Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Donelson Place Care and Rehabilitation Center
(CCN: 44-5148),

Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-08-535
Decision No. CR2155
Date: June 15, 2010
DECISION

Petitioner, Donelson Place Care and Rehabilitation Center, was not in substantial
compliance with program participation requirements from April 10 through April 30,
2008. Petitioner failed to show that the determination that its noncompliance posed
immediate jeopardy to its residents from April 10 through April 24, 2008 was clearly
erroneous. A civil money penalty (CMP) of $5,750 per day from April 10 through April
24, 2008, is not reasonable in this case. A reasonable CMP is $3,050 per day from April
10 through April 24, 2008, and $250 per day from April 25 through April 30, 2008, a
total CMP of $47,250. A denial of payment for new admissions (DPNA) from April 24
through April 30, 2008, is also reasonable.

I. Background

Petitioner, located in Nashville, Tennessee, is authorized to participate in the federal
Medicare program as a skilled nursing facility (SNF) and the Tennessee Medicaid
program as a nursing facility (NF). Petitioner was subject to a Life Safety Code® (LSC)
survey, a complaint investigation, and a recertification survey by the Tennessee
Department of Health, Middle Tennessee Regional Office of Health Care Facilities (state
agency), all completed on April 10, 2008. The Centers for Medicare and Medicaid
Services (CMS) notified Petitioner by letter dated April 22, 2008, that Petitioner was not
in substantial compliance and that the surveyors had found immediate jeopardy and
substandard quality of care. CMS advised Petitioner that: it was imposing a CMP of
$5,750 per day effective April 10, 2008, continuing until the immediate jeopardy was
removed or Petitioner’s participation in Medicare was terminated; the amount of the
CMP per day would be reduced if immediate jeopardy was removed but noncompliance
continued; CMS was imposing a discretionary DPNA effective April 24, 2008, if
Petitioner did not return to substantial compliance before that date; Petitioner’s provider
agreement and participation in Medicare would be terminated on May 3, 2008, if
Petitioner did not remove the immediate jeopardy before that date; and the state was
required not to approve or to withdraw any prior approval of a nurse aide training and
evaluation program (NATCEP) that Petitioner conducted.'

CMS notified Petitioner by letter dated May 7, 2008, that a LSC revisit survey completed
on May 1, 2008, determined that Petitioner had removed the immediate jeopardy that the
LSC deficiencies under Tags K012, K025, K062, and K067 posed. CMS also advised,
however, that Petitioner was not found to have returned to substantial compliance. Based
upon the revisit survey, CMS decreased the CMP to $600 per day, beginning on April 25,
2008, until Petitioner returned to substantial compliance or was terminated. CMS further
advised Petitioner that the DPNA continued and that CMS would not terminate
Petitioner’s provider agreement on May 3, 2008. However, CMS noted that Petitioner
was subject to mandatory termination if it did not return to substantial compliance by
October 10, 2008.

CMS notified Petitioner by letter dated June 17, 2008, that a revisit survey by the state
agency on May 29, 2008, found that Petitioner had corrected all LSC violations as of
May 1, 2008, but that three health related deficiencies remained. CMS advised Petitioner
that it was modifying the enforcement remedies and imposing the following: a CMP of
$5,750 per day effective April 10 through April 24, 2008, reduced to $250 per day from
April 25, 2008, until Petitioner returned to substantial compliance or its participation was
terminated; the other remedies remained unchanged. Joint Stipulation (Jt. Stip.); CMS
Exhibit (CMS Ex.) 9 at 4-8, 9-11, and 12-14. The parties stipulated that both the DPNA
and CMP ended on April 30, 2008. Jt. Stip. {{ 6, 8. The parties also agreed that the state
agency and CMS concluded that immediate jeopardy existed from April 10 through April
24, 2008. Jt. Stip. 48.

' Petitioner advised me at hearing that it did not conduct a NATCEP. Therefore, the
withdrawal of authority to conduct a NATCEP is not an issue in this case. Tr. 30-31.
Petitioner requested a hearing by letter dated June 18, 2008. The case was assigned to me
for hearing and decision on June 20, 2008. I convened a hearing in Nashville, Tennessee,
on January 22 and 23, 2009, the substance of which is recorded in a 483-page transcript
(Tr.). CMS offered and I admitted CMS Exs. 1, 3, and 5 through 10. Tr. 40. Petitioner
offered Petitioner’s Exhibits (P. Exs.) 1 through 7 and 9, and P. Exs. | through 6 and 9
were admitted at hearing. Tr. 41-50, 371-73. P. Ex. 7 was submitted post-hearing at my
direction (Tr. 471-72), with no objection by CMS, and consists of pictures of a fire
damper that was viewed at the hearing. P. Ex. 7 is admitted and considered as evidence.
CMS elicited testimony from surveyor Jerry Humphrey, a state agency Fire Safety
Specialist Supervisor, and Debra Verna, a state agency Regional Administrator and
surveyor. Petitioner elicited testimony from: Mark Miller, its Administrator at the time
of the surveys in question; Mitch Abrams, the Vice President of Plant Operations for
Petitioner’s owner; and Steve Leake of Energy Command Corporation, an expert witness
on the function and installation of dampers. The parties submitted post-hearing briefs
(CMS and P. Brief, respectively) and reply briefs (CMS and P. Reply, respectively).

II. Discussion
A. Issues
The issues in this case are:

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

Whether the remedy imposed is reasonable.
B. Applicable Law

The statutory and regulatory requirements for a long-term care facility’s participation in
Medicare (SNF) and Medicaid (NF) are found at sections 1819 and 1919 of the Act,
respectively, and at 42 C.F.R. Part 483. Section 1819(h)(2) of the Act vests the Secretary
of Health and Human Services (Secretary) with authority to impose enforcement
remedies against a SNF for failure to comply substantially with the federal participation
requirements that sections 1819(b), (c), and (d) of the Act established.” Pursuant to
section 1819(h)(2)(C), the Secretary may continue Medicare payments to a SNF not

> Section 1919(h)(2) of the Act gives similar enforcement authority to the states to
ensure that NFs comply with the participation requirements that sections 1919(b), (c), and
(d) of the Act established.
longer than six months after the date the facility is first found not in compliance with
participation requirements. Pursuant to section 1819(h)(2)(D), if a SNF does not return
to compliance with participation requirements within three months, the Secretary must
deny payments for all individuals admitted to the facility after that date - commonly
referred to as the mandatory or statutory DPNA. In addition to the authority to terminate
a noncompliant SNF’s participation in Medicare, the Act grants the Secretary authority to
impose other enforcement remedies, including a discretionary DPNA, 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 remedies
against a long-term care facility that is not complying substantially with federal
participation requirements. “Substantial compliance means a level of compliance with
the requirements of participation such that any identified deficiencies pose no greater risk
to resident health or safety than the potential for causing minimal harm.” 42 C.F.R.

§ 488.301 (emphasis in original).* A deficiency is a violation of a participation
requirement established by sections 1819(b), (c), and (d) of the Act or the Secretary’s
regulations at 42 C.F.R. Part 483, Subpart B. Facilities that participate in Medicare may
be surveyed on behalf of CMS by state survey agencies to determine whether the

acilities 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. 42 C.F.R.

§ 488.406.

The regulations specify that a CMP that is imposed against a facility on a per day basis
will fall into one of two ranges of penalties. 42 C.F.R. §§ 488.408, 488.438. The upper
range of a CMP, $3,050 per day to $10,000 per day, is reserved for deficiencies that pose
immediate jeopardy to a facility’s residents and, in some circumstances, for repeated
leficiencies. 42 C.F.R. §§ 488.438(a)(1)(i), (d)(2). “Jmmediate jeopardy means a
situation in which the provider’s noncompliance with one or more requirements of
participation has caused, or is likely to cause, serious injury, harm, impairment, or death
to a resident.” 42 C.F.R. § 488.301 (emphasis in original). The lower range of a CMP,
$50 per day to $3,000 per day, is reserved for deficiencies that do not constitute
immediate jeopardy, but either cause actual harm to residents or cause no actual harm but
have the potential for causing more than minimal harm. 42 C.F.R. § 488.438(a)(1)(ii).

> References are to the 2007 version of the Code of Federal Regulations (C.F.R.), unless
otherwise indicated.
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). The hearing before an
ALJ is a de novo proceeding. Residence at Salem Woods, DAB No. 2052 (2006); Cal
Turner Extended Care Pavilion, DAB No. 2030 (2006); Beechwood Sanitarium, DAB
No. 1906 (2004); Emerald Oaks, DAB No. 1800 (2001); Anesthesiologists Affiliated,
DAB CR65 (1990), aff'd, 941 F.2d 678 (8th Cir. 1991). 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, CMS’s choice of remedies, or the factors
CMS considered when choosing remedies, is not subject to review. 42 C.F.R.

§ 488.408(g)(2). A facility may only challenge the scope and severity level of
noncompliance that CMS finds if a successful challenge would affect the range of the
CMP that CMS could impose or impact the facility’s authority to conduct a NATCEP.

42 C.F.R. §§ 498.3(b)(14), (d)(10)(i). CMS’s 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 (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 where
that finding was the basis for an immediate jeopardy determination. See, e.g., Ridge
Terrace, DAB No. 1834 (2002); Koester Pavilion, DAB No. 1750 (2000). ALJ review of
a CMP is subject to 42 C.F.R. § 488.438(e).

The standard of proof or quantum of evidence required is a preponderance of the
evidence. CMS has the burden of coming forward with the evidence and making a prima
facie showing of a basis for imposing an enforcement remedy. Petitioner bears the
burden of persuasion to show by a preponderance of the evidence that it was in
substantial compliance with participation requirements or any affirmative defense. See
Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004); Batavia Nursing &
Convalescent Ctr., DAB No. 1904 (2004), aff'd, Batavia Nursing & Convalescent Ctr. v.
Thompson, 129 F. App’x. 181 (6th Cir. 2005); Emerald Oaks, DAB No. 1800; Cross
Creek Health Care Ctr., DAB No. 1665 (1998); Hillman Rehab. Ctr., DAB No. 1611
(1997), aff'd Hillman Rehab. Ctr. v. U.S. Dep’t of Health and Human Servs., No. 98-
3789, 1999 WL 34813783 (D.N.J. May 13, 1999).

C. Findings of Fact, Conclusions of Law, and Analysis
My conclusions of law are set forth in bold followed by my findings of fact and analysis.
The state agency conducted an annual recertification survey and the investigation of
several complaints at Petitioner’s facility from April 7 through 10, 2008. The results of

the survey and investigation are reported in the statement of deficiencies (SOD) dated
April 10, 2008. CMS Ex. 2. In conjunction with the annual recertification survey the
state agency also conducted a LSC survey at Petitioner’s facility from April 8 through
April 10, 2008, the results of which are reported in a SOD dated April 10, 2008. CMS
Ex. 1.

Petitioner requested a hearing seeking review of the deficiencies from the LSC cited
under Tags K012, K025, K062, and K067, all of which allegedly posed immediate
jeopardy, and the alleged deficiencies from the health survey that alleged actual harm to
residents, specifically those cited as F157, F281, F309, and F490.* CMS Ex. 8.
Petitioner stipulated at hearing that it no longer disputed the deficiency findings from the
complaint and health recertification surveys that concluded on April 10, 2008. Petitioner
stipulated that it continued to dispute, and would present evidence at hearing related to,
the alleged deficiencies from the LSC survey completed on April 10, 2008, which
allegedly posed immediate jeopardy to Petitioner’s residents, specifically those cited
under Tags K012, K025, K062, and K067. Petitioner also stipulated that it disputed the
reasonableness of the CMP that CMS proposed. Petitioner stated that it was not
contesting the DPNA and withdrawal of authority to conduct a NATCEP. The parties
agreed that the CMP, which CMS proposed and subject to my review, is $5,750 per day
from April 10 through April 24, 2008, and $250 per day from April 25, 2008 through
April 30, 2008. Tr. 27-34. I conclude that Petitioner has also preserved an issue as to
whether it returned to substantial compliance with program participation requirements
before May 1, 2008, the date CMS identified.

CMS objected to proceeding on the alleged LSC violations that were not alleged to have
posed immediate jeopardy on grounds that Petitioner’s request for hearing only
challenged the LSC violations that were specifically listed in its request for hearing, i.e.,

4 “F157” and “K012” are both examples of “Tags.” The F “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,
which sets forth CMS policy related to health surveys. The “Tag” designation relates to
the specific part of the SOM app. PP that sets forth the specific regulatory provision
allegedly violated and CMS’s guidance to surveyors related to the regulation. The K
“Tag” designation is used for LSC surveys under SOM app. I, § II, Task 5, and the K Tag
refers to the specific data tag on the Fire Safety Survey Report used by the surveyor.
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. State of Indiana by the
Indiana Dep’t of Pub. Welfare v. Sullivan, 934 F.2d 853 (7th Cir. 1991); Northwest
Tissue Ctr. v. Shalala, | 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 the SOM interprets.

those that allegedly posed immediate jeopardy. Petitioner argued that it did not intend to
waive a challenge to any of the alleged LSC violations, which the survey that ended on
April 10, 2008 cited. Tr. 34-36. I agree with CMS that Petitioner did not specifically
challenge supposed LSC violations not alleged to have posed immediate jeopardy.
However, Petitioner did generally deny the validity of the surveyors’ findings and
conclusions as to all cited deficiencies and specifically stated in its request for hearing its
position that “at all relevant times, it was in substantial compliance with the provisions of
42 C.F.R. 483 and other applicable law.” Request for Hearing at 1. I conclude that the
Request for Hearing (CMS Ex. 8) and Petitioner’s Prehearing Brief, pages 20 and 21,
provided CMS adequate notice of the specific issues in this case. I also conclude that
CMS suffers no prejudice by any lack of clarity of the request for hearing given my
decision in this case.

1. Petitioner violated 42 C.F.R. § 483.70(a).

2. Petitioner has not shown that CMS’s determination that the
violation of 42 C.F.R. § 483.70(a) posed immediate jeopardy is clearly
erroneous.

Petitioner is obligated to ensure that its physical environment is “designed, constructed,
equipped, and maintained to protect the health and safety of residents, personnel and the
public.” 42 C.F.R. § 483.70(a). The regulation requires that Petitioner meet the
requirements of the 2000 edition of the LSC that the National Fire Protection Association
(NFPA) published, except as otherwise provided by the regulation. 42 C.F.R.

§ 483.70(a)(1).

The LSC is a set of fire protection requirements designed to
provide a reasonable degree of safety from fire. It covers
construction, protection, and operational features designed to
provide safety from fire, smoke, and panic.

SOM, ch. 2, § 2470 (Rev. 1, 05-21-04).

Petitioner had a census of 112 residents at the time of the survey. Six residents were
bedfast all or most of the time; eighty-eight residents were in wheelchairs all or most of
the time; eleven residents required some type of assistance or other assistive devices with
ambulation; fifty-eight residents suffered from dementia; two suffered from mental
retardation; ten residents were receiving respiratory treatment; nine were physically
restrained; and only one was considered to be independently ambulatory. CMS Ex. 5 at
1. Given the profile of Petitioner’s resident population, I infer that Petitioner’s residents
were at high risk in the event of an uncontrolled fire. Petitioner also conceded that a fire
in a nursing home can result in serious harm to residents. P. Brief at 12.

The LSC survey was completed by Jerry Humphrey on April 8, 9, and 10, 2008.
Surveyor Humphrey alleged fourteen separate violations. and he alleged that four
violations cited under Tags K012, K025, K062, and K067 posed immediate jeopardy.
CMS Ex. 1. The SOD lists the findings or observations Surveyor Humphrey made during
his inspection of the facility. The four alleged immediate jeopardy violations are based
upon the following findings: ceiling dampers were contaminated with sprayed ceiling
texture material; a ceiling damper in the dinning room was tied open with a plastic zip tie;
some ceiling openings, supply and exhaust ducts, did not have dampers; numerous attic
sprinklers in four of four fire zones were covered with blown insulation and roll
insulation; and fire and smoke partitions had missing wall board and penetrations around
wiring, duct work, and sprinkler piping that passed between adjacent smoke
compartments. CMS Ex. | at 2, 6, 12, 14. He also observed that four of nine sprinkler
heads in the kitchen had paint on their fusible links. CMS Ex. | at 12. Based on his
findings, Surveyor Humphrey cited Petitioner for violations under Tags K012, K025,
K062, and K067.

a. K012

Petitioner’s facility is wood frame construction with brick veneer walls with a sprinkler
system throughout, including in the attic. CMS Ex. | at 1; Tr. 98. The standard listed on
the SOD under Tag K012 is that “[bJuilding construction type and height meets one of
the following: 19.1.6.2; 19.1.6.3; 19.1.6.4; and 19.3.5.1.” CMS Ex. 1 at 1. LSC
Subsection 19.1.6.2 provides that use of a building for health care occupancies is limited
to certain types of buildings, and, for a Type V(111) building, such as that occupied by
Petitioner, the building may be no more than two stories in height and must be protected
by an automatic sprinkler as subsection 19.3.5.1 specifies. LSC § 19.1.6.3 has no
application in this case, as it applies only to Type I and II construction. LSC

§ 19.1.6.4 requires that every exterior wall of frame construction and all interior stud
partition walls have fire-stops of at least 2 inch thick wood or some noncombustible
material in all concealed draft openings, both horizontal and vertical. LSC § 19.1.6.4 is
not at issue in this case, as there is no allegation that the walls in Petitioner’s facility were
not properly fire-stopped. LSC § 19.3.5.1 requires that when an automatic sprinkler
system is required for a facility, as it was for Petitioner’s facility, the system must meet
the requirements of LSC § 9.7.

No dispute exists that Petitioner had the required sprinkler system, but it is alleged that
Petitioner failed to properly maintain the system. CMS Ex. | at 11-12. The SOD states
that the basis for the violation under Tag K012 was Petitioner’s failure to “provide proper
protection for construction of the Type V (111) building placing the facility residents at
potential risk of injury or death in the event of fire resulting in Immediate Jeopardy.”
CMS Ex. | at 1-2. Surveyor Humphrey explained at hearing that he cited Petitioner
under Tag K012 due to his findings related to dampers, the sprinklers in the attic, and the
smoke barriers in the attic that were also individually cited as deficiencies under Tags
K025, K062, and K067. Surveyor Humphrey explained that, due to the defects he
observed, Petitioner’s facility and its residents were not protected from fire as the LSC
requires for the type construction of Petitioner’s facility. Tr. 98. CMS alleges that the
defects that Surveyor Humphrey found, when considered collectively, rendered
ineffective the fire protection of Petitioner’s facility resulting in an immediate jeopardy
situation. CMS Brief at 18.

Under K012, Surveyor Humphrey cited that a ceiling damper in the dining room was tied
open with a zip tie. Surveyor Humphrey testified that he saw a ceiling damper in the
dining room that was tied open with a plastic zip tie, and he opined that the damper
would not have closed due to heat until the zip tie melted. He further opined that,
because the damper was tied open, fire could enter the attic through the duct before the
tie melted. Tr. 109-10. Surveyor Humphrey testified that the fact that the duct was tied
open with a plastic zip tie did not pose immediate jeopardy by itself. Rather, his
determination that immediate jeopardy existed was based on the totality of the problems
he found with dampers. Tr. 135-36. Petitioner’s heating, ventilation, and air
conditioning (HVAC) contractor, Steve Leake, opined, consistent with Surveyor
Humphrey’s opinion, that a fire would melt the zip tie and then the damper could operate
as designed. Tr. 232-33. Although the two experts agree that the zip tie would melt ina
fire and the damper could then operate properly, clearly the manufacturer did not intend
that the damper was to be held open by a zip tie. Further, the evidence does not establish
that the damper would operate when it was intended to, due to the need for the fire to
melt the zip tie. Thus, the evidence does not show that the damper could provide
intended protection from the spread of smoke or fire. I conclude that use of the zip tie to
tie open the damper, which is not disputed to have been installed as a fire protection
device, amounted to a violation, as it affected the effectiveness of the device.

I further conclude, as discussed hereafter, that Petitioner violated the standards under Tag
K025, due to penetrations through smoke barriers, and Tag K067, due to missing fire
dampers in ceiling ducts. I further conclude that those violations collectively constituted
a violation of the standard under K012.

b. K025

The LSC requires that buildings, such as those used for long-term care facilities, be
divided into compartments to limit the spread of fire and to restrict the movement of
smoke. LSC § 8.3.1. The standard stated under Tag K025 in the SOD is that smoke
barriers required by LSC § 8.3 must be constructed to provide at least one-half hour of
fire resistance. CMS Ex. | at 2. Surveyor Humphrey alleged in the SOD that Petitioner
failed to maintain the integrity of smoke barriers in the attic, because he observed
penetrations around wiring, sprinkler piping, and ducts that passed through the smoke
barrier and “portions of the attic stop and smoke partition were missing or knocked out.”
CMS Ex. | at 6.
10

LSC § 8.3.1 requires that building spaces be subdivided by smoke barriers to restrict the
movement of smoke. Subsection 8.3.6.1 requires that the space between items that
penetrate a smoke barrier and the smoke barrier, be filled with material capable of
maintaining the smoke resistance of the smoke barrier or by an approved device designed
to maintain the smoke resistance. LSC §§ 8.2.3.2.4 and 8.2.4.4.1 establish similar
requirements for smoke partitions and fire barriers.

Surveyor Humphrey testified that he has an Associate of Science degree in Fire Science
from Tennessee State University and a Bachelor of Professional Studies with a
concentration in Fire Prevention Technology from the University of Memphis. He is also
a Certified Fire Inspector in Tennessee, a certified Medical Gas Inspector, a member of
the NFPA, and he has thirty-five years of experience in fire safety. He is employed as a
Fire Safety Specialist Supervisor by the state agency. Tr. 85-87. Petitioner did not object
to my acceptance of Surveyor Humphrey as an expert in fire and life safety, or to my
permitting him to testify regarding his opinions about fire and life safety. Tr. 88.
Surveyor Humphrey testified that this case is the first in which he cited immediate
jeopardy for LSC violations. Tr. 89. He testified that he recognized the seriousness of
the deficiencies and that combined they posed immediate jeopardy to Petitioner’s
residents. Tr. 92-97.

Surveyor Humphrey testified that he observed that a piece of gypsum board,
approximately eighteen inches by six inches, was missing from a one side of a smoke
wall near the attic floor. He testified that the attic stop was only required to have gypsum
board on one side. He testified in response to my questioning that, even with gypsum
board missing on one side, the smoke wall would have been effective to stop the
movement of smoke, if one did not consider the gaps around wires, conduits, ducts, and
pipes. But he testified that the missing gypsum board would have reduced the fire rating
of the smoke barrier. He testified that he observed gaps around wires, conduits, ducts,
and pipes where they passed through smoke barriers in the attic spaces. Tr. 110-13, 148-
51, 189-95. Surveyor Humphrey testified that the missing gypsum board did not pose
immediate jeopardy, but the penetrations of the smoke walls that would allow smoke to
spread between compartments posed immediate jeopardy. Tr. 136, 151. Surveyor
Humphrey admitted on cross-examination that, during the survey that concluded on April
10, 2008, he did not completely enter the attic space, that he entered only to his waist and
observed the attic space. Tr. 164-65, 188. Surveyor Humphrey testified that people
generally die by smoke rather than fire. Tr. 206.

Petitioner does not deny that its staff found gaps around pipes, wires, ducts, and other
services where they passed through attic smoke barriers. The gaps were caused by old
fillers or seals that had dried up, pulled away, and/or fallen out. Tr. 345-46, 348-49; P.
Brief at 17; P. Reply at 5. Petitioner asserts, based upon the testimony of Administrator
Miller, that the gaps Petitioner’s staff filled were small areas. Petitioner argues that this
testimony supports a conclusion that “smoke would have been restricted from passage,
11

although admittedly not as completely as it would be after penetrations were filled with
new material.” P. Brief at 17. The evidence shows, and Petitioner concedes, that the
gaps were large enough to permit smoke to pass between compartments, which can only
mean that the smoke barrier was not effective, contrary to the requirements of the LSC.
The amount of smoke that could pass through the gaps is not the issue. LSC § 8.3.6.1
provides:

8.3.6.1 Pipes, conduits, bus ducts, cables, wires, air ducts,
pneumatic tubes and ducts, and similar building service
equipment that pass through floors and smoke

barriers shall be protected as follows:

(1) The space between the penetrating item and the smoke
barrier shall meet one of the following conditions:

a. It shall be filled with a material that is capable of
maintaining the smoke resistance of the smoke barrier.

Petitioner has not shown that the gaps it admits existed did not degrade the effectiveness
of the smoke barriers, because it did not prove that the gaps were filled with a material
capable of maintaining the smoke resistance of the smoke barrier. Petitioner admits that
“fillers and seals had dried and pulled away.” P. Brief at 17; see Tr. 348-49. Petitioner
admits that smoke would not have been as completely restricted from passage as it would
be after the gaps were filled with new material. P. Brief at 17.

Mitch Abrams, Vice President of Plant Operations for Petitioner’s owner, testified that
whether the gaps in the smoke walls around wires, pipes, and ducts posed a danger to
Petitioner’s residents depended upon the size of the gaps. He opined that the gaps would
need to be severe and extend to multiple compartments for there to be a potential for
harm due to smoke. He did not believe that the missing gypsum board posed any danger.
Tr. 436-42. Mr. Abrams did not testify that the gaps that Surveyor Humphrey found and
that staff corrected did not degrade the effectiveness of the smoke walls in Petitioner’s
attic or pose a risk for serious injury or death to Petitioner’s residents in the event of fire.
If Mr. Abrams’ testimony was interpreted to be that the gaps in the smoke walls did not
render the walls ineffective, his testimony would not be credible, as he never observed
the gaps.

I conclude that the gaps around pipes, wires, conduits, ducts, and/or other services that
passed through attic smoke barriers violated LSC § 8.3.6.1 and the regulation. However,
based upon the testimony of Surveyor Humphrey and Petitioner’s witnesses, I conclude
that the piece of gypsum board, missing from only one side of an attic smoke barrier, did
not degrade the effectiveness of the smoke barrier to stop the spread of smoke.
12

Therefore, the missing piece of gypsum board did not amount to a violation of the LSC or
the regulation.”

Mark Miller, Petitioner’s Administrator, testified that the missing piece of gypsum board
on one side of a smoke wall, approximate dimensions eighteen or twenty-four inches by
twelve inches, was replaced, and all penetrations were sealed with caulk or sheet rock
mud. He testified that, based upon the plan of correction (CMS Ex. | at 3), the repairs
and his final inspection were complete on April 25, 2008. Tr. 345-51. I conclude, based
upon Administrator Miller’s testimony and the plan of correction, that Petitioner
corrected the deficiency on April 25, 2008. My conclusion is consistent with the findings
recorded in the SOD for the revisit survey completed on May 1, 2008. CMS Ex. 3 at 3.

c. K062

The LSC § 19.3.5.1 requires that a building, such as Petitioner’s, have an automatic
sprinkler system that meets the requirements of LSC § 9.7. The standard stated under
Tag K062 of the SOD is that required automatic sprinkler systems must be maintained in
reliable operating condition and that they be inspected and tested regularly. CMS Ex. 1
at 11. The SOD alleges that the standard was violated, because Petitioner failed to
maintain the sprinkler system. Surveyor Humphrey alleged in the SOD that he
determined that four of nine sprinkler heads in the kitchen had paint on their fusible links
and that sprinkler heads in the attic were covered and restricted with blown and rolled
insulation. CMS Ex. | at 12.

Surveyor Humphrey testified that Petitioner’s facility had four fire zones. He testified
that he discovered problems with the sprinkler heads in the attic in each of the four fire
zones, but he did not count how many were affected. He testified, however, that, when
he observed a problem, he had Petitioner’s maintenance director with him, and the
maintenance director went into the attic. Tr. 99. Surveyor Humphrey testified that he
estimated that twenty-five percent of the sprinkler heads in each of the four fire zones
were obstructed by either blown or rolled insulation. He testified that the number of
sprinkler heads obstructed was, in his opinion, sufficient to prevent the sprinkler system
from being effective to stop a fire. He testified that some sprinkler heads were covered
by blown insulation, or had blown insulation hanging from the sprinkler head, and that
other sprinkler heads were blocked by rolled insulation that was hanging loose from the

> No dispute exists that the piece of gypsum board missing from the attic smoke barrier
may have reduced the fire resistance rating of the smoke barrier. However, no deficiency
is cited based upon an allegation that the particular smoke barrier did not have the
required one-half hour fire resistance rating. LSC § 19.3.7.3.

13

underside of the roof. He described the obstructions as being sufficient to prevent the
sprinkler heads from spraying a complete 360 degree pattern, which would prevent full-
coverage of the attic. He also opined that the presence of the insulation on the sprinkler
heads might delay their activation by increasing the temperature necessary for their
discharge. Tr. 100-08. He testified that he concluded that the obstruction of the sprinkler
heads by insulation posed immediate jeopardy. Tr. 135, 137.

Surveyor Humphrey told Petitioner’s Administrator, and stated in his testimony, that
paint on the sprinkler heads in the kitchen did not pose immediate jeopardy. Tr. 153,
376-77. CMS stipulated that the four sprinkler heads in the kitchen with paint on them
were not a deficiency or the basis for the determination of immediate jeopardy in this
case. Tr. 376-77.

According to manufacturer’s specifications, sprinkler heads must be kept clean and free
of materials, and modified sprinklers need to be replaced. Failure to replace damaged or
modified sprinkler heads might impair their performance. P. Ex. 3 at 2, 9.

Administrator Miller testified that Petitioner used two companies to service its sprinkler
and fire alarm systems. He testified that that the systems were inspected in February
2008, and no issues were identified. Tr. 319-20. He testified that, when Surveyor
Humphrey advised him on April 10, 2008, that there were problems, he contacted both
companies. He testified: the sprinkler heads in the kitchen were replaced, and they
tested one of the kitchen sprinklers that had paint on it to see if it worked, prior to April
15, 2008 (P. Ex. 3 at 1; P. Ex. 4 at 2); the sprinkler system was checked; and they did a
100 percent audit of the sprinkler heads in the attic. Tr. 321-27. He testified that he
personally examined all of the 315 sprinkler heads in the attic with the assistance of the
maintenance director, Ron Jones. P. Ex. 4 at 13 He testified that all the sprinkler heads
in the attic are the riser or upright type, rather than the pendent type.° He also testified
that no insulation bats are installed between the rafters that could hang down, contrary to
the testimony of Surveyor Humphrey. He testified that some rolled insulation had been
laid on the floor of the attic spaces. He testified that no insulation was blown into the
attic after the building was acquired by his company in 2003. He testified that no
sprinkler head is closer to the attic floor than eighteen inches, and it is improbable that a
bat or roll of insulation laid on the floor would have interfered with a sprinkler head. He
testified that they found four sprinkler heads that had a small amount of dust or blown
insulation that was brushed off with a paint brush and that they found no sprinkler head
that was totally obstructed by rolled or blown insulation. He testified that the main
sprinkler line that supplied the sprinklers in the living space had some rolled insulation

® The illustrations on page 3 of Plaintiff's Exhibit 3 reflect that the head of the pendant
type sprinkler points down, while the head of the upright type points up.
14

over it, but the main line does not have any sprinkler heads in it. Administrator Miller
could not recall the date when he and the maintenance director finished their work in the
attic. Tr. 329-44. However, he testified that, based upon the plan of correction (CMS Ex.
1 at 3), they finished cleaning the sprinkler heads in the attic on April 14, 2008. Tr. 351.

Mr. Abrams testified that it was unlikely that the blown insulation in the attic would

impede a sprinkler head, as they discharge at 100 pounds per square inch of pressure
(psi). He acknowledged, however, that the presence of insulation on a sprinkler head
might change the temperature at which it discharges. Tr. 445-47.

After consideration of all the evidence of record, I conclude that Surveyor Humphrey’s
observations related to the attic sprinkler heads, as elaborated upon at hearing, are not
credible. Surveyor Humphrey admitted that he only entered the attic to his waist and
looked around using his flashlight and the attic lights. Thus, his ability to observe was
limited to what was within his field of vision, with his upper body through an access hole
in the floor of the attic while standing on a ladder. Surveyor Humphrey did not walk
around in any attic space or attempt to observe what may have been under blown
insulation at or near the floor of the attic, but he nevertheless opined that some sprinkler
heads near the floor of the attic were covered with blown insulation. He testified that
there was rolled insulation affixed to the attic rafters under the roof that was loose and
hanging down and obstructing sprinkler heads. However, based upon the testimony of
Petitioner’s Administrator, I find that there was no rolled insulation affixed between the
rafters that could hang down. Surveyor Humphrey testified that in some places the blown
insulation was piled high enough to actually cover sprinkler heads, but he never entered
the attic space and did not testify as to how he could determine there were sprinkler heads
that were completely covered. He testified that as many as twenty-five percent of the
attic sprinkler heads were obstructed, though he never entered the attic and clearly did not
know how many attic sprinkler heads there were. While I have no doubt that Surveyor
Humphrey is a credible person, his assertions about his observations of the sprinkler
heads in the attic are not credible. Tr. 95, 99, 100, 104-08, 164-65.

Petitioner presented credible testimony of Administrator Miller regarding Petitioner’s
audit of the facility’s attic system. Part of the audit involved Administrator Miller and
Petitioner’s maintenance director personally inspecting each of the 15 attic compartments
and each sprinkler head in the attic. Their audit revealed that only four of 315 sprinkler
heads in the attic had dust or other particulate material on them and that the dust or other
particulate material could be simply removed by brushing with a paintbrush.
Administrator Miller also testified that no insulation had been blown into the facility after
he became Administrator on February 21, 2005. He testified that no rolled insulation was
attached to the attic roof rafters that could hang down and obstruct a sprinkler head. He
testified that no piles of blown insulation were found over sprinkler heads. He testified
that the attic sprinkler heads were all of the upright or riser type, hung from the attic
rafters, and were eighteen inches above the attic floor. He explained that a sprinkler
15

supply line that had no sprinkler heads ran along the floor of the attic and that pipe did
have rolled insulation on it. Tr. 329-43, 445-47; P. Ex. 4 at 13.

CMS stipulated at hearing that the four kitchen sprinkler heads with paint on them did not
amount to a violation of the LSC, and I so conclude. I also conclude that Petitioner has
rebutted the SOD’s allegation that the condition of the attic sprinkler heads violated the
LSC. I do not find any merit to the CMS speculation (CMS Reply at 2-3) that
Petitioner’s maintenance director, who followed Surveyor Humphrey during the survey,
went to the attic compartments and corrected all the problems with the attic sprinklers,
before he and Administrator Miller began their attic audit the day after the survey ended.
The CMS argument verges on frivolity in the complete absence of any evidence to
support the argument other than the fact that Petitioner elected not to call the maintenance
director as a witness. I conclude that the four dirty sprinklers that the Administrator
found during the audit of the attic would not degrade the effectiveness of the sprinkler
system in the attic, based upon: (1) the small number of sprinkler heads involved, even if
all four were delayed in their operation; and (2) the small amount of material that was
easily removed by brushing with a paint brush -- which I am willing to infer was more
likely than not less force than that represented by 100 psi of water pressure.

Accordingly, I find on these facts no violation of the LSC under K062 or K012, no
violation of the regulation, and no deficiency.

d. K067

LSC § 19.5.2.1 requires that heating, ventilation, and air conditioning systems comply
with LSC § 9.2 and that they be installed in accordance with manufacturer’s
specifications. Tag K067 on the SOD sets forth this standard. The requirement for fire,
smoke, and ceiling dampers is found in NFPA 90A, Standard for the Installation of Air-
Conditioning and Ventilating Systems § 5.4 (1999 ed.), and NFPA 90B Standard for the
Installation of Warm Air Heating and Air-Conditioning Systems § 4.2.2 (1999 ed.). Asa
general rule, fire dampers are required for ducts that pass through a floor, wall, or ceiling
that is required to have a fire resistance rating.

Surveyor Humphrey alleges in the SOD that Petitioner violated the LSC, because he
observed textured ceiling paint on some dampers, which he concluded would negatively
affect the operation of the dampers. He also alleged in the SOD that he found ducts
without dampers. CMS Ex. | at 13-16. A fire or smoke damper is a mechanical device
that is activated by heat or a motor to prevent the passage of smoke or fire in a duct that
passes through a fire rated assembly. Tr. 109. The dampers in Petitioner’s facility, like
that portrayed in Plaintiff's Exhibit 7, were not designed to provide an air tight seal to
prevent transmission of smoke from a fire. Rather, the dampers were fire dampers.
Mitch Abrams testified that the dampers were fire dampers (P. Ex. 7), not smoke
dampers, and they were not intended to seal tightly unless the HVAC system was
16

running. Even if the HVAC system was running and the flaps of the damper were sealed
they are intended to stop the flame and not the smoke. The dampers are heat activated
and only trip in the presence of fire or extreme heat. Ducts also have smoke detectors
that shut off the HVAC when smoke is sensed so that the smoke is not distributed by the
HVAC system. Tr. 422-33.

Surveyor Humphrey testified that he found nine ducts with no dampers. Tr. 110, 116.
He testified that he found thirteen ceiling dampers that had spray ceiling texture materials
on them. Tr. 113-17. Surveyor Humphrey testified that, as a surveyor, he may not test
equipment to determine whether it works properly. Tr. 117. However, he testified that
he consulted with the manufacturer of the fire dampers and was informed that the
operation of the dampers would not be affected by the over-spray of textured ceiling
material. Tr. 127-32. He also testified that he learned that the facility had tested one of
the dampers that had overspray, and it worked correctly. Tr. 126. Surveyor Humphrey
testified that it was the missing dampers that weighed most heavily in his determination
that immediate jeopardy existed due to the risk for fire to spread to the attic. Tr. 154. I
conclude overspray of textured ceiling materials on the thirteen ceiling dampers did not
affect or compromise their performance, and those dampers were not a violation of the
LSC or the regulation and did not amount to a deficiency.

Administrator Miller testified that he did not see any missing dampers himself, but his
maintenance crew worked on the dampers. He testified that he was aware of one damper
that was closed off with cardboard near the nurse’s station, but he could not testify as to
whether a damper was supposed to be in that duct. He also relied upon his outside
contractor, Energy Command, and Mr. Leake, to ensure all dampers were working
properly. Tr. 307-11. Mr. Leake testified that, based on his observations, the engineer
probably intended each duct in the facility to have its own damper. Tr. 251. Mr. Leake
testified that his staff replaced eight dampers and that all the dampers in the facility then
worked. Tr. 229-30. Mr. Leake testified that, as of April 14, 2008, all dampers
functioned properly, but the service order shows that the work was actually completed on
April 17, 2008. Tr. 234; P. Ex. 1; P. Ex. 2 at 2-3. I infer that the eight dampers that Mr.
Leake testified were replaced were placed in ducts with missing dampers and in the duct
where the tested damper (P. Ex. 7) had been, as the other dampers were simply tested
manually by operating the screw mechanism that opened and closed the flaps of the
dampers and were found to be operating. P. Ex. 2 at 3; Tr. 222. Furthermore, the plan of
correction lists nine dampers that were replaced and were characterized as “Dampers
Missing from Ceiling.” CMS Ex. | at 2-3, 14.

Mitch Abrams testified that Petitioner’s dampers were working properly and correctly.
Tr. 432-33. An e-mail from Mitch Abrams dated April 18, 2008, to Surveyor Humphrey
and his supervisor, reflects that all testing of the dampers was completed on April 17,
2008. P. Ex. 2 at 1. The evidence is consistent with his assertion being based upon the
work by Mr. Leake’s company and the report of Administrator Miller.
17

Surveyor Humphrey testified that he personally observed that nine dampers were missing
from ducts. Tr. 116. Administrator Miller admitted that at least one duct did not have a
damper and that it had been closed off with cardboard. Mr. Leake’s testimony is that
eight new dampers were installed and that all the others worked. I find credible Surveyor
Humphrey’s testimony that some dampers were missing. Mr. Leake’s opinion that the
engineers likely intended all the ducts in this particular structure to have dampers is also
credible. Petitioner has not presented credible evidence that there were no missing
dampers or that the missing dampers were not necessary as part of the original
engineering design to prevent or control fire. I conclude that the evidence shows that
there were missing dampers and that the missing dampers amounted to a violation of the
LSC under K067, and a violation of the regulation. The evidence shows that new
dampers were installed, and all dampers were tested by April 17, 2008. P. Ex. 2 at 3;
CMS Ex. | at 2-3, 13-15. However, the plan of correction plainly states that verification
and/or final inspection of the corrective action was not done until April 25, 2008. CMS
Ex. | at 4, 15.

e. Immediate Jeopardy

CMS alleges that Petitioner’s violations of the LSC, related to fire and smoke protection,
posed immediate jeopardy from April 10 through April 24, 2008. CMS Brief at 1-2, 19.
I have concluded that the evidence shows violations under: Tag K025, due to
penetrations through smoke barriers; Tag K067, due to missing fire dampers in ceiling
ducts; and Tag K012, based on the violations under Tags K025 and K067, as well as the
duct in the dining room that was held open with a zip tie.

Petitioner argues that there was no immediate jeopardy. Petitioner acknowledges that 42
C.F.R. § 498.60(c)(2) requires me to uphold the CMS determination of level of
noncompliance, unless it is clearly erroneous, and that, pursuant to prior decisions of the
Board, it has the burden of making the required showing. P. Brief at 1-5. Petitioner
asserts that the declaration of immediate jeopardy regarding the missing gypsum board
and the penetrations in the smoke walls was clearly erroneous, because the “scale of the
conditions was overstated by CMS.” P. Brief at 5. Certainly I have concluded that not
all the defects identified by Surveyor Humphrey, and advanced by CMS as a basis for a
deficiency finding, are supported by the evidence. Thus, from Petitioner’s perspective,
CMS may be said to have overstated the conditions that support its determination that
immediate jeopardy existed. However, I have found two conditions that the evidence
supports and, therefore, Petitioner must bear the burden to show that the declaration of
immediate jeopardy based on either or both conditions was clearly erroneous. I conclude
that Petitioner has failed to meet that burden.

Petitioner argues that Surveyor Humphrey’s conduct was inconsistent with his conclusion
that immediate jeopardy existed at Petitioner’s facility. Petitioner points out that
Surveyor Humphrey’s notes indicate that he considered citing the individual standards at

18

less than immediate jeopardy but that the cumulative effect of the defects he observed
caused him to declare immediate jeopardy. Petitioner argues that it has shown that not all
the conditions amounted to violations and immediate jeopardy. Petitioner urges me to
conclude that immediate jeopardy was, therefore, clearly erroneous. P. Brief at 12. This
argument is not persuasive. I have found two conditions that the evidence supports.
Petitioner bears the burden to show that the declaration of immediate jeopardy based on
either or both conditions was clearly erroneous. I conclude that Petitioner has failed to
meet that burden.

Petitioner argues that Surveyor Humphrey told the facility that he had identified
immediate jeopardy but than declined to identify for Administrator Miller the specific
defects that posed immediate jeopardy so that immediate corrections could be made to
abate the risk of serious injury or death of residents. Petitioner argues that I should
consider this evidence that Surveyor Humphrey did not correctly identify immediate
jeopardy or that he simply did not understand the concept. P. Brief at 12. Administrator
Miller testified that he met with Surveyor Humphrey for the exit conference. Surveyor
Humphrey was at the facility from April 8 through April 10 and did not mention
immediate jeopardy until the exit conference on April 10, 2008. During the exit
conference, Surveyor Humphrey identified the penetrations or gaps in the smoke barrier
and the missing gypsum board on the smoke wall, the sprinklers, and the dampers as the
basis for citing wide-spread immediate jeopardy. Administrator Miller testified that he
asked Surveyor Humphrey to show him the defects, but the surveyor refused and told
Administrator Miller that he would have to wait for the SOD. Tr. 258-66. I indicated to
the parties on the record at hearing that I concluded Surveyor Humphrey was in error in
this regard. His action was inconsistent with the guidance to surveyors in SOM, app. Q,
VI, C. However, I advised Petitioner at hearing that it was nevertheless burdened to find
and correct the defects that posed immediate jeopardy and show that it was in substantial
compliance. Tr. 387-91. The fact that Surveyor Humphrey was vague and not
particularly helpful in ensuring that the facility was aware of, and working to correct,
defects that posed likely risk of serious injury or death is no defense for Petitioner in this
case. This was the first instance in his career where Surveyor Humphrey decided to
declare immediate jeopardy, and I construe his response to the Administrator to reflect a
lack of knowledge of proper procedures to ensure a resident population is protected,
rather than deliberate obstructionism or indication that he did not understand what
constitutes immediate jeopardy. Petitioner’s argument in its post-hearing briefing does
not persuade me to change my conclusions on this issue.

Petitioner argues that the gaps around wires, ducts, conduits, and pipes that passed
through the smoke barriers did not pose immediate jeopardy. However, Petitioner agrees
that a fire in a nursing home can result in serious injury and death of residents. P. Brief at
12. It is also not disputed that more individuals die from smoke inhalation than from fire.
Tr. 206. Petitioner does not deny that gaps existed and that staff filled them, as
Administrator Miller confirmed in his testimony. Petitioner does not argue that, even
19

with the penetrations, the barriers were effective. Rather, Petitioner argues that the lack
of specificity that Surveyor Humphrey and/or CMS provides as to the location of the
penetrations in the attic smoke walls negates immediate jeopardy. P. Brief at 16-17.
Petitioner’s argument is not persuasive. Petitioner concedes gaps existed that the staff
filled and that the gaps would have allowed at least some smoke to pass. Thus, Petitioner
concedes that the smoke barrier would not effectively serve the purpose that the LSC
required.

Petitioner argues in the alternative that, if immediate jeopardy existed, it was abated by
April 15, 2008. P. Brief at 18-21; P. Reply at 4-6. I accept that immediate jeopardy
related to the missing dampers was abated when the new or replacement dampers were all
installed and verified to be operating correctly on or about April 17, 2008. However,
Petitioner’s evidence shows that the work on the gaps in the attic smoke barriers was not
complete until on or about April 24, 2008. I conclude, based upon Administrator Miller’s
testimony and the plan of correction, that Petitioner abated immediate jeopardy with the
correction of the defective attic smoke barriers on April 25, 2008. Petitioner’s argument
that some of the worst gaps were corrected as early as April 15, 2008, is insufficient to
show that the determination that immediate jeopardy continued after that date was clearly
erroneous. Indeed, Petitioner’s argument concedes that some gaps remained after that
date that required filling and also concedes that some smoke could still pass between
smoke compartments contrary to the LSC’s requirements.

Petitioner has not shown that CMS’s declaration of immediate jeopardy, based upon the
gaps in smoke barriers and the missing ducts, was clearly erroneous. Petitioner has not
shown that it restored the effectiveness of attic smoke barriers prior to April 25, 2008.
Immediate jeopardy is appropriately found when a deficiency has caused, or is likely to
cause, serious injury, harm, impairment, or death to a resident. 42 C.F.R. § 488.301. The
Board has explained that a presumption exists that CMS’s determination is correct, which
a petitioner must rebut by showing the determination to be clearly erroneous. Daughters
of Miriam Ctr., DAB No. 2067 (2007); Liberty Commons Nursing and Rehab Ctr. —
Johnston, DAB No. 2031 (2006). The Board has also held that immediate jeopardy
exists under either of the following circumstances: the facility’s noncompliance has
caused death or “serious” harm to one or more residents; or the facility’s noncompliance
is or was “likely to cause” death or serious harm. Daughters of Miriam Ctr., DAB No.
2067. Given the fragile nature of the resident population, and the fact that the gaps
degraded the effectiveness of the smoke barriers, the declaration of immediate jeopardy
through April 24, 2008, has not been shown to be clearly erroneous in this case.
20

3. A CMP of $5,750 per day from April 10 through April 24, 2008, is
not reasonable.

4. A reasonable CMP is $3,050 per day from April 10 through April
24, 2008, and $250 per day from April 25 through April 30, 2008, a
total CMP of $47,250.

5. A DPNA from April 24 through April 30, 2008, is also reasonable.

I have concluded that Petitioner was in violation of 42 C.F.R. § 483.70(a), based upon
violations of the LSC related to missing fire dampers (including one tied open) and
defective attic smoke barriers due to gaps around penetrations in those barriers. I have
concluded that the violation was corrected as of April 25, 2008. I have concluded that the
violation posed immediate jeopardy to Petitioner’s residents during the entire period,
April 10 through April 24, 2008. Petitioner stipulated at hearing that it no longer
disputed the deficiency findings from the complaint and health recertification surveys
that concluded on April 10, 2008. Regarding the health and complaint surveys, no
dispute exists that Petitioner was found to have returned to substantial compliance on
May 1, 2008. Accordingly, I conclude that CMS had a basis to impose enforcement
remedies against Petitioner for the period April 10 through April 30, 2008. During the
period April 10 through April 24, 2008, there was immediate jeopardy. During the
period April 25 through April 30, 2008, Petitioner does not dispute that CMS had a basis
to impose a CMP of $250 per day. Petitioner stipulated at hearing that it did not contest
the DPNA imposed from April 24 through April 30, 2008. Thus, the issue for me is
whether a CMP of $5,750 per day from April 10 through April 24, 2008 is reasonable. If
not, I need to determine de novo a reasonable per day CMP.

The regulations authorize imposition of a CMP of from $3,050 to $10,000 per day for
deficiencies that constitute immediate jeopardy. 42 C.F.R. § 488.438(a)(1)(i). The lower
range of CMP, from $50 per day to $3,000 per day, is reserved for deficiencies that do
not constitute immediate jeopardy but either cause actual harm to residents or cause no
actual harm but have the potential for causing more than minimal harm. 42 C.F.R.

§ 488.438(a)(1)(ii). I assess de novo the reasonableness of the CMP that CMS proposed
based on the factors set forth at 42 C.F.R. § 488.438(f). In determining the amount of the
CMP, the following factors specified by 42 C.F.R. § 488.438(f) must be considered: (1)
the facility’s history of non-compliance, including repeated deficiencies; (2) the facility’s
financial condition; (3) the seriousness of the deficiencies as set forth at 42 C.F.R.

§ 488.404 (which includes the scope and severity of the deficiencies, the relationship of
one deficiency to other deficiencies resulting in noncompliance, and the facility’s prior
history of noncompliance in general and specifically with reference to the cited
deficiencies); and (4) the facility’s degree of culpability.

21

Petitioner asserted in the request for hearing that the CMP proposed was unreasonable
and beyond the facility’s ability to pay and that payment would seriously jeopardize the
facility’s financial stability. Petitioner did not argue any financial impediment in its post-
hearing briefs but argued that the proposed CMP of $5,750 per day was unreasonable. P.
Brief at 21-23; P. Reply at 6-8. I find no evidence that Petitioner is unable to pay the
CMP. [have received no evidence of a history of similar deficiencies or noncompliance.
Given the nature of the LSC violations and Petitioner’s prompt action to make
corrections, I do not consider Petitioner to be very culpable. Nevertheless, the LSC
violations are serious given the nature of Petitioner’s population and the admitted risk for
serious injury or death posed by fire and smoke in a long-term care facility. CMS
proposed a $5,750 per day CMP based upon its determination that four LSC violations
were present that posed immediate jeopardy, a determination I have found to be in error.
Accordingly, I conclude that a $5,750 per day CMP is unreasonable, but that a CMP of
$3,050 per day is reasonable. A $3,050 per day CMP is the lowest CMP authorized for a
deficiency that poses immediate jeopardy.

Il. Conclusion

For the foregoing reasons, I conclude that Petitioner was not in substantial compliance
with program participation requirements from April 10 through April 30, 2008.
Reasonable enforcement remedies are a CMP of $3,050 per day from April 10 through
April 24, 2008 and $250 per day from April 25 through April 30, 2008, a total CMP of
$47,250, and a DPNA from April 24 through April 30, 2008.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Adrian Adrian, M.D.,
(PTAN: CC606 and CC607),

Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-10-426
Decision No. CR2154

Date: June 11, 2010

DECISION

I deny the motion of the Centers for Medicare and Medicaid Services (CMS) to dismiss
the hearing request of Petitioner, Adrian Adrian, M.D. I decide the merits of the case on
the written record and find that the effective date of Petitioner’s enrollment in the
Medicare program is July 13, 2009. Thus, pursuant to 42 C.F.R. § 424.521(a), Petitioner
may retrospectively bill for services rendered as of June 13, 2009.

I. Background

Petitioner filed a hearing request on January 28, 2010. Several documents accompanied
the hearing request: a letter dated January 12, 2010 to Petitioner from his Medicare
contractor, Palmetto GBA, containing an unfavorable reconsideration decision;
Petitioner’s corrective action plan request to the contractor dated September 25, 2009;
Palmetto’s September 21, 2009, enrollment approval letter to Petitioner, and a letter from
Palmetto to Petitioner dated May 9, 2009. I have marked Petitioner’s entire submission
as Exhibit A and numbered the pages consecutively for reference in this decision.
Petitioner challenges the effective date of his enrollment in the Medicare program that
Palmetto assigned, which was the date his application was received (July 13, 2009) with
approval to bill 30 days retroactively, i.e., from June 13, 2009. Petitioner alleges he
should have been enrolled in the Medicare program with a retroactive effective dated July
22, 2008, almost a year earlier than the date when CMS’s contractor determined that
Petitioner was eligible for enrollment. See Ex. A at 1.

This case was assigned to Judge Steven T. Kessel for hearing and decision on February
23, 2010, and an Acknowledgement and Initial Pre-Hearing Order (Prehearing Order)
was issued at his direction. The case was then transferred to me for hearing and decision
on March 19, 2010, pursuant to 42 C.F.R. § 498.44.

CMS moved to dismiss Petitioner’s hearing request arguing that Petitioner has no right to
appeal the effective date of his enrollment in the Medicare program. However, CMS
failed to file a list of exhibits, list of proposed witnesses, pre-hearing brief, or any of the
materials that the Prehearing Order, dated February 23, 2010, required. CMS did not file
a motion for summary disposition or otherwise indicate what result it sought if its
dismissal motion failed. CMS did not request any additional opportunity to make further
submissions.

Petitioner too failed to file a pre-hearing exchange as the Prehearing Order required.
Subsequently, Petitioner advised the Departmental Appeal Board (Board) that he had no
further submissions to make and requested that I decide his appeal based on the current
record.
I have reviewed the materials Petitioner submitted with his January 28, 2010 request for a
hearing, as well CMS’s motion, and proceed to decide this case on the written record that
the parties submitted.
IL. Issues, findings of fact and conclusions of law

1. Issues

The issues in this case are as follows:

1. Whether I should dismiss Petitioner’s hearing request on the ground that
he has no right to appeal; and
2. Whether CMS’s contractor and CMS properly determined Petitioner’s
effective date of enrollment to be July 13, 2009.'

2. Findings of fact and conclusions of law
My findings of fact and conclusions of law are set forth in bold and italics below.

A, The effective date of a Medicare provider agreement or supplier approval
is an initial determination reviewable in this forum; thus, Petitioner has a
right to a hearing.

i. Applicable standard

Pursuant to 42 C.F.R. § 498.70(b), I may dismiss a hearing request in the circumstance
where a party requesting a hearing “does not otherwise have a right to a hearing.”

ii. Analysis

CMS argues that the Medicare Act and CMS regulations do not permit a supplier to
appeal the effective date of a supplier’s billing privileges and that Petitioner has no right
to challenge the effective date of his participation in the Medicare program. CMS Br. at
2-5. CMS asserts that a supplier’s appeal rights are limited solely to denials of
enrollment applications or revocations of billing privileges. CMS Br. at 2. Specifically,
CMS argues that part 424, subpart P, grants appeal rights only from denials and
revocations of enrollment. 42 C.F.R. § 424.545(a). Since an effective date appeal arises
after an approval, rather than a denial or revocation, CMS reasons that the regulations do
not permit appeals of effective date determinations.

CMS admits that it is “aware that 42 C.F.R. § 498.3(b)(15) indicates that ‘[t]he effective
date of a Medicare provider agreement or supplier approval’ is a reviewable ‘initial
determination.”” CMS Br. at 3. CMS contends, however, that the regulation was not
“intended to apply to physician practitioner organizations, that are not subject to survey
and certification requirements.” Jd.

Although Palmetto GBA stated in its January 12, 2010 reconsideration decision that
Petitioner’s effective date was established as June 13, 2009, Petitioner’s enrollment
application was filed on July 13, 2009, which is therefore the actual effective date.
Pursuant to 42 C.F.R. § 424.520(d), the date that by Palmetto GBA identified as the
“effective” date (June 13, 2009) is actually the date from which Petitioner may
retroactively bill for services.
CMS’s argument about the “intent” of the regulation flies in the face of its very plain and
unambiguous terms. The wording of section 498.3(b)(15) appears entirely
straightforward and includes no qualifying or limiting language. It is well established,
and not questioned by either party here, that applicable statue and regulations bind the
Board and all ALJs. Where a regulation speaks clearly on its face and applies to the
question before me, I am bound to follow it.

CMS points to one ALJ decision that did consider the regulatory history of section
498.3(b)(15) and interpreted the section in light of that history in the manner CMS now
advocates.” CMS Br. at 3. Notably, the ALJ first acknowledged the rights conferred by
the plain language of the statute, stating:

CMS acknowledges that the plain language of 42 C.F.R. § 498.3[(b)](15)
indicates that the determination of the effective date of a Medicare provider
agreement or supplier approval, is an initial determination that is subject to
hearing and judicial review. However, CMS argues that 42 C.F.R.

§ 498.3(b)(15) is not a provision applicable in the case of a supplier such as
Petitioner. Although the plain language of a regulation would normally
control, review of legislative or regulatory history is appropriate when an
issue of interpretation is raised as it is in this case.

Mikhail Paikin. D.O., DAB CR2064, at 7 (2010) (citation omitted) (emphasis added).
The ALJ in Paikin did not offer any further explanation of why he felt he could look

behind the plain language of a binding regulation to read in a limitation that nowhere
appears in the regulation.

I disagree that review of regulatory history is appropriate when an issue of interpretation
is merely raised, without more. Regulatory history and other sources of guidance are
relevant in interpreting language that is ambiguous, unclear in its application, or which
leaves gaps; however, courts do not resort to such interpretive tools when the wording is
clear on its face. See, e.g., Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 253-54
(1992) ([T]he “cardinal canon” of construction is that a statute means what it says and,
when unambiguous, “this first canon is also the last: judicial inquiry is complete.”).
CMS has not identified in what respect the wording of section 498.3(b)(15) may be said
to be ambiguous or unclear or where the language leaves a gap requiring interpretation to
give it meaning. I thus find little room for interpretation and therefore find review of
legislative or regulatory history inappropriate.

? CMS fails to acknowledge the many recent ALJ decisions that have concluded that the
plain language of section 498.3(b)(15) creates a right for any provider or supplier to
challenge the effective date of enrollment of a provider agreement or of supplier
approval. See, e.g., Andrew J. Elliot, M.D., DAB CR2103, at 3 (2010); Victor Alvarez,
M.D., DAB CR2070 (2010); Romeo Nillas, M.D., DAB CR2069 (2010); Jorge M.
Ballesteros, CNRA, DAB CR2067 (2010); Vincent Pirri, M.D., DAB CR2065 (2010).
I also disagree that the regulatory history, even were I to rely on it, supports CMS’s
current position. The provision that became section 498.3(b)(15) was first proposed in
1992 in a notice of proposed rulemaking, which aimed at doing two things:

(1) establishing “uniform criteria for determining the effective date of participation for all
Medicare and Medicaid providers and suppliers” and (2) specifying that “those
dissatisfied with a decision on their effective date of participation under Medicare are
entitled to a Medicare hearing on the decision.” 57 Fed. Reg. 46,362 (Oct. 8, 1992).

The regulation proposed in 1992 (and finalized in 1997) did set out uniform criteria for
establishing effective dates for provider agreements and supplier approvals for those
providers and suppliers subject to survey and certification requirements (or accreditation
by a CMS-approved accrediting organization). That fact does not necessarily mean that
the expansion of Medicare hearings to include effective date challenges, which was
proposed and finalized in the same rulemakings, was limited to such providers and
suppliers. The 1992 preamble indicates that the prior practice had been inconsistent
about whether the date on which a prospective provider or supplier was entitled to
participate in Medicare was a “proper subject for Medicare hearings.” 57 Fed. Reg. at
46,362-63. The rule was intended to ensure that, when a provider or supplier is found not
to meet conditions of participation initially but later to meet requirements, the resulting
effective date could be appealed (even though participation was ultimately approved). Id.

In adopting section 498.3(b)(15), CMS recognized that approving participation at a date
later than that sought amounts to a denial of participation during the intervening time and
generally involves the same kind of compliance issues that arise from initial denials. 62
Fed. Reg. 43,931, 43,933 (Aug. 18, 1997); 57 Fed. Reg. at 46,363. CMS’s argument that
suppliers like Petitioner cannot challenge an effective determination because their
applications have been “approved” rather than denied or revoked is contrary to the
expressed intent of the regulation.

CMS also contends that the fact that section 498.3(b)(15) was adopted long before
section 936(a)(2) of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, codified at 42 U.S.C. § 1395cc(j), required the Secretary to establish an
appeals process from the denial of applications for enrollment should suffice to
demonstrate that it was not intended to affect those appeal rights. CMS Br. at 3. This
argument is not persuasive. A later statute does not elucidate the intended meaning of a
prior regulation. The regulation on its face grants appeal rights to challenge effective
date determinations of provider agreements and supplier approvals generally. While it is
certainly true that the drafters of section 498.3(b)(15) would not likely have known in
advance that other suppliers would later acquire appeal rights, I cannot conclude that they
therefore intended that the appeal rights of such suppliers should be more limited than
those they were articulating for the suppliers who were able to request hearings at the
time section 498.3(b)(15) was drafted.
In fact, the long lag between the addition of effective date determinations to the list of
appealable initial determinations and the creation of an appeals process for denials of
enrollment applications cuts the other way. By the time that CMS adopted 42 C.F.R. Part
424, Subpart P, setting out enrollment requirements as a condition for participation in
Medicare, CMS was well aware of the longstanding provision granting “appeal rights and
procedures for entities dissatisfied with effective date determinations.” 62 Fed. Reg. at
43,931-32. Yet, CMS provided that a prospective provider or supplier whose enrollment
is denied or revoked “may appeal CMS’ determination in accordance with part 498,
subpart A of this chapter.” 42 C.F.R. § 424.545(a). Section 498(b)(15) is part of subpart
A of part 498, yet CMS did not exclude section 498(b)(15) or otherwise indicate that the
effective date determination would not be a proper subject for these Medicare hearings.
Hence, the plain language of section 424.545(a) reinforces the plain language of section
498.3(b)(15).

CMS further contends that the effective date of a provider agreement or supplier approval
is distinct from the effective date of billing privileges. CMS Br. at 4. To the extent that
CMS suggests that an ambiguity arises from the term “supplier approval” referenced in
section 498.3(b)(15), I am not persuaded that the language of section 498.3(b)(15) bears a
reading that excludes approval after submission of an enrollment application rather than
after a survey or deeming of an accredited supplier, or by CMS’s assertion that it should
be read to refer only to the language of section 489.13. CMS Br. at 4. Section 489.13
applies to the determination of the effective date of provider agreements and the “supplier
approval of entities that, as a basis for participation in Medicare,” are subject to survey
and certification or accreditation. This argument is circular, since section 489.13 merely
codifies the provisions for uniform effective date determinations for all providers and
suppliers subject to survey and certification or accreditation that were adopted as part of
the 1997 rulemaking. 62 Fed. Reg. at 43,931. Section 489.13 is not, however, the only
provision for approval of suppliers to participate in Medicare. Approval is defined in
section 424.502 as meaning the determination that the supplier is “eligible under
Medicare rules and regulations to receive a Medicare billing number and be granted
Medicare billing privileges.” The effective date of such approval for suppliers not
requiring survey and certification or accreditation is governed by sections 42 C.F.R.

§ 424.520(c) and (d). Importantly, section 498.3(b)(15) does not state that appealable
initial determinations are limited to the effective dates of provider agreements and
supplier approvals under section 489.13.

lam thus bound to follow the regulations in permitting an appeal by any provider or
supplier dissatisfied with a determination as to the effective date of its provider

agreement or supplier approval.

Based on the foregoing, I deny CMS’s motion to dismiss.
B. The effective date of Petitioner’s participation in Medicare was
properly determined under 42 C.F.R. § 424.520(d).

As explained above, I decide the merits of this case based on the written record.

The undisputed facts of this case are as follows. Petitioner originally submitted an
enrollment application to Palmetto GBA, a CMS contractor, in August of 2008. Ex. A
at 1. Petitioner admits that the application submitted was not the correct application for
the provider type. Jd. Petitioner submitted another application to the CMS contractor in
April of 2009, and admits that “the date was not on the signature page so the application
was rejected.” Jd. Petitioner states that he “tried to reopen the CCN...with the date on
the signature page. Due to CMS regulations, we were unable to reopen this CCN.” Id.

Petitioner agrees that Palmetto GBA “finally received” a “complete clean application” on
July 13, 2009. Id. By letter dated September 21, 2009, Palmetto GBA informed
Petitioner that his application was approved, and he had been assigned a Provider
Transaction Access Number to bill Medicare. /d. at 6. The letter indicated that an
“effective date of 6/13/2009” was assigned based on this being “30 days from the receipt
ate of the application” pursuant to 42 C.F.R. § 424.521(a)(1). Id. at 7. The letter also
instructed Petitioner that, if he disagreed with this determination, he could submit a
corrective action plan (CAP) within 30 days or request reconsideration within 60 days.
Id.

Petitioner then submitted a CAP on September 25, 2009. Jd. at 4-5. In his CAP, he
requested that his effective date be made retroactive to July 22, 2008. Id. at 5. He argued
that he had been trying to get Medicare approval even under a prior contractor but
“encountered several issues during this process” that included the fact that guidelines
changed effective April 1, 2009 meant that billing privileges “will only go back 30 days
from receipt of application.” Jd. Despite recognizing this rule, Petitioner asked Palmetto
GBA to “retro his effective date to 7/22/08.” Id.

Palmetto GBA evidently treated this CAP as a reconsideration request. On January 12,
2010, the Palmetto GBA hearing officer denied Petitioner’s request to change the
effective date, citing 42 C.F.R. §§ 424.520(d) and 424.521(a)(1). Id. at 2-3.

The present appeal followed. Petitioner now seeks an earlier effective date based on the
date when Petitioner’s first enrollment application was submitted to Palmetto GBA, plus
a 30-day retroactive billing period. /d. at 1.

The effective date of approved enrollment in the Medicare program for Petitioner is
governed by 42 C.F.R. § 424.520(d), which reads:
(d) Physicians, nonphysician practitioners, and physician and nonphysician
practitioner organizations. The effective date for billing privileges for
physician, nonphysician practitioners, and physician and nonphysician
practitioner organizations is the later of the date of filing of a Medicare
enrollment application that was subsequently approved by a Medicare
contractor or the date an enrolled physician or nonphysician practitioner
first began furnishing services at a new practice location.

(Emphasis added). The “date of filing” is the date that the Medicare contractor receives a
signed provider enrollment application that the Medicare contractor is able to process to
approval. 73 Fed. Reg. 69,725, 69,769 (Nov. 19, 2008) (emphasis added).

Petitioner admits that CMS did not receive “a complete clean application” that was
subsequently approved until July 13, 2009. Ex. A. at 1. Because it is undisputed that
prior applications from Petitioner could not be processed to approval as submitted, no
legal basis exists to use the date of filing of prior applications to determine the effective
date of enrollment.

Petitioner did not, and could not, appeal the contractor’s rejections of his earlier
applications. The rejection of an enrollment application is governed by 42 C.F.R.
§ 424.525, which reads:

§ 424.525 Rejection of a provider or supplier’s enrollment application
for Medicare enrollment.

(a) Reasons for rejection. CMS may reject a provider or supplier's
enrollment application for the following reasons:

(1) The prospective provider or supplier fails to furnish complete
information on the provider/supplier enrollment application within 30
calendar days from the date of the contractor request for the missing
information.

(2) The prospective provider or supplier fails to furnish all required
supporting documentation within 30 calendar days of submitting the
enrollment application.

(b) Extension of 30-day period. CMS, at its discretion, may choose to
extend the 30 day period if CMS determines that the prospective provider
or supplier is actively working with CMS to resolve any outstanding issues.

(c) Resubmission after rejection. To enroll in Medicare and obtain
Medicare billing privileges after notification of a rejected enrollment
application, the provider or supplier must complete and submit a new
enrollment application and submit all supporting documentation for CMS
review and approval.

(d) Additional review. Enrollment applications that are rejected are not
afforded appeal rights.

(Emphasis added). Petitioner thus had no appeal right from the rejection and was
required to submit a new application.

It is undisputed that Palmetto GBA received the application that was subsequently
approved on July 13, 2009. Pursuant to 42 C.F.R. section 424.520(d), the date of the
contractor’s receipt of that application must be used as the effective date.

Despite the clarity of this rule, confusion has been introduced by a muddling of the
effective date for which a supplier is approved as eligible to bill Medicare, governed by
42 C.F.R. § 424.520(d), with the earliest date for which an approved supplier may be
permitted to bill retroactively for services provided prior to the effective date, if the
contractor finds that certain prerequisites are met, governed by 42 C.F.R. § 424.521 (a).
The contractor in this matter contributed to this confusion by conflating the two date
determinations and setting out as the “effective dates” the earliest dates for which it
would permit Petitioner to bill retroactively for services provided. Ex. A. at 6-10 (letter
granting Petitioner’s approval to participate in the Medicare program); id., at 2-3
(reconsideration determination letter).

For many years, the question as to the proper effective date was unlikely to arise, because
physicians and non-physician practitioners were permitted to bill for services provided up
to 27 months retroactively. See 73 Fed. Reg. at 69,766. On January 1, 2009, however,
CMS’s regulations were changed to prohibit reimbursement to providers and suppliers
for items or services that they provided prior to the dates of their enrollment with
narrowly defined exceptions. CMS was concerned that Medicare not pay for items or
services when it could not be certain that the supplier met Medicare eligibility standards
at the time those items or services were provided. Jd. To avoid this problem, CMS
considered requiring that billing privileges begin only on the date when the contractor
approved the supplier as eligible to receive reimbursement from Medicare and no
retroactive billing be permitted. Jd. Commenters pointed out that this policy would
penalize suppliers who demonstrated their eligibility in their enrollment applications but
who were not approved for some time thereafter as a result of their contractors’
processing time. Jd. at 69,767. CMS addressed the public concern about contractor
processing timeliness by adopting the approach of setting the effective date for approval
of eligibility to the date of filing of the enrollment application that was ultimately
processed to approval (or the date that the applicant is open for business at the new
location, if later). Jd. CMS explained that “it is not possible to verify that a supplier has
met all of Medicare’s enrollment requirements prior to submitting an enrollment
application.” Jd. Commenters also complained, however, that a prospective supplier
might have to begin offering items and services prior to filing an enrollment application
and that refusing to pay for those items or services was unfair to them. Id. at 69,768.
CMS responded that suppliers, including physicians and NPPs, are responsible for filing
10

timely enrollment applications and, in most cases, can do so prior to providing Medicare
services at a practice location. /d. For those situations where they can not, CMS
explained that it was:

finalizing a provision that allows physicians. ..to retrospectively bill for services
up to 30 days prior to their effective date of billing when the physician or
nonphysician organization has met all program requirements, including State
licensure requirements, where services were provided at the enrolled practice
location prior to the date of filing and circumstances, such as, when a physician is
called to work in a hospital emergency department which precluded enrollment in
advance of providing services to Medicare beneficiaries in § 424.52 1(a)(1).

Id. (emphasis added).* A careful reading of the regulations and preamble discussions
makes clear that the grant of a retroactive billing period of up to 30 days does not
constitute a change in the effective date of the supplier’s approval of eligibility to
participate in Medicare and is based on a showing of circumstances precluding timely
enrollment, not a determination of an earlier date of approval.

Petitioner does not identify any authority for a right to appeal the grant of, or length of, a
retroactive billing period. Current regulations, which were in effect at the time of
Petitioner’s approval for participation in Medicare, limit retroactive billing to 30 days
prior to the effective date. 42 C.F.R. § 424.521(a). The billing period under section
424.521(a) is retroactive from the effective date of approval. It follows that section
498.3(b)(15) does not provide for challenges to the period for retroactive billing beyond
an appeal that the effective date of approval itself was wrongly determined. Furthermore,
the regulation at section 424.52 1(a) is binding on me. I can neither alter nor deviate from
its explicit limitation on retroactive billing to the 30 days already granted to Petitioner.
Thus, I have no authority to extend the retroactive billing period for Petitioner.

> The regulations also permit a retroactive billing period of up to 90 days prior to the
effective date in certain disaster situations not relevant here. 42 C.F.R. § 424.521(a)(2).
11

Il. Conclusion

In conclusion, the earliest effective date for enrollment in the Medicare program was
properly determined to be July 13, 2009. See 42 C.F.R. § 424.520(d). Thus, I must deny
Petitioner’s request for an effective date earlier than July 13, 2009 or retroactive billing
privileges earlier than June 13, 2009.

/s/
Leslie A. Sussan
Board Member


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Steven K. Hwang, MD,
Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-10-480
Decision No. CR2152
Date: June 11, 2010

DECISION REMANDING CASE
TO CENTERS FOR MEDICARE AND MEDICAID SERVICES

I remand this case to the Centers for Medicare and Medicaid Services (CMS) so that it
may develop the record and make a determination based on the facts. I vacate the CMS’s
determination to grant an effective enrollment date of January 17, 2009 to Petitioner
Steven K. Hwang, M.D.

I. Background

Petitioner is a physician practicing in the State of California. On February 9, 2010, he
filed a hearing request in which he asserted that Palmetto GBA, a Medicare contractor,
had improperly denied him the opportunity to submit claims for Medicare reimbursement
covering items or services that he provided to beneficiaries during calendar year 2008.
The case was assigned to me for a hearing and a decision.

I issued a pre-hearing order directing the parties to exchange briefs and proposed
exhibits, including the written direct testimony of any proposed witnesses. CMS filed a
motion for summary judgment. It provided no proposed exhibits. Petitioner failed to
reply to the motion or to submit a pre-hearing exchange. | issued an order to show cause
to Petitioner in which I warned him that I would dismiss his hearing request if he did not
file a pre-hearing exchange. On May 25, 2010, Petitioner filed a letter, which I accept as
his pre-hearing exchange. He filed no proposed exhibits.

IL. Issue, findings of fact, and conclusions of law
A. Issue

The issue in this case is whether Palmetto GBA and CMS properly determined
Petitioner’s effective enrollment date to be January 17, 2009.

B. Findings of fact and conclusions of law

It is impossible for me to decide whether CMS properly determined the effective date of
Petitioner’s enrollment in the Medicare program. CMS has provided me with no
evidence supporting its determination. The brief that counsel for CMS filed in this case
is so laconic as not to be a brief at all. Rather, it is simply a series of conclusions that are
unsupported by anything. '

I will not make findings of facts in the absence of evidence supporting them. Petitioner
represents that he maintained a practice of medicine through calendar year 2008 and
provided reimbursable services to Medicare beneficiaries but that he failed to file claims
for reimbursement during that year because of alleged problems he had with his billing
service. He has, however, not provided any evidence supporting that assertion.
Petitioner contends that his provider enrollment was revoked or discontinued due to his
failure to file claims during 2008. However, neither he nor CMS has provided any
documentation of that allegation. Petitioner contends also that he was told by someone,
presumably, CMS’s contractor, that he had to reapply for enrollment and that he did so in
early 2009. However, according to Petitioner, he was subsequently shocked to discover

' The brief contains a footnote that states:

All referenced documentation was submitted by petitioner in conjunction
with his February 9, 2010 hearing request. CMS waives any objection to
receipt of these documents into evidence.

CMS Brief at 1 n.1. I have no idea what counsel is talking about. Petitioner did not
submit “documentation” with his hearing request. The only documentation that I have in
this case is: CMS’s brief; Petitioner’s hearing request; his May 25, 2010 letter to me; and
a copy of the reconsideration determination, which I obtained through a request that I
made. In fact, this footnote is boilerplate language, which counsel has used in other
briefs. Apparently, he used it here without actually ascertaining whether Petitioner had
submitted “documentation.”

that CMS would not award him an effective date of enrollment that was earlier than the
date of the 2009 application. Thus, according to Petitioner, he lost the opportunity to
claim reimbursement for services that he provided to beneficiaries in 2008.

It is unclear to me whether these assertions would support CMS’s determination to grant
Petitioner an effective enrollment date of January 17, 2009. CMS has not asserted that
Petitioner’s enrollment was revoked or discontinued. It has not provided me with any
legal analysis as to the basis for the revocation or discontinuation if, indeed, that
happened. Nor has CMS provided even prima facie proof as to the date of Petitioner’s
enrollment application.

I caution the parties that I am not suggesting in this decision that I would either sustain or
overturn CMS’s determination if this case comes back to me at a later date. All that Iam
saying is that it is impossible for me to decide this case at this time given CMS’s failure
to provide me with even prima facie evidence of what happened. It is unclear to me,
furthermore, whether CMS actually knows the entire history of Petitioner’s enrollment
and his application status. Therefore, I am remanding this case so that CMS may develop
the record and make an informed determination.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Proactive Medical, L.L.C.,
(NPI: 1942284005),
Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-10-218
Decision No. CR2150

Date: June 9, 2010

DECISION

Here, the sole question before me is whether Petitioner, Proactive Medical, L.L.C.,
participated in the Medicare Program as a fixed-base Independent Diagnostic Testing
Facility (IDTF) or a mobile IDTF. If fixed-base, the Medicare contractor properly
revoked its billing privileges, because it shared its practice location with another
Medicare-enrolled supplier, in violation of federal regulations. On the other hand, a
mobile IDTF may share its practice location, so if Petitioner was mobile, the revocation
was improper and must be reversed.

For the reasons discussed below, I find that Petitioner operated as a mobile IDTF, and the
Medicare Contractor improperly revoked its billing privileges.

Background

Until its Medicare supplier number was revoked on June 3, 2009, Petitioner participated
in the Medicare program as an IDTF. See 42 C.F.R. § 410.33. Ina letter dated May 4,
2009, the Medicare contractor, Pinnacle Business Solutions, Inc., notified Petitioner that
its supplier number would be revoked, because the supplier shared its practice location
and subleased its operation with another Medicare enrolled individual or organization, in
violation of IDTF performance standards. CMS Ex. 1.

Petitioner sought reconsideration, and, in a decision dated October 9, 2009, the
contractor’s Medicare Senior Enrollment Officer affirmed the revocation of Petitioner’s
supplier number. CMS Exs. 5, 7.

The parties have filed cross motions for summary judgment. With its motion and brief
(CMS Br.), CMS submits ten exhibits (CMS Exs. 1-10). With its motion and brief (P.
Br.), Petitioner submits five exhibits (CMS Exs. 1-5).

Discussion

Petitioner is entitled to summary judgment, because the
undisputed evidence establishes that it was enrolled in the
Medicare program as a mobile IDTF, which may share a
practice location with another Medicare-enrolled individual
or organization.'

An IDTF may be a fixed location, a mobile entity, or an individual nonphysician
practitioner. 42 C.F.R. § 410.33(a)(1). It must meet all of the standards set forth in 42
C.F.R. § 410.33(g), or CMS will revoke its billing privileges. 42 C.F.R. § 410.33(h).
Section 410.33(g)(15) prohibits a fixed-base IDTF from “sharing a practice location with
another Medicare-enrolled individual or organization,” and it prohibits a fixed-base IDTF
from “leasing or subleasing its operations or practice location to another Medicare
enrolled individual or organization.” But these prohibitions explicitly do not apply to
mobile IDTFs (“[w]ith the exception of... mobile IDTFs .. .”).

Here, Petitioner concedes that it subleased space from Jon V. Schellack, M.D., a
Medicare-enrolled supplier. P. Br. at 4; see CMS Br. at 3.

The parties also agree that Petitioner enrolled in the Medicare program as an IDTF,
effective September 1, 2002. CMS Br. at 3, § 1; P. Br at 3, § 3.

To maintain Medicare billing privileges, a supplier must “resubmit and recertify” the
accuracy of its enrollment information every five years. To meet this requirement, the
supplier submits a new enrollment application with supporting documentation. 42 C.F.R.
§ 424.515. Accordingly, on February 3, 2009, Petitioner submitted a new Medicare
enrollment application, CMS Form 855B. CMS Ex. 9. Section 4 of that application form
asks for the information necessary to establish an IDTF as a mobile entity, including
“base of operations address for mobile or portable suppliers” (Section 4E); “vehicle

' [make this one finding of fact/conclusion of law.
information” (Section 4F); and “geographic location for mobile and portable suppliers
where the base of operations and/or vehicle renders services” (Section 4G). CMS Ex. 9
at 15-21. According to CMS, because Petitioner failed to complete sections 4E, 4F and
AG, it did not establish itself as a mobile IDTF. CMS Br. at 6.

Petitioner, however, points out that the application form instructs applicants to complete
only those portions of section 4 “that are changing.” CMS Ex. 9 at 7 (emphasis added).
At the specific subsections, it reiterates: “[i]f you are changing, adding or deleting
information, check the applicable box, furnish the effective date, and complete the
appropriate fields in this section.” CMS Ex. 9 at 20 (emphasis added). Thus, Petitioner
was only required to complete those sections if it were making any changes.”

Prior to February 3, 2009, Petitioner had submitted its most recent enrollment application
on October 31, 2003. In that earlier application, Petitioner provided the information
purportedly missing from its 2009 application: “base of operations address,” “vehicle
information,” and “geographic location for mobile and portable suppliers where the base
of operations and/or vehicle renders services.” P. Ex. | at 7, 8. No evidence suggests
that this information had changed (and CMS has not come forward with any evidence
suggesting a dispute on that issue), so Petitioner appropriately left those sections blank on
its 2009 application.

Petitioner was therefore a mobile IDTF and not subject to subleasing and space-sharing
restrictions of 42 C.F.R. § 410.33(g)(15).

Conclusion

Petitioner is entitled to summary judgment because the undisputed evidence establishes
that it operated as a mobile IDTF, and the Medicare Contractor improperly revoked its
billing privileges.

/s/
Carolyn Cozad Hughes
Administrative Law Judge

> Petitioner was changing only its address from “5425 Brittany Drive, Suite B” to “5425
Brittany Drive, Suite C.” Compare P. Ex. | at 7 with CMS Ex. 9 at 16.