributes its failure to develop cards for all residents to “the
unreasonable time period for correction.” P. Br. at 19. I have already addressed this
issue.
14

Patient #5 had physician orders for weekly serum potassium levels that were dated March
14 and March 21, 2007. CMS Ex. 17, at 1, 2. On March 23, the physician ordered a 1.0
dialysate bath. Blood was drawn on that day but staff did not request testing for
potassium levels. Jd. at 4. Blood was next drawn on March 26, and sent to the lab, but
the facility neglected to request a potassium level. Jd. at 3. Staff just continued to
administer a lower concentration dialysate bath.

Since the time of the survey, Petitioner has apparently determined the status of these
patients’ blood tests, and argues that, in fact, for all but one of these patients, blood tests
were performed as ordered. But this misses the point. That the Administrator did not
know and could not promptly find out what was going on with four out of five of these
vulnerable patients shows that the facility’s system for tracking lab tests was not
effective. It is not sufficient that the facility might eventually be able to track down the
lab results; it must have a system in place to monitor the blood draws, testing, and lab
reports so that it can respond timely to any changes in the patient’s blood levels.

I reject Petitioner’s remarkable argument that such timely response is not necessary.
According to the facility’s medical director, Dr. Rodolfo Gutierrez, missing a potassium
lab test, or even multiple lab tests, creates no potential for harm, since he is only
concerned about “trends” in potassium levels. In an emergency, according to Dr.
Gutierrez, he would order the lab on a “stat” basis, and review it immediately. P. Ex. 20,
at 4 (Gutierrez Decl.). But based on what was going on at the facility, Dr. Gutierrez
would not necessarily have known if test results showed an emergency, as demonstrated
by the March 7 survey finding that Patient #10’s blood test showed a potassium level of
8.7. Nothing in the record suggests that the information was even conveyed to the
physician. I agree with Surveyor Schweitzer that a patient’s life could be compromised if
the incorrect dialysate bath is used for any length of time, and the physician cannot order
appropriate treatment if staff fail to provide him with timely lab results. CMS Ex. 30, at
7-8 (Schweitzer Decl.).

Nor do I agree with Petitioner’s suggestion that monthly reviews by its medical team
make up for its ineffective tracking system because the reviewers would, at the time of
the review, notice any errors or irregularities. See P. Br. at 14. Waiting up to a full
month to respond to a critical test result is not acceptable. Moreover, what would the
facility do if it determined that ordered testing had not been performed? Presumably the
physician would re-order the tests, but, without an effective tracking system in place, the
facility still would have no way of ensuring that the samples were taken, the tests ordered,
and the results received and reported.
15

With respect to the individual patients whose charts were reviewed by Surveyor
Schweitzer, the ordered testing was not even performed for at least two of them —
omissions that no one picked up on because of the facility’s ineffective tracking system.
Petitioner admits that the ordered blood labs were not drawn for Patient #1. P. Br. at 15;
P. Ex. 23, at 7 (Savage Decl.). Lab reports show that blood was drawn on March 15 (two
days prior to the date of the physician order) and on March 29, the date of the survey. P.
Ex. 9. The facility thus failed to follow the physician order, and waited 12 days before
testing Patient #1’s potassium levels.

Nor were the ordered tests performed for Patient #5. Administrator Savage suggests that
CMS looked at the wrong patient chart, and claims that, for Patient #5, all ordered labs
were drawn timely. P. Ex. 23, at 8 (Savage Decl.). Misidentified or not, CMS has
produced a physician order and test results that are unquestionably for the same facility
patient. The documents show that the patient had a physician order for weekly potassium
levels. CMS Ex. 17. The lab report shows no testing for potassium, and the record
contains no evidence of any test for potassium levels from the date of the order (March
14) through the date of the survey, more than two weeks later.

The regulations require that an ESRD be under the control of an identifiable governing
body responsible for the governance and operation of the facility. The governing body
must ensure safe and effective patient care, which includes developing written patient
care policies, and periodically reviewing implementation of those policies to ensure that
they have been carried out. 42 C.F.R. § 405.2136. Patient treatment is under the general
supervision of a physician-director who must devote sufficient time to the facility to carry
out his responsibilities of planning, organizing, conducting, and directing the professional
ESRD services. The physician-director must ensure adequate monitoring of the patient
and the dialysis process. 42 C.F.R. § 405.2161(b)(3). In addition, properly trained staff
must be present in adequate numbers to meet the patient needs. 42 C.F.R. § 405.2162.

The absence of an effective system for monitoring lab tests, which would have enabled
the facility to respond promptly to critical lab results, means that the governing body was
not doing its job, the physician-director was not performing his job, and the staff were not
meeting the patient needs. It represents a serious breakdown in the delivery of care,
jeopardizes patient health and safety, puts the facility out of substantial compliance with
the three cited conditions for coverage, and, without regard to any of the other
deficiencies cited, justifies termination here.
16

C. The facility was not in substantial compliance with 42 C.F.R.

§ 405.2140(b) because it failed to correct its infection control problems,
which jeopardized patient health and safety, and seriously limited the
facility’s capacity to render adequate care. Based on these ongoing
deficiencies, CMS was justified in terminating the facility’s Medicare
participation.

need not resolve the infection control issue since the facility’s failure to track patient lab
tests, by itself, justifies termination.’ Nevertheless, because certain dispositive facts are
undisputed and because Petitioner’s arguments — that the regulation is met so long as it

as written procedures in place, and that hot water is not necessary for effective infection
control — are plainly and dangerously wrong, I address the issue. I conclude that the
facility’s continuing failure to correct its infection control problems justifies
termination."”

People on dialysis are especially vulnerable to infection, which is the second leading
cause of death among dialysis patients. CMS Ex. 31. To protect them, the facility must
¢ maintained and equipped to provide a sanitary environment. 42 C.F.R. § 405.2140(b).
t must have written policies and procedures in effect for preventing and controlling
epatitis and other infections. These policies must include, but are not limited to,
appropriate procedures for surveillance and reporting infections, housekeeping, handling
and disposal of waste and contaminants, and sterilization and disinfection.

‘6 For this reason, I decline to address the hotly contested issue of whether the
facility was using a potentially dangerous device called a “dummy drip chamber” in
setting up its machines.

'T Petitioner characterizes CMS’s raising the infection control issue in its closing
brief as “trial by ambush” since CMS did not discuss the deficiency in its opening brief.
However, the deficiency is set forth in the Statement of Deficiencies. Petitioner itself
obviously recognized that the issue was on the table because it addressed it in its opening
brief and even moved for partial summary judgment, arguing that it was in compliance
with 42 C.F.R. § 405.2140(b)(1). Although CMS initially did not address the issue in its
motion for summary judgment, we discussed it at the prehearing conference, CMS
addressed it in its closing brief, and Petitioner had ample opportunity to reply and even
sur-reply.
17

Petitioner’s record on infection control is particularly grim. Among its many concerns,
the ESRD network complained that the facility lacked effective and efficient infection
control management, citing its high rate of hospitalizations due to infection (25%).'*
CMS Ex. 6, at 2. The network also charged that staff members failed to wash their hands
and use complete personal protective equipment. Jd.

At the time of the March 7 survey, the facility’s significant problems with infection
control continued. Petitioner had in place written policies and procedures for controlling
and preventing infection, and CMS voices no objections to the contents of those
documents. However, in CMS’s view, these policies and procedures were not “in effect”
because Petitioner failed to follow them. Among other cited deficiencies, the staff
bathroom had no hot water. CMS Ex. 3, at 30. Behind the nurses’ station, “clean” and
“dirty” sinks sat side-by-side, with splatter from the dirty sink contaminating the contents
of the clean sink (containers of clamps and bleach-soaked cloths used for cleaning
machinery and patient chairs). A third sink, located at the far end of the room, contained
the emergency eyewash station but could not be used because clean supplies were stacked
on the entire counter and sink edge. Jd. at 29.

In its plan of correction, Petitioner responded to the absence of hot water in the employee
bathroom by assuring CMS that “lack of hot water in the facility was rectified
immediately and the facility has hot water for hand washing and patient care.” Jd. at 29.'"
With respect to the problem of the clean and dirty sinks, the facility promised that the
“front sink” would be designated the clean sink, and the “back sink” would be designated
as the dirty sink, assuring CMS that “these sinks have been labeled as such and the staff

'§ In its 2006 Dialysis Facility Report, the University of Michigan Kidney
Epidemiology and Cost Center recommended review of infection control practices at the
facility because, during the period 2002-2004, 26% of the facility’s patients were
hospitalized for septicemia, compared with 10.9% nationally. CMS Ex. 7, at 4.

'° Petitioner asserts that, in making this representation, it was not claiming that it
had hot water in the employee bathroom. P. Reply Br. at 16. At the time of the March 3
survey, the facility apparently had no hot water at all anywhere in the facility — a problem
that inexplicably seems to have escaped the notice of the surveyors since they did not cite
it in the statement of deficiencies. CMS Ex. 3. In any event, I do not find it credible that
Petitioner offered corrections to problems that were not cited, but then said nothing about
the problem that was cited — the absence of hot water in the employee bathroom. I find it
more likely that Petitioner’s ambiguously-worded plan of correction was intended to
mislead CMS into believing that the cited problem had been remedied when it had not.
18

have been informed of the change.” Jd. The facility then claimed that all dirty clamps
and bleach solution “have been moved” to the dirty sink, and that all the supplies that
prevented the use of the eyewash station had been relocated to a cart. Id.; see also CMS
Ex. 4.

But when the surveyors arrived at the facility on March 29, the facility still had no hot
water in its employee bathroom. According to Petitioner, the hot water heater “intended
for that purpose” was in the trunk of the car of a corporate director.*” P. Br. at 18.

Petitioner argues that 42 C.F.R. § 405.2140(b)(1) requires only written procedures, and,
so long as the written documents were in place, the facility’s failure to provide effective
hand washing facilities for staff does not state a deficiency under the regulation. P. Br. at
10; P. Reply Br. at 6-7. I reject this. The plain language of the regulation requires that
policies and procedures be “in effect.” See also 42 C.F.R. § 405.2136(f) (governing body
must ensure that intent of written policies is carried out).

Petitioner also argues that hot water was not required because: 1) alcohol-based hand

rubs were available for staff use; 2) other sinks in the facility had hot water, which staff
could have used; and 3) hot water is not necessary for hand washing anyway. I reject all
three arguments.

To justify substituting alcohol-based hand rubs for hand washing, Petitioner quotes at
length a section from the Federal Register amending nursing home regulations to allow
alcohol-based hand rubs in egress corridors, notwithstanding the potential fire hazard
posed. The preamble to those regulations cites literature from the Center for Disease
Control (CDC) discussing the virtues of hand rubs for infection control. 70 Fed. Reg.
15229, 15230 (March 25, 2005). While alcohol-based rubs may be sufficient for some
purposes, they are not appropriate for staff who have used the bathroom, because their
hands are then susceptible to contamination with proteinaceous materials. The CDC
advises that alcohol gels are not appropriate for use when hands are visibly dirty or
contaminated with proteinaceous (blood or other bodily fluids such as fecal material or
urine) materials. CDCI, Guideline for Hand Hygiene in Health-Care Setting (2002),
available at http://www.cdce.gov/mmwr/preview/mmwrhtml/rr5 1 16al.htm.

° CMS also asserts that the facility had not resolved the problem of cross-
contamination between its clean and dirty sinks, which Petitioner vehemently disputes. I
need not resolve this factual dispute in order to find, based on the absence of hot water in
the employee bathroom, that the facility was not in substantial compliance with 42 C.F.R.
§ 405.21409(b).
19

The facility’s own policy for hand washing emphasizes that hand washing “is the single
most important procedure for preventing nosocomial (hospital-based) infection.”

Routine hand washing requires “vigorous rubbing together of all surfaces of lathered
hands for at least 45 seconds, followed by thorough rinsing under a stream of water for a
minimum of 30 seconds.” Personnel are instructed to wash their hands “after touching
inanimate sources that are likely to be contaminated with organism: these sources include
... urinal, using restroom, etc.” P. Ex. 19, at 2. Ina January 15, 2007 staff meeting and
January 16 inservice, the director of clinical services, Judi Fernandez, RN, added,
“Visible residue or material on hands require hand washing with warm water,
antibacterial [soap], for 30-45 seconds, vigorously and do in between fingers, fingers, and
both sides of the hands up to the wrist, but further up if there has been contamination with
blood or other fluids.” Jd. at 1 (Emphasis added); CMS Ex. 22.

With regard to Petitioner’s argument that hot water was available in other facility sinks,
staff using the employee bathroom would have had to go from the second floor to the first
floor to reach those sinks, creating multiple opportunities for the spread of infection.

Finally, Petitioner argues that hot water is unnecessary, pointing to various portions of the
CDC’s instructions that say nothing about water temperature. But, as noted above, Nurse
Fernandez’s instructions included the admonition that hands be washed in warm soapy
water. These instructions are consistent with CDC recommendations. See CDC, Clean
Hands Save Lives!, available at http://www.cdc.gov/cleanhands. The CDC recommends
warm, rather than hot water, in order to prevent dermatitis. But body oils on the hands
hold soils and bacteria. Hot or warm soapy water is more effective than cold, soapy water
in removing oily soils and the bacteria in them (which should come as no surprise to
anyone who has ever attempted to wash a greasy pan with cold water). See U.S. Food
and Drug Administration, Hand Washing, available at http://www.cfsan.fda.gov.
Obviously, unless the facility provided hot water, staff would not have access to any
warm water.

I note finally that, in light of this facility’s history of infection control problems, it should
have been doing all in its power to prevent the spread of infection. Offering its staff
warm water in which to wash after using the bathroom required a relatively simple fix,
but, for some reason, Petitioner did not make that correction. Although CMS did not cite
this as a condition-level deficiency, I find that it nevertheless jeopardized patient health
and safety and justifies termination.
20

IV. Conclusion

The facility was not in substantial compliance with program requirements at the time of
the March 3, 2007 survey. CMS afforded it an opportunity to correct its deficiencies, but
the evidence establishes that, at the time of the March 29, 2007 survey, it was not in
compliance with multiple Medicare conditions of participation. Its deficiencies
jeopardized patient health and safety. CMS is therefore authorized to terminate its

Medicare participation.

/s/
Carolyn Cozad Hughes
Administrative Law Judge