Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Covington Court Health and Rehabilitation Center
(CCN: 04-5363),
Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-11-395
Decision No. CR2600

Date: September 13, 2012

DECISION

Petitioner Covington Court Health and Rehabilitation Center challenges the
determination of the Centers for Medicare and Medicaid Services (CMS) that it was not
in substantial compliance with program participation requirements. Petitioner also
challenges CMS’s imposition of a per-instance civil money penalty (PICMP) in the
amount of $10,000. For the reasons discussed below, I find Petitioner was not in
substantial compliance with program participation requirements, and that a PICMP of
$10,000 is a reasonable enforcement remedy.

I. Background

Petitioner is a skilled nursing facility located in Fort Smith, Arkansas. The Arkansas
Department of Human Services, Office of Long Term Care (state agency), conducted a
complaint survey of Petitioner on January 21, 2011, and found Petitioner to be out of
substantial compliance with the participation requirements at 42 C.F.R.
§ 483.10(b)(11) (Tag F157, scope and severity level D); 42 C.F.R. § 483.25 (Tag F309,
scope and severity level J); 42 C.F.R. § 483.25(1) (Tag F329, scope and severity level E);
42 C.F.R. § 483.25(m)(2) (Tag F333, scope and severity level E); and 42 C.F.R.

§ 483.75(j)(2)(ii) (Tag F505, scope and severity level E).

By letter dated February 16, 2011, CMS notified Petitioner that it was imposing the
following remedies: a PICMP of $10,000 for the deficiency at Tag F309; a denial of
payment for new admissions (DPNA) beginning March 3, 2011, and continuing until the
day before Petitioner achieved substantial compliance or its provider agreement was
terminated; and termination of Petitioner’s provider agreement unless Petitioner achieved
substantial compliance before April 21, 2011. CMS Ex. 6.

CMS advised Petitioner by letter dated March 3, 2011, that the PICMP of $10,000 for
Tag F309, was rescinded, and that the effective date of the DPNA was changed from
March 3, 2011, to April 21, 2011. The letter also advised Petitioner that its provider
agreement would still be terminated effective April 21, 2011, unless it achieved
substantial compliance by that date. CMS Ex. 5.

In another letter dated March 8, 2011, CMS advised Petitioner that the PICMP of
$10,000 that had been rescinded for Tag F309, was reinstated. The letter also advised
Petitioner that the other remedies, termination of its provider agreement and the DPNA,
remained unchanged. CMS Ex. 4.

By letter dated April 1, 2011, CMS notified Petitioner that, based on a survey conducted
on March 17, 2011, it found Petitioner to be out of substantial compliance with the
participation requirement at 42 C.F.R. § 483.25(m)(2) (Tag F333, scope and severity
level D). CMS stated that the following enforcement remedies were imposed: the DPNA
was effective April 21, 2011; the PICMP of $10,000 for Tag F309 was already imposed;
and termination of Petitioner’s provider agreement would now be effective June 21,
2011.’ CMS Ex. 2.

By letter dated April 15, 2011, CMS notified Petitioner that it had achieved substantial
compliance with the requirements for Medicare participation. CMS advised Petitioner
that it had rescinded the termination of Petitioner’s Medicare/Medicaid provider

' At the top of the notice letter dated April 1, 2011, CMS advised Petitioner, in boldface
capital letters, that this letter superceded a notice that CMS had sent on March 31, 2011.
CMS indicated that the only difference between the two letters was that it corrected the
effective date of the DPNA. CMS Ex. 2, at 1. I note that the record also contains CMS’s
March 31, 2011 letter. CMS Ex. 3.
agreement and also rescinded the DPNA. CMS stated that the PICMP of $10,000 had
already been imposed. CMS Ex. 1.

Petitioner requested a hearing by letter dated April 15, 2011. The case was docketed as
C-11-395 and assigned to me for hearing and decision on April 19, 2011.

I conducted an in-person hearing in Little Rock, Arkansas on September 27-28, 2011.
CMS offered exhibits (CMS Exs.) 1 through 37, which I admitted into evidence.
Transcript (Tr.) 20. Petitioner offered exhibits (P. Exs.) 1, and 3 through 40, which I
admitted. Tr. 21. On September 16, 2011, Petitioner took the deposition of Dr. Phillip
Bobo, which was offered as P. Ex. 40 and admitted at the hearing. On September 21,
2011, CMS took the deposition of Dr. Bruce Biller, and offered his deposition as CMS
Ex. 38, which I admitted into evidence. On November 29, 2011, Petitioner took the
deposition of Toava McGahan-Howard, Certified Nurse Aide (CNA), and offered her
deposition as P. Ex. 41, which I admitted into evidence.

CMS called the following witnesses: Surveyor Linda Schneider, R.N. and Theresa
Bennett, R.N. Petitioner called the following witnesses: John Hopkins; Dr. Randall
Beallis; Patricia Fashing, Licensed Practical Nurse (LPN); and Thomas Martini, R.N.
The parties filed post-hearing briefs (P. Br. and CMS Br.) and post-hearing reply briefs.

II. Issues
The issues in this case are:

1. Whether Petitioner was out of substantial compliance with participation
requirements; and

2. Whether the remedies imposed are reasonable.
Ill. Applicable law

The statutory and regulatory requirements for participation by a long-term care facility
are found at sections 1819 (SNF) and 1919 (NF) of the Social Security Act (Act) 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

* All references are to the 2011 version of the Code of Federal Regulations (C.F.R.),
which was in effect at the time of the survey.
established by sections 1819(b), (c), and (d) of the Act.? Pursuant to 1819(h)(2)(C), the
Secretary may continue Medicare payments to a SNF not longer than six months after the
date the facility is first found not in compliance with participation requirements.

Pursuant to 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. 42 C.F.R. § 488.301. State survey agencies
survey facilities that participate in Medicare on behalf of CMS to determine whether the
facilities are complying with federal participation requirements. 42 C.F.R. §§ 488.10-.28,
488.300-.335. The regulations specify the enforcement remedies that CMS may impose
if a facility is not in substantial compliance with Medicare requirements. 42 C.F.R.

§ 488.406.

CMS may impose a CMP for the number of days a facility is not in substantial
compliance or for each instance of noncompliance. 42 C.F.R. § 488.430(a). 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
deficiencies. 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

* Section 1919(h)(2) of the Act gives similar enforcement authority to the states to ensure
that NFs comply with their participation requirements established by sections 1919(b),
(c), and (d) of the Act.

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). A
per instance CMP may range from $1000 to $10,000, and the range is not affected by the
presence of immediate jeopardy. 42 C.F.R. § 488.438(a)(2).

The Act and regulations make a hearing before an administrative law judge (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. The Residence at
Salem Woods, DAB No. 2052 (2006); Cal Turner Extended Care, DAB No. 2030 (2006);
Beechwood Sanitarium, DAB No. 1906 (2004); Emerald Oaks, DAB No. 1800, at 11
(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); 42 C.F.R. §§ 488.330(e), 498.3.
However, the 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 determined, if a
successful challenge would affect the range of the CMP that may be imposed or impact
the facility’s authority to conduct a NATCEP. 42 C.F.R. § 498.3(b)(14), (d)(10)(i). The
CMS determination as to the level of noncompliance, including the finding of immediate
jeopardy, “must be upheld unless it is clearly erroneous.” 42 C.F.R. § 498.60(c)(2);
Woodstock Care Ctr., DAB No. 1726, at 9, 38 (2000), aff'd, 363 F.3d 583 (6th Cir.
2003). The Board has long held that the net effect of the regulations is that a provider has
no right to challenge the scope and severity level assigned to a noncompliance finding,
except in the situation where that finding was the basis for an immediate jeopardy
determination. See, e.g., Ridge Terrace, DAB No. 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 imposition of 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.
Batavia Nursing & Convalescent Ctr., DAB No. 1904 (2004), aff'd, 129 F. App’x. 181
(6th Cir. 2005); Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004); Emerald
Oaks, DAB No. 1800; Cross Creek Health Care Ctr., DAB No. 1665 (1998); see
Hillman Rehab. Ctr., DAB No. 1611 (1997), aff’d, No. 98-3789, 1999 WL 34813783
(D.N.J. May 13, 1999).
IV. Findings of Fact, Conclusions of Law, and Analysis

A. Petitioner was not in substantial compliance with 42 C.F.R. § 483.25 (Tag
F309) (quality of care).*

Under the statute and the “quality of care” regulation, each resident must receive and the
facility must provide the necessary care and services to allow a resident to attain or
maintain the highest practicable physical, mental, and psychosocial well-being, in
accordance with the resident’s comprehensive assessment and plan of care. Act

§ 1819(b)(2); 42 C.F.R. § 483.25.

CMS’s allegations of noncompliance with 42 C.F.R. § 483.25 center on the care provided
to two diabetic residents, R5 and R6, who were also wife and husband, respectively. The
Statement of Deficiencies (SOD) alleges, based on record review and interview, that
Petitioner failed to ensure that its staff identified that R5 had significantly low blood
sugar results, along with serious deterioration in her physical and mental condition, such
that there existed an emergency situation requiring the prompt notification of emergency
medical services. The SOD alleges also that Petitioner failed to ensure that the physician
was promptly consulted when R6 had significantly low blood sugar results and failed to
ensure that his blood sugar was monitored to ensure that there was no further drop in his
blood sugar level. CMS Ex. 7, at 9.

Facts Relating to Resident 5

R5 was a 75-year old woman who was admitted to the facility on January 23, 2010, with
diagnoses that included uncontrolled diabetes mellitus, cerebral vascular accident,
osteoporosis, hypertension, esophageal reflux, and amputation of a toe. CMS Ex. 9; see
CMS Ex. 12; P. Ex. 14, at 5. R5’s Minimum Data Set (MDS) with an assessment
reference date of January 29, 2010, indicates that R5 had short-term and long-term
memory problems, had some difficulty with decision-making, used a wheelchair most of
the time, required assistance with her activities of daily living, and was on a therapeutic

+ The only deficiency citation at issue in this case is the one under 42 C.F.R. § 483.25,
Tag F309. Although CMS alleged a deficiency under 42 C.F.R. § 483.10(b)(11), Tag
F157 (“failure to notify physician of significant change”), CMS chose not to impose any
remedies against Petitioner based on this citation. See CMS Reply at 2. As I discuss
below, the evidence shows that Petitioner failed to notify the residents’ physician
immediately as required when their blood sugar levels were significantly low. However,
CMS’s case treats this failure as part of a bigger picture showing a violation of 42 C.F.R.
§ 483.25, Tag F309.
diet. P. Ex. 14, at 3, 6, 13. Petitioner updated R5’s MDS on February 2, 2010,
September 16, 2010, and November 14, 2010. P. Ex. 14, at 18-63; P. Br. at 15.

R5’s care plan identified as a problem her potential for weight loss related to her diabetic
diet and dementia. Among other approaches, the plan directed staff to: notify physician
of significant weight loss; observe for changes in appetite; weigh per schedule and as
needed; provide diet as ordered; provide with food/beverage preferences; encourage to
eat; offer alternate if meal is refused or less than 50% of meal is consumed; provide
snacks or supplements; observe for signs and symptoms of hypoglycemia (low blood
sugar) and hyperglycemia (high blood sugar); consult with the registered dietician as
needed; and keep resident/responsible party informed. CMS Ex. 11, at 4-5.

At the October and November 2010 monthly exams, R5’s treating physician, Dr. Randall
Beallis, documented that R5 had stable vital signs, and her lungs and heart showed no
abnormalities. CMS Ex. 14, at 7-8.

R5’s physician orders dated October 11, 2010, stated that Petitioner’s staff was to notify
R5’s physician immediately if her capillary blood glucose (CBG)° level was below 40 or
higher than 400. P. Ex. 6, at 30; CMS Ex. 12, at 1; CMS Ex. 14, at 1.

A nursing note dated November 14, 2010, at 8:15 a.m., states that R5’s CBG level was
measured at 7:00 a.m., and registered 76. Nursing staff administered 16 units of Novolin
70-30, which is “intermediate insulin.” P. Ex. 10, at 1; CMS Ex. 13, at 1; P. Ex. 11, at
87; CMS Ex. 12, at 2.° At 11:30 a.m., R5’s CBG level was 285. P. Ex. 10, at 1; CMS
Ex. 13, at 1. Nursing staff administered three units of Novolin R 100, which is fast-
acting insulin given based on a sliding scale. P. Ex. 10, at 1; CMS Ex. 13, at 1; P. Ex. 11,
at 88; CMS Ex. 12, at 3; Tr. 133-35.

In another November 14, 2010 nursing note at 11:33 p.m., LPN Ronald Llemit stated
that, around 4:30 p.m., R5 was awake, alert and oriented. Her respirations were normal
and unlabored, with no shortness of breath. LPN Llemit noted that R5 was able to make
her needs known to staff. He documented that R5’s CBG level measured 214. P. Ex. 10,
at 1; CMS Ex. 13, at 1. LPN Llemit administered two units of Novolin R 100 (sliding

* The phrases “blood glucose level” and “blood sugar level” are interchangeable and
mean the amount of glucose or sugar present in the blood.

® Intermediate insulin works for a much longer period of time and can stay in the body
for up to 24 hours. Tr. 134.
scale) insulin and twelve units of Novolin 70-30 insulin. P. Ex. 11, at 88; CMS Ex. 12, at
3; CMS Ex. 20, at 1; Tr. 133. LPN Llemit noted that R5 refused to eat dinner.’ He
encouraged RS5 to drink the supplement Ensure and R5 refused. P. Ex. 10, at 1; P. Ex. 21,
at 6; CMS Ex. 13, at 1.

Apparently, around 5 p.m., R5 refused dinner in the dining room again and also again
refused to drink Ensure. P. Ex. 21, at 6. On R5’s meal charting record, which shows the
percentage of meals consumed, LPN Llemit wrote a “0” in the box corresponding to the
5:00 p.m. dinner to indicate that R5 had nothing to eat. P. Ex. 12, at 10.

Sometime between 8:10 and 8:30 p.m., R6 (R5’s husband and roommate at the facility),
stood in the hallway and called for help for R5.* CMS Ex. 19, at 2, 4. It appears that
staff members LPN Llemit, CNA McGahan-Howard, and CNA Alyssa Regnier, entered
R5’s room. See P. Ex. 21, at 4; CMS Br. at 5. According to LPN Llemit’s nursing notes,
R5 had “cold, clammy skin” and was “unresponsive to stimuli and verbal command.” P.
Ex. 10, at 1; CMS Ex. 13, at 1.

CNA McGahan-Howard left R5’s room to retrieve the facility’s manual vital signs
equipment. CMS Ex. 30, at 26. LPN Llemit stated in an interview that he told the CNAs
to obtain R5’s vital signs, but they couldn’t feel a pulse. LPN Llemit stated that he “did a
pulse ox & it was [not] reading.”” CMS Ex. 30, at 22. According to CNA McGahan-
Howard, RS5’s pulse was “faint.” P. Ex. 41, at 24. LPN Llemit checked R5’s CBG level,
and his nursing notes state that her blood sugar level was 39 at 8:30 p.m. P. Ex. 10, at 1;
CMS Ex. 13, at 1. Although R5 had a physician’s order requiring staff to notify her
physician if her blood sugar level measured less than 40, Petitioner’s staff did not notify

7 Petitioner claims that R5 said that she had eaten pizza and also claims that R5’s family
brought her a dinner of coleslaw, baked beans, and fish. P. Br. at 5; see P. Ex. 41, at 10-
1, 13. As I discuss further below, there is no documentary evidence in the record that
R5 ate anything on the evening of November 14, 2010, following her afternoon dosage of
insulin.

* Tnote that the parties do not agree on the exact time when RS’s husband, R6, called out

for assistance for R5. Based on the record, I find that R6 called for help sometime
between 8:10 p.m. and 8:30 p.m. More specificity in fixing the time does not appear to
be material.

° Although LPN Llemit stated that the pulse ox “was [not] reading,” it is apparent that
what he meant is that the pulse oximeter was not giving a reading when it was attached to
R5’s finger.

R5’s physician. Instead, CNA McGahan-Howard stated that she ran to the kitchen to get
orange juice, LPN Llemit attempted to get R5 to drink the orange juice, but she was not
able to drink it. P. Ex. 41, at 28-29. Staff were unable to get a blood pressure reading or
a pulse oximeter reading for R5, so CNA McGahan-Howard went to another wing of the
facility to retrieve a second vital signs machine. P. Ex. 41, at 29, 102, 107. LPN Llemit
and CNA Regnier obtained an oxygen canister and a nasal cannula from different supply
closets. They hooked up the equipment and began to administer oxygen to RS.

According to R5’s son, LPN Llemit called him at 8:24 p.m. to tell him about his mother’s
condition. R5’s son states that he arrived at the facility within 15-20 minutes, and
discovered that his mother was unconscious. CMS Ex. 30, at 35.

Around 8:40 p.m., LPN Llemit called R5’s physician, Dr. Beallis. CMS Ex. 30, at 22.
According to LPN Llemit, he told Dr. Beallis that R5 was unresponsive, her blood sugar
was 39, her vital signs were unreadable via pulse oximetry, and he could not feel a pulse
on R5. CMS Ex. 30, at 22. Dr. Beallis gave an order for a Glucagon injection and to
reassess R5 after fifteen minutes. '° CMS Ex. 30, at 22. LPN Llemit obtained the
Glucagon from the facility’s emergency kit, which was kept in a locked room, returned to
R5’s room and administered the injection around 8:45 p.m., according to the facility’s
own timeline as provided to CMS. CMS Ex. 20. At 9:00 p.m., LPN Llemit measured
R5’s CBG level, and it had dropped to 26 following the Glucagon injection. P. Ex. 10, at
1; CMS Ex. 13, at 1. LPN Llemit reportedly called Petitioner’s DON and Dr. Beallis,
who ordered staff to call Emergency Medical Services (EMS) for R5. See P. Ex. 25, at 2.
At 9:03 p.m., LPN Llemit called EMS. P. Ex. 20, at 5; CMS Ex. 16, at 5. EMS arrived
at the facility at 9:11 p.m. P. Ex. 20, at 5; CMS Ex. 16, at 5. According to paramedic
John Hopkins, when he arrived on the scene, he assessed R5 and found her respirations
were “very shallow and weak.” Tr. 200. He noted that R5 was unresponsive and he
could not really detect a pulse. P. Ex. 20, at 4; Tr. 200. Mr. Hopkins measured R5’s
blood sugar, and found that it was 29. P. Ex. 20, at 4; CMS Ex. 16, at 4; Tr. 198. At 9:14
p.m., the paramedics gave a “D 50 IV push” (intravenous administration of Dextrose 50).
P. Ex. 20, at 4, CMS Ex. 16, at 4. There was no change in R5’s condition as a result of
the D 50. P. Ex. 20, at 4; CMS Ex. 16, at 4; Tr. 200-01. The paramedics then moved R5
to the ambulance, placed her on the cardiac monitor, and shocked her with a defibrillator.
R5 went into asystole (no pulse), and the paramedics started CPR and administered
epinephrine and atropine. R35 still had no pulse, and the paramedics continued CPR and
transported R5 to the emergency room. P. Ex. 20, at 4; CMS Ex. 16, at 4; Tr. 201. R5
was pronounced dead at 10:14 p.m. at the hospital. CMS Ex. 17, at 7-9, 15.

‘© Glucagon is a medication that increases blood glucose.
10

Facts Relating to Resident 6

R6 was a 76-year old man who was admitted to Petitioner’s facility on December 12,
2008. CMS Ex. 21. His diagnoses included cerebrovascular accident, uncontrolled
diabetes mellitus, hypertension, chronic airway obstruction, obesity, and depression.
CMS Ex. 21. Like his wife (R5), R6 had a physician’s order that required Petitioner’s
staff to notify his physician immediately if his blood sugar level dropped below 40. CMS
Ex. 26, at 1, CMS Ex. 24, at 7.

On October 31, 2010, at 4:30 p.m., LPN Llemit documented on R6’s Medication
Administration Record (MAR) that his blood sugar level was 37. CMS Ex. 24, at 7. A
review of the nursing notes indicates that, for October 31, 2010, there is no entry stating
that R6 had a blood sugar reading of 37 at 4:30 p.m. CMS Ex. 25, at 5. The record
contains no evidence that staff immediately contacted R6’s physician to inform him that
R6’s blood sugar level had dropped below 40.

Discussion

Petitioner agrees that R5’s condition was “very serious” on the night of November 14,
2010, but contends that CMS “‘overstates the gravity of the situation.” P. Br. at 24.
Petitioner asserts that its staff acted timely and competently in providing treatment to RS,
including promptly calling EMS, and that her death was “unavoidable.” P. Br. at 11.
Petitioner also contends that its staff provided necessary diabetic dietary care and services
to RS.

The record does not support Petitioner’s contentions. There can be no dispute that R5
experienced a life-threatening diabetic crisis on the night of November 14, 2010, nor can
it be disputed that the change in her condition required immediate emergency medical
attention. The record shows that Petitioner’s staff failed to notify R5’s physician
immediately when her blood sugar fell below 40, as explicitly required under his standing
orders. Moreover, Petitioner’s staff failed to monitor R5’s meal intake adequately after
she received her afternoon dosage of insulin. Contrary to Petitioner’s claim, I find that its
staff did not act with any urgency despite R5’s critical condition, and failed to call 911
immediately to obtain emergency medical services for R5. Given the obvious — that
critical time was lost because of Petitioner’s staff’s delay in calling 911 — it is
impossible to conclude with any confidence at all that R5’s death was “unavoidable” as
Petitioner suggests.

Because R5 was a diabetic, she required close monitoring of her blood sugar levels and
her meal intake. Her care plan directed staff to, among other things, offer alternates if
she refused a meal or if she consumed less than 50% of an offered meal, provide snacks
or supplements, and observe her for signs and symptoms of hypoglycemia and
11

hyperglycemia. CMS Ex. 11, at 5. R5 also had a physician’s order that required staff to
notify her physician immediately if her blood glucose level fell below 40 or higher than
400. P. Ex. 6, at 30; CMS Ex. 12, at 1; CMS Ex. 14, at 1; Tr. 286.

As stated above, on the night of November 14, 2010, sometime between 8:10 and 8:30
p.m., R6 (husband of R5) called out for help, and Petitioner’s staff found R5 with “cold,
clammy skin” and “unresponsive to stimuli and verbal command.” P. Ex. 10, at 1; CMS
Ex. 13, at 1. Petitioner’s staff was unable to obtain R5’s vital signs.'' LPN Llemit stated
that the CNAs could not feel a pulse and that the pulse oximeter was not giving a reading.
CMS Ex. 30, at 22. CNA McGahan-Howard, however, said that R5’s pulse was “faint.”
Staff went to retrieve another vital signs machine from another wing of the facility. LPN
Llemit checked R5’s CBG level, and it was 39 at 8:30 p.m. P. Ex. 10, at 1; CMS Ex. 13,
at 1. LPN Llemit and CNA Regnier then left R5’s room to get an oxygen canister and a
nasal cannula, returned, hooked up the equipment, and administered oxygen to RS. P.
Ex. 10, at 1; CMS Ex. 13, at 1.

It was Petitioner’s staff’s obligation under Dr. Beallis’ standing order to notify him
immediately when R5’s blood sugar level dropped below 40. However, they failed to
follow this order. According to Dr. Beallis’ signed affidavit, LPN Llemit called Dr.
Beallis “at approximately 8:40 p.m. and notified [him] that Resident #5’s CBG was 39.”
P. Ex. 25, at 1; Tr. 287. Petitioner acknowledges that ten minutes passed before LPN
Llemit called Dr. Beallis to notify him of R5’s condition." P. Br. at 26; P. Reply at 11.
In Petitioner’s view, because CMS presented no evidence as to how “immediate” should
be defined, the question is whether a ten-minute delay was “reasonable” in light of the
fact that LPN Llemit had to first retrieve the proper equipment and then test R5’s CBG
level. P. Br. at 26; P. Reply at 11.

I do not find Petitioner’s staff’s ten-minute delay in notifying Dr. Beallis to be
“reasonable.” There can be no dispute that the fact that RS had a blood sugar of 39

"' According to Petitioner, one of its CNAs obtained R5’s vital signs, and wrote them
down on a piece of paper. P. Br. at 28-29. I find no support for this in the record as
Petitioner has not offered any “piece of paper” into evidence documenting R5’s vital
signs on the night of November 14, 2010.

" T note that Petitioner also claims elsewhere in its posthearing brief that LPN Llemit
called Dr. Beallis around 8:36 p.m. P. Br. at 8. Other than LPN Llemit’s self-serving
statement, the time of 8:36 p.m. is not substantiated in any way by any documentary
evidence. P. Ex. 21, at 6.
12

required immediate physician involvement. At the hearing, Dr. Beallis himself testified,
“in the case of a low blood sugar, that needs to be addressed absolutely immediately.”
Tr. 262. Petitioner has offered no compelling reason to explain the delay in calling Dr.
Beallis, other than to argue that LPN Llemit was unavailable because he was running
about the facility getting equipment. It hardly needs pointing out that if LPN Llemit was
too busy with other tasks to call Dr. Beallis, there were other staff present who would
have had the ability and opportunity to contact Dr. Beallis “absolutely immediately”
when R5’s blood sugar was found to register 39 around 8:30 p.m. Instead, for whatever
reason, while R5 remained unresponsive and her physical condition continued to
deteriorate, ten critical minutes passed before staff took any action. By failing to follow
Dr. Beallis’ standing order to immediately notify him of R5’s significantly low blood
sugar level, Petitioner’s staff failed to provide R5 with necessary care and services, in
violation of 42 C.F.R. § 483.25.

Moreover, given the life-threatening circumstances faced by RS, I find that Petitioner’s
staff failed to seek emergency medical services for her immediately so that she could be
transported to the hospital. In maintaining that there was no delay in calling 911 for R5,
Petitioner claims that its staff were required under Dr. Beallis’ standing order to first
notify him of R5’s CBG level and that to do anything else would have been “at odds with
ensuring that residents receive consistent care.” P. Br. at 22. According to Petitioner,
there exists a “chain of medical authority” and that where a physician’s order is in place
that relates to symptoms a resident may be experiencing, then it would be a violation of
the physician’s order for a nurse to also call EMS in addition to notifying the physician.
P. Reply at 7. Petitioner contends also that its nursing staff did not have the medical
training to determine whether it was appropriate to call EMS for R5, and that it was a
decision best left to Dr. Beallis.

In Petitioner’s view, once LPN Llemit notified Dr. Beallis of R5’s condition, then calling
EMS was essentially no longer an option for LPN Llemit. Dr. Beallis testified that LPN
Llemit told him that RS was “groggy” and had a blood sugar of 39, and based on this
information, he ordered a Glucagon injection and told LPN Llemit to reassess her after 15
minutes. Dr. Beallis instructed LPN Llemit to call him back if the Glucagon did not raise
R5’s blood sugar. Tr. 262, 266, 279-80, 303-03; P. Ex. 25, at 1-2. When asked why he
did not order LPN Llemit to call EMS immediately when he was contacted, Dr. Beallis
testified that it was “not the appropriate thing to do.” Tr. 267. According to Dr. Beallis,
Glucagon “‘is a successful treatment at least 99 out of 100 times for hypoglycemia” and if
nursing staff were to call EMS in every instance when a resident had low blood sugar,
then “‘you’d be calling EMS all the time inappropriately.” Tr. 267.

Dr. Beallis testified that the only time that it would be acceptable for a nurse to call EMS
without first obtaining the order from him would be in a life-threatening situation. Tr.
268-69. According to Dr. Beallis, a situation where someone was “actively bleeding” or
did not have a pulse would warrant an immediate call to EMS by nursing staff. Tr. 269.
13

Dr. Beallis also stated that if someone had low blood sugar and was completely
unconscious, then he would give the order to “[c]all EMS and administer Glucagon.” Tr.
263.

As the record shows, in R5’s case, the Glucagon treatment was not successful, and R5’s
CBG level, when measured again at 9:00 p.m. following the injection, had dropped to 26.
P. Ex. 10, at 1; CMS Ex. 13, at 1. After being made aware in a second phone call from
LPN Llemit that R5’s blood sugar level had fallen even further, Dr. Beallis finally
ordered nursing staff to call EMS. Tr. 266-67.

In addition to the testimony of Dr. Beallis, Petitioner offered the testimony through sworn
deposition of Dr. Phillip Bobo. P. Ex. 40. I note that although Petitioner offered Dr.
Bobo as an expert in “[e]mergency medicine, geriatric care, and nursing facility
operational medical policies and care,” CMS objected to his being qualified as an expert
in geriatric care. P. Ex. 40, at 11-13. Dr. Bobo testified that Petitioner’s nursing staff
followed Dr. Beallis’ orders and “did everything that they could do.” P. Ex. 40, at 64-65,
66. He testified that when a nurse reports that a patient has a blood sugar of less than
forty, and is not alert, then a physician can either order DSOW IV or Glucagon in order to
raise the blood sugar. P. Ex. 40 at 32-34. He opined that a situation where a resident has
a blood sugar of below forty would not necessarily warrant calling EMS. P. Ex. 40, at
35. According to Dr. Bobo, “if you call EMS right away, then you’re not addressing the
immediate problem. I mean, you might call them, but you’ve got to address this problem
with actions by the nursing staff and what they can do and they have the capability of
doing.” P. Ex. 40, at 36. In describing the condition of a patient who has a blood sugar
of below forty, Dr. Bobo stated:

Well, they are going to be mentally confused, may even be
comatose, probably are comatose at forty... . And you stay in
a comatose state long enough, you may even have impaired
breathing. It can affect every organ system. But usually this
is — the first thing that goes is the cerebral — the neurological
status of the patient deteriorates.

P. Ex. 40, at 38. When asked if a blood sugar of below forty is manageable or if it is
always a critical event, Dr. Bobo opined that “it can be managed” and noted that “blood
sugars less than forty occur all the time, and they are treated and they respond, and
they’re fine.” P. Ex. 40, at 38.

Dr. Bobo acknowledged that Petitioner’s staff could also have called 911 at the same
time they called Dr. Beallis to notify him that R5’s blood sugar was below forty. P. Ex.
40, at 90. He stated further, “you can call 911 any time you want to if you so desire to
call 911, but it’s not in the policy for them to call 911, and it’s not the doctor’s order to
call 911.” P. Ex. 40, at 91. When asked who could have called 911, Dr. Bobo stated that
14

“{a]nyone could call 911” and admitted that, among the two CNAs and one LPN who
were attending to R5 on November 14, any one of them could have called 911. P. Ex. 40,
at 92-93.

In support of its position that Petitioner’s staff should have immediately contacted EMS
for R5, CMS relies on the deposition testimony of Dr. Bruce Biller, who was qualified as
an expert in endocrinology and internal medicine. Tr. 10. Dr. Biller testified that R5’s
blood sugar level of 39 indicated that she was experiencing “severe hypoglycemia.” Tr.
22. Dr. Biller testified:

[R5] was found semiconscious with clear-cut symptoms
evident of hypoglycemia in a setting of a blood glucose of
either 39 or 27, depending on the sequence that you choose to
find. Clearly it is a medical emergency. At that point the
next thing that should have happened is calling EMS,
unquestionably. . . . Calling EMS is step one. Step two
should have been calling the doctor. Neither of those
happened then.

CMS Ex. 38, at 24.
In describing R5’s condition, Dr. Biller testified further:

So we have now a situation where we have someone who is
undetectable vital signs, no detectable O2 on the pulse ox,
and barely breathing. This is a clear-cut medical emergency.
Call EMS, is step one.

CMS Ex. 38, at 25-26.

Besides being very critical of how Petitioner’s staff responded to R5’s medical
emergency, Dr. Biller also expressed his opinion that Dr. Beallis did not act appropriately
in the situation. Referring to Dr. Beallis’ order to give a Glucagon injection to R5, Dr.
Biller testified:

[t]he doctor should have given the order to call the EMS at
that point, since it had not been called up until that point.
That’s step one, get EMS. And step two is give glucagon
once. Instead, the order was give glucagon and call me back
in 15 minutes.

CMS Ex. 38, at 26; see CMS Ex. 38, at 51-52.
15

When asked if LPN Llemit’s call to Dr. Beallis around 8:39 p.m. constituted “immediate
contact,” Dr. Biller responded, “No.” CMS Ex. 38, at 51. When asked “what would
constitute immediate contact to the doctor,” Dr. Biller emphasized again that “in his
professional opinion once the patient was found as she was in an extreme hypoglycemic
state, step one is call EMS; and immediate next step is call the doctor.” CMS Ex. 38, at
51. Dr. Biller pointed out that a call to EMS would take “less than a minute” and noted
that EMS, when contacted, came on site in roughly ten minutes. CMS Ex. 38, at 51. Dr.
Biller opined that Petitioner’s staff did not give R5 “optimal care,” stressing the fact that
staff failed to call “EMS at various times when they could have, should have been called,
including the very beginning of this, the recognition of it being severe hypoglycemia.”
CMS Ex. 38, at 57.

Weighing the testimony offered by Dr. Bobo and Dr. Biller, I find that the opinions of Dr.
Biller are entitled to more weight. Dr. Biller’s credible testimony indicates that R5’s
condition on the night of November 14 presented a medical emergency and that
Petitioner’s staff failed to recognize it as such. Dr. Biller testified that Petitioner’s staff
should have called EMS immediately, and then called Dr. Beallis. I am not persuaded by
Dr. Bobo’s testimony that R5’s condition did not warrant calling EMS immediately. Dr.
Bobo opined that it was not necessary to call EMS when a patient has a blood sugar level
of below forty. However, he also stated that serious harm can result if a patient has a
blood sugar level of below forty, noting that there is a potential for coma and
neurological damage. Dr. Bobo’s testimony is clearly contradictory. Moreover, I find
somewhat troubling his apparently-nonchalant view that, even though R5 was found
nonresponsive and hypoglycemic, calling EMS was not necessarily required since it was
not part of Dr. Beallis’ order. As testified by Dr. Biller, R5 had “undetectable vital signs,
no detectable O2 on the pulse ox, and [was] barely breathing. This is a clear-cut medical
emergency.” That Dr. Bobo did not view the totality of R5’s symptoms as being
indicative of a medical emergency is simply not consistent with the clinical evidence, and
that inconsistency renders his testimony unreliable in my analysis of this situation. There
can be no question that, as Dr. Biller correctly recognized and forcefully asserted, R5 was
in critical condition and EMS should have been immediately contacted by Petitioner’s
staff.

I have also discounted Dr. Bobo’s opinion that Petitioner’s staff complied with Dr.
Beallis’ orders. In opining that staff “followed the physician’s orders to the tee” (P. Ex.
40, at 64), Dr. Bobo chooses to ignore what the evidence clearly shows — that Petitioner’s
staff failed to contact Dr. Beallis immediately when R5’s blood sugar fell below 40, as
they were required to do under his standing order. Dr. Biller, on the other hand, held the
entirely opposite view to that of Dr. Bobo, expressing the opinion that Petitioner’s staff
provided less than optimal care to R5. Given the undisputed evidence that Petitioner’s
staff failed to carry out Dr. Beallis’ order and failed to call EMS timely, I agree with —
and accept as the more credible — Dr. Biller’s opinion. It is evident that even though R5
was unresponsive and suffering what most likely was a diabetic crisis due to her

16

abnormally low blood sugar level, no one on Petitioner’s staff took immediate action to
call EMS or Dr. Beallis. Rather, staff acted in a disorganized fashion, running to-and-fro
in search of equipment, and their response to R5’s emergency can only be described as
confused, disorganized, and tragically inadequate.

Further, I find Petitioner’s argument that nursing facility staff do not possess the ability
or training to recognize an emergency situation or call 911 to be completely at odds with
iow one would expect reasonable nursing facility staff to act in an emergency situation.
In fact, Petitioner’s own witness, Dr. Bobo, testified that it would have been appropriate
for either the CNAs or LPNs to call EMS for R5. As Dr. Bobo stated, “[a]nyone could
call 911,” and he admitted that, among the two CNAs and one LPN who were attending
to R5 on November 14, any one of them could have called 911. P. Ex. 40, at 92-93. Dr.
Biller also testified that LPNs are trained to recognize emergency situations and that it is
within the scope of their duty to call EMS if an emergency situation arises. CMS Ex. 38,
at 30.

I note that even Petitioner’s own Director of Nursing, Susie Shaw, stated that if a resident
ad a blood sugar level of 39, and was cold, clammy, and unresponsive, staff should “call
911, call MD & tell him what [the resident’s] condition is & that [the resident] has been
sent to hospital.” CMS Ex. 30, at 29. In DON Shaw’s view, nursing staff would be
acting within the scope of their duties in calling both 911 and a resident’s physician in an
emergency situation. She did not indicate that there were any restrictions on who could
call 911. Based on the statements of Dr. Bobo, Dr. Biller, and DON Shaw, there can be
little doubt that Petitioner’s nursing staff was entirely capable of calling 911 on its own
initiative, and that doing so would not in any way have been inconsistent with their
obligations as caregivers. I find Petitioner’s position that calling EMS for R5 was “a
decision best left to a physician” (P. Br. at 25) is wholly unsupported in the record. As
CMS points out, given the emergency circumstances, Petitioner’s staff could have
simultaneously called EMS and immediately notified Dr. Beallis of R5’s low blood sugar
— they were not mutually exclusive events, and I have been shown no evidence or rational
argument to suggest that they were.

As further evidence that Petitioner failed to provide necessary care and services to RS,
CMS contends that the record also shows that Petitioner’s staff failed adequately to
monitor R5’s meal intake on November 14, 2010, and failed to implement the
interventions in her care plan after she twice refused to eat. As stated above, around 4:30
p.m. on November 14, R5 received her afternoon dosage of insulin. R5 refused to eat her
dinner and also refused a can of the dietary supplement Ensure. P. Ex. 10, at 1; CMS Ex.
13, at 1. Around 5:00 p.m., LPN Llemit again offered R5 dinner and Ensure, and she
again refused both. P. Ex. 21, at 6.

With respect to her diabetes, R5’s care plan required staff, among other things, to provide
her a diet as ordered, to provide her with food and beverage preferences, to encourage her
17

to eat, to offer alternative meals if she refused or ate less than 50% of a meal, to provide
snacks or supplements, and to keep her responsible party informed. CMS Ex. 11, at 4-5.
Thus, when R5 refused her dinner and the offered Ensure, an option under her care plan
would have been for LPN Llemit to offer her an alternate meal. Alternatively, LPN
Llemit could have offered R5 a snack. He did neither. Instead, according to the nursing
notes, some little while later around 5:00 p.m., LPN Llemit offered R5 the same meal and
again offered Ensure. As she had before, R5 refused. LPN Llemit again failed to offer
R5 an alternate meal or provide snacks. Under R5’s care plan, LPN Llemit was also
required to notify her responsible party that R5 was refusing to eat after receiving insulin.
He did not do this either. I note that LPN Llemit did call R5’s son later, in the 8:00 p.m.
our; however, the purpose of that call was to inform him of the fact that his mother was
suddenly in very critical condition.

In its defense, Petitioner argues that CNA Howard saw RS eat dinner on November 14,

2010. According to CNA Howard, between 5:10 and 5:30 p.m., R5 ate coleslaw, baked
beans, and barbecued fish that her family had provided to her. P. Br. at 5. Petitioner
contends that R5 refused a snack an hour later because she was still eating her dinner. P.
Br. at 5. Furthermore, Petitioner asserts that CNA Howard stated that she recorded that

R5 ate 75% of her dinner on November 14, and that the notation on Petitioner’s meal
charting record that RS ate nothing is incorrect or was somehow altered. P. Br. at 6.

I do not find CNA Howard’s testimony credible and decline to rely on it at all. Petitioner
as offered no independent evidence for the idea that R5 ate some fish or other food
brought to her by her family. Such evidence, if it existed, would certainly not have been
difficult to develop and present. I have no reason to question LPN Llemit’s nursing notes
where he documented that R5 “refused to eat” her dinner and also “refused” to drink
Ensure on the evening of November 14, 2010. See P. Ex. 10, at 1. Moreover, Petitioner
as offered no reason for anyone to have altered the meal charting documentation —
much less proof even hinting at such an alteration — which clearly shows that R5 ate
“0%” of her dinner.

However, even if R5 had eaten something at dinner, Petitioner’s staff and her physician
ought to have been aware of her meal intake and accurately recorded it. Tracking R5’s

diet and what she ate was crucial given the fact that R5 was known to be diabetic and in
need of very close monitoring.

Assuming that R5 did not eat any dinner or drink her supplement, which is what the
record strongly indicates based on Petitioner’s own records, I find that Petitioner’s staff
failed to implement the careplanned interventions after RS refused to eat. It was
incumbent upon Petitioner’s staff to ensure that RS ate enough food after she received her
afternoon dosage of insulin so that her blood sugar levels remained stable. However, the
record shows that staff did not adequately respond to R5’s refusal to eat, thereby
exposing her to the risk of developing severe hypoglycemia.
18

CMS’s expert witness, Dr. Biller, testified that a long-time diabetic who missed a meal or
refused to eat or drink after receiving insulin would have a “high risk” of being in a life-
threatening situation. CMS Ex. 38, at 97-98. Dr. Biller testified further that after RS
refused to eat, Petitioner’s staff failed to respond appropriately since they did not
“develop an alternative group of strategies that could be quickly tried and while [R5] was
not yet having symptoms of hypoglycemia, which was, in my professional judgment, a
serious and real threat to her.” CMS Ex. 38, at 98. Additionally, according to
Petitioner’s witness, LPN Fashing, an LPN is trained to understand that there is a good
potential for a hypoglycemic episode “if a diabetic patient receives a full dosage of
insulin and does not eat.” Tr. 330. LPN Fashing testified further that in the event of a
refusal to eat by R5 after she received insulin, then staff could implement the care plan
approaches to address the situation at the time that she refused the meal. Tr. 334.

In addition to their tepid response to R5’s refusal to eat, I note that the staff also failed to
notify R5’s physician, Dr. Beallis, that she had refused to eat dinner. At the hearing, Dr.
Beallis admitted that no one called him either time when R5 refused her dinner. Tr. 286.
As discussed above, LPN Llemit called Dr. Beallis several hours later, to inform him that
R5’s blood sugar level had dropped to 39. Even then, it is not clear whether Dr. Beallis
was informed that R5 had not eaten anything since receiving her afternoon dosage of
insulin. In his affidavit, Dr. Beallis states that he was told that R5’s blood sugar was 39,
but gives no indication that he was aware that R5 had not eaten anything for several

ours. P. Ex. 25, at 1-2.

Clearly, R5 was at risk for a severe hypoglycemic episode due to her refusal to eat. Her
situation was made more perilous in light of the fact that she had received her afternoon
dosage of insulin shortly before her refusal of dinner. I find that Petitioner’s staff did
ittle to ensure that R5 ate something and failed to implement the approaches specified in
er care plan. As a result, Petitioner’s staff failed to provide R5 with necessary care and
services to address her diabetic dietary needs, in violation of 42 C.F.R. § 483.25.

© Although Dr. Beallis maintained that he was given accurate and complete information
regarding R5’s condition from LPN Llemit (Tr. 262-63), his position seems rather
disingenuous in light of the fact that he may not have had any idea that RS had not eaten
for several hours. Dr. Beallis testified that “the amount that [R5] ate [was] a medical
concern for” him (Tr. 256), and stated that having accurate information about R5’s meal
intake would have been relevant to monitoring her for hypoglycemia and hyperglycemia.
If he was unaware that RS5 had not eaten anything after receiving insulin, then the
information he received about R5’s condition would have been neither accurate nor
complete.
19

Finally, CMS also contends that Petitioner failed to follow its own policies in treating RS.
CMS notes that Petitioner’s internal Nursing Procedures Manual contained policies that
addressed diabetic coma/insulin shock and change in a resident’s medical condition. P.
Ex. 1, at 1-3, 6-8. Inasmuch as I have concluded that Petitioner violated 42 C.F.R.

§ 483.25 based on its failure to follow R5’s physician’s order, failure to timely contact
EMS, and its failure to monitor her meal intake, I do not find it necessary to address
CMS’s argument that Petitioner’s staff acted in a manner inconsistent with its own
policies.

With respect to R6, who is the husband of R5, Petitioner concedes that its staff did not
notify Dr. Beallis when R6 had a blood sugar level of less than 40, as required by his
order, but characterizes this failing as possibly a transcription error on R6’s MAR.
Petitioner asserts further that there was no risk of harm at all to R6 as a result of this
failure.

Like his wife (R5), R6 also suffered from diabetes mellitus. As with R5, there was an
explicit standing order in R6’s chart from Dr. Beallis that required staff to notify him
immediately if R6’s blood sugar level fell below 40. As documented on R6’s MAR, his
blood sugar level dropped to 37 on October 31, 2010. Dr. Beallis was not notified by
staff of this event, nor were there any interventions put in place to address R6’s blood
sugar reading of 37 or monitor it further.

Petitioner has offered no real explanation for its staffs failure to contact Dr. Beallis on
October 31. Instead, Petitioner poses the theory that R6’s low blood sugar reading of 37
“charted in the MAR was an error.” P. Br. at 32. According to Petitioner, because R6
did not experience any signs or symptoms of hypoglycemia, his blood sugar level reading
could not truly have been 37. Petitioner posits that LPN Llemit most likely incorrectly
entered R6’s blood sugar level into the computer, and then failed to have the error
corrected. P. Br. at 32.

Petitioner’s arguments are not credible as they are without support in the evidence. In
claiming that a transcription error occurred, Petitioner has offered only speculation and
conjecture, with no actual proof. There is no corroborating evidence that a
documentation error occurred and that the MAR does not accurately reflect R6’s blood
sugar reading for October 31, 2010. In fact, when asked about R6’s blood sugar level of
37, Dr. Beallis made no mention of any transcription error on the MAR, but instead
acknowledged that he was not notified of the low blood sugar reading and was unaware
of it “for a couple of months after it happened.” Tr. 276.

Moreover, the fact that R6 did not suffer any apparent or obvious harm due to Petitioner’s
staff’s failure to notify the physician does not in any way absolve Petitioner of its
obligation to comply with the physician’s orders. Petitioner’s staff had a duty to notify
Dr. Beallis immediately if R6’s blood sugar dropped below 40. There can be no dispute
20

at this point in the discussion of the facts that R6’s low blood sugar reading potentially
could have resulted in a severe — and as this record sadly shows — life-threatening
hypoglycemic episode, putting him at risk for grave consequences. Petitioner’s staff
failed to notify Dr. Beallis as required by his order, and consequently, I find that
Petitioner failed to provide R6 with the necessary care and services as required by 42
CFR. § 483.25.

B. CMS’s determination of immediate jeopardy level noncompliance is not
clearly erroneous.

CMS concluded that the violation of 42 C.F.R. § 483.25 posed immediate jeopardy.
However, because CMS imposed a PICMP in this case, and not a per-day CMP, I need
not consider CMS’s finding that the deficiencies here constituted immediate jeopardy.
CMS recognizes as much, for it states in its prehearing brief, “The presence of
‘immediate jeopardy’ is not a regulatory prerequisite for imposing a per-instance CMP
and is not at issue in this case.” CMS Prehearing Br. at 21.

The regulations are clear that the scope and severity determination of immediate jeopardy
can be appealed but only if the range of CMP that can be imposed could change or if the
facility’s nurse aide training program would be affected due to a finding of substandard
quality of care. 42 C.F.R. §§ 498.3(b)(14)(i), (ii) and 498.3(d)(10)(i), (ii). It does not
appear that Petitioner had a nurse aide training program. Further, there is but a single
range for PICMPs and the amount of a PICMP is not affected by whether or not there is
immediate jeopardy. 42 C.F.R. §§ 488.408; 488.438. Thus, the immediate jeopardy
finding is not subject to appeal or my review in this case. However, to the extent that a
declaration of immediate jeopardy reflects upon the seriousness of the deficiency, it is
reasonable to consider whether immediate jeopardy existed as an evidentiary matter.

Immediate jeopardy is defined as a situation in which a facility’s noncompliance with one
or more requirements of participation “has caused, or is likely to cause, serious injury,
arm, impairment, or death to a resident.” 42 C.F.R. § 488.301. CMS’s determination as
to the level of noncompliance must be upheld unless it is clearly erroneous. 42 C.F.R.

§ 498.60(c). Under the clearly erroneous standard, CMS’s immediate jeopardy finding is
presumed to be correct, and the facility has a heavy burden to overturn it. Stone County
Nursing & Rehabilitation Center, DAB No. 2276, at 17 (2009); Edgemont Healthcare,
DAB No. 2202, at 20 (2008); Daughters of Miriam Center, DAB No. 2067, at 7 (2007).

Petitioner placed R5 and R6 in immediate jeopardy when its staff failed to notify their
physician when they had significantly low blood sugar readings, in violation of his
standing orders. As a result, R5 experienced a diabetic crisis — a severe hypoglycemic
episode — and thus suffered actual harm. In addition to the delay in contacting her
physician, Petitioner’s staff also failed to respond appropriately once they were aware of
R5’s deteriorating condition. Although R5’s unresponsiveness and life-threatening

21

symptoms clearly created an emergency situation, staff delayed in calling EMS, causing
critical time to be lost. With respect to R6, Petitioner’s failure to follow physician’s

orders placed him at risk of serious harm as he could have suffered a severe
hypoglycemic episode much as his wife did, with the obvious risk of similarly-tragic
results. CMS’s immediate jeopardy finding is thus not clearly erroneous.

C. The $10,000 PICMP imposed is reasonable.

I have concluded that Petitioner was not in substantial compliance with all program
participation requirements due to a violation of 42 C.F.R. § 483.25, Tag F309.

Therefore, there is a basis for CMS to impose one or more of the enforcement remedies
listed in 42 C.F.R. § 488.406, including a PICMP for each instance that a facility is not in
substantial compliance. 42 C.F.R. § 499.430(a). CMS is authorized to impose a PICMP
from $1000 to $10,000 per instance. 42 C.F.R. § 488.438(a)(2). Unlike a per-day CMP,
a finding of immediate jeopardy is not required to impose the maximum PICMP. In this
case, CMS has imposed a PICMP of $10,000.

My review of the reasonableness of the PICMP imposed is de novo and is based upon the
evidence in the record before me. In determining the reasonableness, I apply the factors
listed at 42 C.F.R. § 488.438(f) which are: (1) the facility’s history of noncompliance;
(2) the facility’s financial condition; (3) factors specified at 42 C.F.R. § 488.404; and (4)
the facility’s degree of culpability, which includes neglect, indifference, or disregard for
resident care, comfort or safety. The absence of culpability is not a mitigating factor.
The factors at 42 C.F.R. § 488.404 include: (1) the scope and severity of the deficiency;
(2) the relationship of the deficiency to other deficiencies resulting in noncompliance;
and (3) the facility’s prior history of noncompliance in general and specifically with
reference to the cited deficiencies.

Petitioner argues that the $10,000 PICMP imposed by CMS is unreasonable. Petitioner
contends that it does not have a history of noncompliance, that the deficiency was
isolated to two residents and was of limited scope, and that its culpability, if any, is
limited. P. Br. at 32-33.

Contrary to Petitioner’s assertions, the record shows, based on documentation submitted
by CMS, that the facility has a history of substantial noncompliance. CMS Ex. 35. In the
past years, Petitioner has been cited under various tags at several surveys. At an April
30, 2010 survey, Petitioner was cited, among other things, for failing to be in substantial
compliance with Tag F323 (accident hazards) at the “K” level of scope and severity.
CMS Ex. 35, at 1. Ata June 2010 survey, Petitioner was cited, among other things, for
failing to be in substantial compliance with Tag F441 (infection control) at the “F” level
of scope and severity, and Tag F309, the tag at issue in this case, at the “D” level of scope
and severity. CMS Ex. 35, at 6. Petitioner has also been cited in the past for life safety
code violations. CMS Ex. 35, at 2-3.
22

I conclude that the deficiencies were serious and that Petitioner was culpable. That only
two residents were involved does not make the deficiencies less serious. In fact,
considering that one resident, R5, suffered a severe hypoglycemic episode and another
resident, R6, could potentially have suffered serious harm, it is fortunate that Petitioner’s
staff’s failings in care did not involve more residents. R5 and R6 were diabetics on
insulin regimens, and it was Petitioner’s staff’s duty to carefully monitor their diets and
condition and notify the physician when they had abnormal blood sugar readings
pursuant to his explicit orders. Petitioner’s staff failed to discharge that duty, and for this
they are culpable. Moreover, as discussed above, I have concluded that Petitioner’s
staff’s exhibited further failings in their treatment of R5, as demonstrated by the failure to
immediately call EMS when she exhibited life-threatening symptoms and her condition
ad clearly turned for the worse.

In an attempt to limit its culpability, Petitioner shifts blame to RS as being partly
responsible for the fact that she had a hypoglycemic episode. In its prehearing brief,
Petitioner states, “[R5] contributed to the hypoglycemic episode that unfortunately ended
with her death.” P. Pre-hearing Br. at 15. According to Petitioner, RS was non-
compliant with her diet, sometimes ate pizza that her son brought her, and this would
cause her blood sugar levels to fluctuate, “creat[ing] a medical situation that [Petitioner]
ad to manage.” P. Pre-hearing Br. at 12. As stated above, R5’s care plan contained
interventions that Petitioner’s staff were required to implement if she refused meals.
These interventions included offering her alternate meals if she refused or ate less than
50% of a meal, providing snacks or supplements, and keeping her responsible party
informed. Other than offering R5 the same meal and Ensure twice on the evening of
November 14, 2010 when she refused to eat dinner, Petitioner’s staff did not attempt any
other careplanned approaches. I find that blaming R5 for its own staff’s failure to
institute the other interventions listed in the care plan is a less-than-admirable strategy on
Petitioner’s part. It was Petitioner’s duty — put plainly, it was Petitioner’s job — to
provide care for R5 in accordance with the care plan it had prepared for her. 42 C.F.R.

§ 483.25. Petitioner failed to do this, and is thus entirely culpable.

Petitioner has not asserted that its financial condition is such that it cannot pay the
PICMP and has presented no evidence of its financial condition.

A $10,000 PICMP is the maximum amount of PICMP that CMS may impose for an
instance of non-compliance. I conclude that the $10,000 PICMP is reasonable in light of
the relevant factors.
23

V. Conclusion

For the foregoing reasons, I conclude that Petitioner was not in substantial compliance
with program participation requirements due to a violation of 42 C.F.R. § 483.25, cited as
Tag F309. The $10,000 PICMP is a reasonable enforcement remedy.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Chambers Drive, Inc., d/b/a Dynasty Deli Quick Stop,
Respondent.
Docket No. C-12-310
ALJ Ruling No. 2012-3

Date: August 23, 2012

RULING AND ORDER

The Center for Tobacco Products (CTP) charges that Respondent, Chambers Drive, Inc.,
d/b/a Dynasty Deli Quick Stop (Dynasty Deli), violated the Federal Food, Drug, and
Cosmetics Act (21 U.S.C. § 331(k)) and regulations (21 C.F.R. §§ 1140.14(a) and
1140.14(b)(1)), because its employees sold tobacco products to a minor and failed to
verify the age of a person purchasing them. Respondent denies the charges.

CTP now moves for a summary decision. Because this case presents genuine issues of
material fact, I deny CTP’s motion.'

Background

The Family Smoking Prevention and Tobacco Control Act (TCA), Pub. L. 111-31, 123
Stat. 1776 (2009), amended the Food Drug and Cosmetics Act (Act). Among its

' With its motion and memorandum in support, CTP has filed three exhibits (CTP Exs. 1-
3), which include Exs. 1-A through 1-N. Respondent, Dynasty Deli, which is not
represented by counsel, has filed an answer but did not respond to the motion.
provisions, the statute prohibits “misbranding” of a tobacco product, and provides that a
tobacco product is “misbranded” if sold or distributed in violation of regulations issued
under section 906(d) of the Act. 21 U.S.C. § 387f(d); 21 U.S.C. § 387(c)(a)(7)(B); 21
C.F.R. § 1140.1(b). Section 906(d) (21 U.S.C. § 387f(d)) authorizes the Food and Drug
Administration (FDA) to regulate tobacco products, including their retail sales. See also
21 U.S.C. § 331 et seq.” Pursuant to that authority, the FDA has published regulations,
which, among other provisions, prohibit the sale of cigarettes and smokeless tobacco to
anyone under the age of 18. 21 C.F.R. § 1140.14(a). Retailers must verify the
purchaser’s age by means of a photographic identification containing the bearer’s date of
birth. 21 C.F.R. § 1140.14(b)(1).

In Mississippi (and other states), FDA-commissioned state inspectors check tobacco
retailers for compliance with the tobacco regulations. See 21 U.S.C. § 372(a)(1)(B)(@);
CTP Ex. 1 at 2 (Goldman Decl. §§ 3, 4). Among other strategies, inspectors accompany
minors to retail establishments, where the minors attempt to purchase tobacco products.
CTP Ex. 1 at 2 (Goldman Decl. { 5).

If the FDA determines that the retailer violated FDA rules, it must give the retailer
“timely and effective notice” of each alleged violation before it conducts a follow-up
compliance check; it must also give notice of all previous violations before it can charge
the retailer. TCA § 103(q)(1)(B), (D); 21 U.S.C. § 333 (Guidance); see also CTP Ex. | at
6 (Goldman Dec. 12). Consistent with these requirements, the FDA sends the retailer a
warning letter the first time it finds a violation. That letter lists the alleged violations,
warns of future inspections, and explains the consequences of future violations. CTP Ex.
1 at 3-4 (Goldman Decl. § 7).

The FDA may impose penalties, including civil money penalties (CMPs) for violations.
The amount of the CMP is related to the number of violations committed within a 24-
month period and increases significantly with every additional violation.*> Where, as

> The CTP is the division of the Food and Drug Administration (FDA) that oversees
implementation of the Tobacco Control Act.

* The statute calls for two schedules of maximum penalties: one for retailers with an
approved training program and one for retailers without such a program, for whom the
amounts should be higher. However, until the FDA promulgates regulations establishing
standards for approved retailer training programs, it imposes the lower range of penalties
for all retailers. The penalty for two violations is $250; the penalty for three violations is
$500; the penalty for four violations is $2,000; the penalty for five violations is $5,000,
and the penalty for six violations is $10,000. TCA § 103(q)(2); 21 U.S.C. § 333
(Guidance);
http://www.fda.gov/TobaccoProducts/GuidanceComplianceRegulatoryInformation/ucm2
52810.htm.
here, CTP alleges that the retailer violated regulations three times within a 24-month
period, it imposes a $500 CMP. Significantly, under current FDA policy, all violations
listed in the warning letter count as one for purposes of calculating the penalty.
http://www.fda.gov/TobaccoProducts/GuidanceComplianceRegulatoryInformation/ucm2
52810.htm.

Discussion

Here, Dynasty Deli is a state-licensed tobacco retailer, located in Booneville, Mississippi.
CTP Ex. 1 at 6-7 (Goldman Decl. § 14); CTP Ex. 1-A. CTP alleges that, three times in a
24-month period, Dynasty Deli employees violated federal regulations restricting the sale
and distribution of cigarettes and smokeless tobacco. Specifically, according to CTP:

e On June 9, 2011, a clerk at Dynasty Deli sold smokeless tobacco (Grizzly Long
Cut Wintergreen Moist Snuff) to a minor, who made the purchase under the
supervision of FDA-commissioned inspector, Randy Tutor. Complaint § 10; CTP
Ex. 1-C.

¢ On June 9, 2011, the Dynasty Deli clerk did not verify the minor’s age prior to
selling him the tobacco product. Complaint 410; CTP Ex. 1-C.

e Ina warning letter dated August 25, 2011, CTP advised Respondent of the alleged
June 9 violations, instructed the retailer to stop violating the tobacco regulations,
and warned that failing to correct the violations could “result in regulatory action
being initiated . . . without further notice. These actions may include, but are not
limited to, a [CMP], no-tobacco-sale order, seizure, and/or injunction.” Complaint
4 10; CTP Ex. 1-E.*

¢ On October 18, 2011, a clerk at Dynasty Deli sold smokeless tobacco (Grizzly
Long Cut Wintergreen Moist Snuff) to a minor, who made the purchase under the
supervision of FDA-commissioned inspector, Randy Tutor. Complaint § 9; CTP
Ex. 1-K.

¢ On October 18, 2011, the Dynasty Deli clerk did not verify the minor’s age prior
to selling him the tobacco. Complaint §9; CTP Ex. 1-K.

Respondent categorically denies these allegations. In its March 1, 2012 answer,
Respondent Store Manager Khaled Aljalal declares that all employees deny selling
tobacco products to minors. He also asserts that he checked the store’s security cameras

* In keeping with the policy mentioned above, CTP counts as one the two June 9
violations listed in the warning letter.
“to see if anyone came to the store on those dates and gave a ticket to any of the
employees,” but saw nothing.

I am authorized to grant a motion for summary decision “if the pleadings, affidavits, and
other material filed in the record, or matters officially noticed, show that there is no
genuine issue as to any material fact and that the party is entitled to summary decision as
a matter of law.” 21 C.F.R. § 17.17(b). Here, Respondent’s answer shows that virtually
all the material facts are in dispute. Dynasty Deli employees deny selling tobacco
products to minors; and they deny failing to verify a purchaser’s age.

Moreover, in examining the evidence for purposes of determining the appropriateness of
a summary decision, I must draw all reasonable inferences in the light most favorable to
the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
Drawing those inferences in Respondent’s favor here, I could not find that CTP is entitled
to judgment as a matter of law.

CTP rests its case on some remarkably weak evidence, which suggests that it may not be
able to prove its case, even in the absence of witness declarations from Respondent,
Dynasty Deli. Not one of CTP’s witnesses claims that he observed the alleged violations.
The two minors say that they worked with Inspector Randy Tutor one to two days per
week, visiting approximately ten retail establishments per day. CTP Ex. 2 at 1 (Poe Decl.
43); CTP Ex. 3 at 1(Tutor Decl. § 3). Witness Kolton Poe says that he was 17-years-old
in June 2011, when he worked with Inspector Tutor. CTP Ex. 2 at 1 (Poe Decl. ¥§ 1, 2).
He “recall[s] visiting retail establishments that sold tobacco products in Booneville,
Mississippi,” and that he was able to purchase Grizzly Long Cut Wintergreen Snuff or
Newport cigarettes at every establishment. CTP Ex. 2 at 2 (Poe Decl. §§ 5, 6). But he
does not mention visiting Respondent, Dynasty Deli. From this, I could reasonably infer
that Witness Poe never set foot in Dynasty Deli.

Witness Timothy Tutor (who is not related to Inspector Tutor) says that he was born in
December 1994, and worked with Inspector Tutor from February 2011 to February 2012.
CTP Ex. 3 at 1 (Tutor Decl. {§ 1, 2). He also remembers visiting retail establishments in
Booneville, Mississippi, and “specifically recall[s]” visiting an establishment in
Booneville named Dynasty Deli Quick Stop. CTP Ex. 3 at 2 (Tutor Decl. ¥.5). He says
that he was able to purchase Grizzly Long Cut Wintergreen Snuff “at the majority of
establishments” he visited, but, significantly, he does not claim that he purchased snuff
or anything else at Respondent’s establishment. CTP Ex. 3 at 2 (Tutor Decl. § 6). From
this, I could reasonably infer that Witness Tutor made no purchases from Dynasty Deli.

CTP submits no receipts establishing that any purchase was made from Dynasty Deli on
June 9, October 18, or any other day.
CTP submits no declaration from Inspector Tutor, who has been deployed to Afghanistan
and is currently unavailable. Instead, it relies on the inspector’s business records and
practices to prove its case. While likely admissible in these proceedings, CTP should be
prepared to show that it had systems in place to prevent, or at least minimize errors.
Drawing all reasonable inferences in the light most favorable to Dynasty Deli, however, I
infer that CTP had no such systems in place. In fact, Inspector Tutor’s reports suggest a
system rife with the potential for errors. According to the minor witnesses, they
accompanied Inspector Tutor to ten retailers per day. CTP Ex. 2 at 1 (Poe Decl. { 3);
CTP Ex. 3 at 1 (Tutor Decl. § 3). The inspector did not, as a matter of course, photograph
the establishments he visited in order to demonstrate that he had been there. His
“diaries” for June 9 and October 18 say that he was in Booneville, Corinth, Baldwyn, and
Tupelo, but do not mention specific visits to Dynasty Deli. CTP Exs. 1-D, 1-L. The
minors allegedly purchased identical products (with identical bar codes) at multiple
establishments throughout the day, and the inspector did not photograph the purchases
until after he returned to his office. CTP describes no method by which he insured that
the tobacco product he eventually photographed was the same product the minor
purchased at Dynasty Deli. CTP Ex. 1-C at 3-7; CTP Ex. 1-J at 3-7. Although Inspector
Tutor drafted narrative reports, he did so only after he returned to his offices, increasing
the risk of confusion and error. CTP Exs. 1-C, 1-J.5

CTP Supervisory Safety Officer Tara Goldman notes that, during the inspections,
inspectors also record their inspection information into the FDA’s Tobacco Inspection
Management System (TIMS), a “web interface,” and CTP produces copies of what
appear to be TIMS reports. These reports indicate that the minors purchased smokeless
tobacco at Dynasty Deli on June 9 and October 18. CTP Exs. 1-B, 1-I. While this
evidence appears to link Respondent Dynasty Deli with the purchases of tobacco
products, as alleged, Respondent has every right to challenge their reliability and, at a
minimum, to cross-examine CTP’s witnesses about them.°

* According to the reports, Inspector Tutor drafted them after returning to his office the
same day the minors made their purchases. According to CTP Supervisory Safety
Officer Tara Goldman, inspectors typically take photographs and draft their narrative
reports within 24-72 hours after the close of the inspection. CTP Ex. | at 2-3 (Goldman
Decl. 5). The longer the delay between inspection and reporting, the greater the
likelihood of error.

° These reports constitute the sole evidence directly linking Dynasty Deli with the
violations. I am not convinced that I can appropriately enter judgment against
Respondent based on this evidence, inasmuch as Respondent will not have the
opportunity to cross-examine the purported initiator of the reports, Inspector Tutor. The
parties will have an opportunity to address this issue before I decide the case.
Conclusion
The following facts appear “without substantial controversy” (see 21 C.F.R. § 17.17(d):

e Respondent owns an establishment that does business as Dynasty Deli Quick Stop,
located at 1301 Chambers Drive, Booneville, Mississippi;

e Respondent is a licensed tobacco retailer in the State of Mississippi;
e Dynasty Deli sells tobacco products.

The parties dispute whether Dynasty Deli employees sold tobacco products to minors on
June 9 and October 18, 2011. The parties also dispute whether, on these occasions,
Dynasty Deli employees failed to verify the minor’s age prior to selling him tobacco
products. Because these material facts are in dispute, I deny CTP’s motion for summary
decision.

I will hold a prehearing conference in this matter on September 28, 2012 at 10:00 A.M.
E.D.T., which will be conducted by telephone. At that time, we will discuss these
unresolved issues, determine whether an in-person hearing is necessary, and if so,
schedule its date and time.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Day Surgery
(CCN: 44-C0001111),

Petitioner,
v.
Centers for Medicare and Medicaid Services.

Docket No. C-12-502

Decision No. CR2599

Date: August 22, 2012

DECISION

The request for hearing filed by Petitioner, Center for Day Surgery, on March 14, 2012,
is dismissed pursuant to 42 C.F.R. § 498.70(b), because Petitioner has no right to a
hearing.!
I. Background
Petitioner is located in Tullahoma, Tennessee, and participates in Medicare as an
ambulatory surgical center (ASC), subject to 42 C.F.R. Part 416. On November 14,
2011, the Tennessee State Survey Agency (state agency) completed a revisit survey of the
facility and found that it was not in substantial compliance with federal program
participation requirements due to an alleged violation of 42 C.F.R. § 416.44(a)(2). The

Centers for Medicare and Medicaid Services (CMS) notified Petitioner by letter dated
February 24, 2012, that it was denying Petitioner’s waiver request and that Petitioner’s

' All references are to the version of the Code of Federal Regulations (C.F.R.) in effect

at the time of the survey, unless otherwise indicated.
ASC agreement would be terminated effective April 24, 2012, if noncompliance
continued at that time.

On March 14, 2012, Petitioner requested a hearing. The case was assigned to me for
hearing and decision on March 29, 2012, and an Acknowledgment and Prehearing Order
(Prehearing Order) was issued at my direction. On June 21, 2012, CMS filed a motion
(CMS Motion) to dismiss the request for hearing on grounds that the termination action
was rescinded and Petitioner no longer had a right to a hearing. CMS filed CMS exhibits
(CMS Exs.) 1 through 11. CMS also filed a motion for leave to file its motion to dismiss
out-of-time? and a motion to stay proceedings pending my ruling on the motion to
dismiss. Petitioner’s response to the motion to dismiss was due on July 11, 2012,
pursuant to the Prehearing Order, paragraph II.D.1 and 42 C.F.R. § 498.17(b)(1).? No
response was received from Petitioner as of July 25, 2012, and I issued an order for
Petitioner to show cause why the request for hearing should not be dismissed for
abandonment or as a sanction for Petitioner’s failure to comply with my Prehearing
Order. On August 1, 2012, Petitioner filed a response to the order to show cause; a
response to the CMS motion for leave to file out-of-time; and a response (P. Response)
opposing the CMS motion to dismiss.* Only CMS Ex. 8 is admitted and considered as
evidence relevant to the issue of whether or not I must dismiss for lack of jurisdiction and
because Petitioner no longer has a right to a hearing.

> There is good cause to grant the CMS motion for leave to file out-of-time. In its
response to the motion for leave to file out-of-time, Petitioner disputes representations
made by CMS in its motion. However, Petitioner does not successfully argue that I
should not consider the CMS challenge to my jurisdiction, even though it was not raised
in a timely fashion according to the Prehearing Order.

> Pursuant to paragraph 5 of the Civil Remedies Division Procedure (CRDP), written
material is filed when deposited in the U.S. mail or with an express delivery service.
Section 498.17(a), (b) of 42 C.F.R. provides that in responding to any “written argument,
contention, suggested finding of fact, conclusion of law, or any other written statement” a
party “will have 20 days from the date of mailing or personal service to submit any
rebuttal statement or additional evidence.” The regulation does not provide for an
additional five days for response to a motion that is served by mail. Thus, Petitioner’s
response was due 20 days after June 21, 2012, the date CMS certified service by certified
mail.

* Petitioner also timely filed its prehearing exchange of its exhibits and lists of exhibits
and witnesses on July 27, 2012.
IL. 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.

A. Petitioner has no right to a hearing because CMS rescinded the
termination of Petitioner’s ASC agreement with the Secretary.

B. Ihave no jurisdiction.

C. Dismissal of Petitioner’s request for hearing pursuant to 42 C.F.R.
§ 498.70(b) is appropriate because Petitioner has no right to a hearing.

An ASC is a distinct entity that operates exclusively to provide surgical services to
patients not requiring hospitalization and for which the duration of services will not
exceed 24 hours following admission. An ASC must have an agreement with the
Secretary to participate in Medicare as an ASC and must meet the conditions for
participation of an ASC. Social Security Act (Act) §§ 1832(a)(2)(F)(i); 1833(4)(1); 42
C.F.R. § 416.2. Pursuant section 1866(h) of the Act and 42 C.F.R. § 416.26(f), if CMS
refuses to enter an agreement with an ASC or terminates an agreement with an ASC, the
ASC is entitled to a hearing in accordance with 42 C.F.R. Part 498. An ASC is a supplier
pursuant to 42 C.F.R. § 498.2. A provider or supplier whose enrollment in Medicare is
revoked, has a right to appeal pursuant to 42 C.F.R. Part 498. Pursuant to 42 C.F.R. §
498.3(b)(6) and (17) CMS initial determinations include determinations as to whether the
services of a supplier continue to meet the conditions for coverage and whether to deny
or revoke a provider’s or supplier’s enrollment in Medicare. A supplier dissatisfied with
an initial determination that its services no longer meet the conditions for coverage is
entitled to a hearing before an administrative law judge (ALJ). 42 C.F.R. § 498.5(e).

The pertinent facts are not in dispute. The state agency completed a survey of Petitioner
and concluded that Petitioner was not in substantial compliance with federal program
participation requirements due to an alleged violation of 42 C.F.R. § 416.44(a)(2). CMS
notified Petitioner by letter dated February 24, 2012, that Petitioner’s request for a waiver
of the regulatory requirement was denied and that Petitioner’s participation agreement
would be terminated effective April 24, 2012, if the noncompliance continued at that
time. Petitioner’s right to request a hearing by an ALJ was triggered by the CMS initial
determination to terminate Petitioner’s ASC agreement and participation in Medicare.
Petitioner timely requested a hearing on March 14, 2012. However, CMS notified
Petitioner by letter dated April 24, 2012, that it granted Petitioner a waiver on April 24,
2012, therefore Petitioner was back in substantial compliance, and CMS rescinded the
termination action. CMS Ex. 8.

The issue is whether the CMS determination to rescind the termination of Petitioner’s
supplier agreement extinguished Petitioner’s right to a hearing. I conclude it did. An
appellate panel of the Departmental Appeals Board (the Board) has affirmed the
dismissal of a request for hearing when the termination of a hospital’s provider
agreement was rescinded by CMS on grounds that the CMS action extinguished the
hospital’s right to a hearing. Florida Health Sciences Ctr., Inc., d/b/a/ Tampa General
Hosp., DAB No. 2263 (2009); see also Cumberland County Hosp. Sys., Inc., d/b/a Cape
Fear Valley Health Sys., DAB CR1957 (2009). The Board has also consistently affirmed
ALJ decisions dismissing hearing requests in long-term care facility cases because CMS
rescinded termination or other enforcement remedies eliminating the facility’s right to a
hearing. Golden Living Ctr., DAB No. 2364, at 2-3 (2011); Columbus Park Nursing and
Rehab. Ctr., DAB No. 2316 (2010); Fountain Lake Health & Rehab., Inc., DAB No.
1985 (2005); Lakewood Plaza Nursing Ctr., DAB No. 1767 (2001); see Eagle Care, Inc.
d/b/a/ Beech Grove Meadows, DAB CR923 (2002); Schowalter Villa, DAB No. 1688
(1999); Arcadia Acres, Inc., DAB No. 1607 (1997); see also The Lutheran Home —
Caledonia, DAB No. 1753 (2000); Walker Methodist Health Ctr., DAB CR869 (2002);
Charlesgate Nursing Ctr., DAB CR868 (2002); D.C. Assoc. for Retarded Citizens, DAB
CR776 (2001); Alpine Inn Care, Inc., d/b/a Ansley Pavilion, DAB CR728 (2001);
Woodland Care Ctr., DAB CR659 (2000); Fort Tryon Nursing Home, DAB CR425
(1996). Petitioner has cited no authority to support a different result in this case.

Petitioner argues that it has a right to a hearing pursuant to 42 C.F.R. §§ 498.3(b)(6) and
498.5(e). P. Response at 1. Section 498.3(b)(6) provides that the CMS decision as to
whether or not the services of a supplier continue to meet the conditions for coverage is
an initial CMS determination. Section 498.5(e), provides that a supplier is entitled to an
ALJ hearing if there is an initial determination that the supplier’s services no longer meet
the conditions for coverage. Petitioner is correct that the state agency concluded that
Petitioner did not meet the conditions for coverage; however, CMS granted a waiver of
the noncompliance and concluded that Petitioner’s provider agreement should not be
terminated. Pursuant section 1866(h) of the Act and 42 C.F.R. § 416.26(f), it is the
termination of Petitioner’s ASC agreement that triggers the right to a hearing not the
conclusion that there was noncompliance with a condition for participation. Petitioner
also argues that the severe consequences in this case associated with the need for
Petitioner to regain compliance without a waiver, should warrant a hearing. However,
the authorities cited by Petitioner neither grant nor recognize any authority for me to
grant Petitioner a hearing on equitable grounds.

Accordingly, I conclude that the CMS decision to rescind the termination of Petitioner’s
ASC agreement extinguished Petitioner’s right to a hearing. Petitioner no longer has a
right to a hearing; I have no jurisdiction to grant the review Petitioner requests; and
dismissal is appropriate pursuant to 42 C.F.R. § 498.70(b).
III. Conclusion

For the foregoing reasons, Petitioner’s request for hearing is dismissed.

/s/

Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,

Complainant,

Vv.

Jario Estevez d/b/a Papi’s Grocery,

Respondent.

Docket No. C-12-889
FDA Docket No. FDA-2012-H-0671

Decision No. CR2598

Date: August 22, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

I enter a default judgment against Respondent, Jario Estavez d/b/a Sam’s
Newsstand. The Center for Tobacco Products (CTP) filed an administrative

complaint against Respondent t

at alleges facts and legal authority that are

sufficient to justify the imposition of a civil money penalty of $500. Respondent

did not timely answer the comp
which to file an answer.

CTP began this case by serving
the complaint with the Food an

aint nor did he request an extension of time within

a complaint on Respondent and by filing a copy of
Drug Administration’s (FDA) Division of

Dockets Management. The complaint alleges that Respondent impermissibly sold

tobacco products to a minor an
tobacco products, violating the
implementing regulations at 21
penalty of $500.

failed to verify the age of a person purchasing
Federal food, Drug, and Cosmetic Act (Act) and its
C.F.R. Part 1140. CTP seeks a civil money

On June 29, 2012, CTP served the complaint on Respondent by United Parcel
Service, as is provided for by 21 C.F.R. §§ 17.5 and 17.7. In the complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent
should pay the penalty, file an answer, or request an extension of time in which to
file answer. CTP warned Respondent that, if he failed to take one of these actions
within 30 days, the Administrative Law Judge could, pursuant to 21 C.F.R. §
17.11, issue an initial decision ordering him to pay the full amount of the proposed
penalty. Respondent did not file an answer within the time provided by
regulation.

I am required to issue a default judgment if the complaint is sufficient to justify a
penalty and the Respondent fails to answer timely or to request an extension. 21
C.F.R. § 17.11(a). For that reason I decide whether a default judgment is
appropriate here, and I conclude that it is merited based on the allegations of the
administrative complaint and Respondent’s failure to answer them.

For purposes of this decision, I assume that the following facts alleged in the
complaint are true. Specifically:

e Respondent owns an establishment that sells tobacco products and which
does business as Papi’s Grocery. The business is located at 6151 Baynton
Street, Philadelphia, PA, 19144.

e On June 6, 2011, an FDA-commissioned inspector made observations at
Respondent’s place of business that included: sale of cigarettes or
smokeless tobacco to a minor under the age of 18; and failure by him to
identify by means of photographic identification, containing the bearer’s
date of birth, that no person purchasing cigarettes or smokeless tobacco was
younger than 18 years of age.

e¢ On September 15, 2011, CTP issued a Warning Letter to Respondent that
recited the July 21, 2011 observations. The letter informed Respondent that
the observed facts constituted violations of regulations at 21 CFR §§
1140.14(a) and (b)(1) that prohibited sales of tobacco products to
individuals under the age of 18 and that required verification of age of
purchasers of tobacco products. It advised him that failure to correct the
violations could result in the imposition of a civil money penalty or other
regulatory action by FDA.

e The Warning Letter was delivered to Respondent. Respondent did not
reply to it.
e@ On March 7, 2012, at about 12:44 p.m., an inspector observed a minor
under the age of 18 buy a package of Newport Non-Menthol Box Cigarettes
at Respondent’s place of business. Additionally, the inspector observed
that the minor’s identification was not verified before the sale.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140(b). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any
person younger than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer
must verify, by means of photo identification containing the bearer’s date of birth,
that no person purchasing the tobacco product is younger than 18 years of age.

Here, Respondent sold tobacco products to individuals younger than age 18 on
two occasions, on June 6, 2011, and March 7, 2012. On both occasions
Respondent failed to verify the age of the purchaser. These actions and omissions
by Respondent constitute a violation of law for which a civil money penalty is
merited. Therefore, I find that a civil money penalty of $500 is permissible under
21 CFR. § 17.2.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Philip Yokwe d/b/a Jumbo Express,
Respondent.

Docket No. C-12-812
FDA Docket No. FDA-2012-H-0590

Decision No. CR2597

Date: August 22, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated the above-captioned matter when it
filed an Administrative Complaint for Civil Money Penalties (Complaint) with the
Departmental Appeals Board, Civil Remedies Division and the Food and Drug
Administration (FDA), Division of Dockets Management. CTP seeks to impose civil
money penalties under the Federal Food, Drug, and Cosmetic Act (Act) and the Act’s
implementing regulations.

The Complaint alleges the following facts. Respondent owns an establishment in
Memphis, Tennessee, that sells tobacco products. Complaint § 2. CTP conducted two
inspections of the establishment, documenting violations during both inspections.
Complaint § 8. During a May 14, 2011 inspection, an FDA-commissioned inspector
observed that Respondent:
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[Sold] cigarettes or smokeless tobacco products to a person younger than

18 years of age . . . [and] fail[ed] to verify by means of photographic
identification, containing the bearer’s date of birth, that no person purchasing
cigarettes or smokeless tobacco is younger than 18 years of age.

Complaint § 10.

In an August 11, 2011 warning letter, CTP informed Respondent of the violations that the
inspector observed and warned Respondent that a failure to correct the violations could
result in the imposition of civil money penalties. Complaint § 10. The FDA received no
response to the warning letter. Complaint § 11.

During a follow-up inspection, an FDA-commissioned inspector “witnessed an
individual, who identified himself as the owner of the establishment, sell two unpackaged
cigarettes to a customer.” Complaint § 9.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on June 29, 2012, via United Parcel Service. CTP charged Respondent with
violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor), 21 C.F.R.

§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth), and 21 C.F.R.
§ 1140.14(d) (breaking or otherwise opening a cigarette package to sell individual
cigarettes or a number of unpackaged cigarettes that is smaller than the quantity in the
minimum cigarette package size.) Complaint §§ 1, 9, 10. CTP requested a $250 civil
money penalty based on two alleged violations of the regulations in a 12-month period.
Complaint § 13.

The cover letter to the Complaint and the Complaint provided detailed instructions
related to filing an answer and requesting an extension of time to file an answer. The
letter and Complaint stated that failure to file an answer could result in the imposition of
a civil money penalty against Respondent. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.

§ 17.9.

If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that the:

presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by
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law for the violations alleged; or (2) The amount asked for in the complaint,
whichever amount is smaller.

21 CFR. §

7.11(a). Further, a failure to file a timely answer means that “respondent

waives any right to a hearing and to contest the amount of penalties and assessments”

imposed in tl

e initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the Complaint as true, I find that those facts establish

Respondent’

s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);

21 C.F.R. §§ 1140.1(b), 1140.14. Lalso find that CTP’s request to impose a $250 civil

money penal

ty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $250.

This initial d

lecision becomes final and binding on both parties within 30 days of the date

of its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2012-H-0612),

Complainant,
v.

Manuel Rodriguez, d/b/a Rodriguez Mini Market
and/or Rodriguez Grocery

Docket No. C-12-839
Decision No. CR2595

Date: August 17, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving a complaint on
Respondent, Manuel Rodriguez d/b/a Rodriguez Mini Market and/or Rodriguez Grocery
(Rodriguez Grocery), at 601 North 55" Street, Philadelphia, PA 19131, and by filing a
copy of the complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The complaint alleges that Rodriguez Grocery impermissibly sold
tobacco products to a minor and failed to verify the age of a person purchasing tobacco
products, violating the Federal Food, Drug, and Cosmetic Act (Act) and its
implementing regulations, 21 C.F.R. Part 1140, and seeks a $500 civil money penalty.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on June 20, 2012, CTP served the
complaint on Respondent Rodriguez Grocery by United Parcel Service. In the complaint
and accompanying cover letter, CTP explained that, within 30 days, Respondent should
pay the penalty, file an answer, or request an extension of time in which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30 days, the
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering it to pay the full amount of the proposed penalty.
Respondent Rodriguez Grocery has not filed an answer within the time prescribed.
Pursuant to 21 C.F.R. § 17.11, I assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e At Respondent’s business establishment, 601 North 55 Street, Philadelphia, PA,
on July 27, 2011, an FDA-commissioned inspector observed the sale of cigarettes
or smokeless tobacco to a person younger than 18 years of age;

e At Respondent’s business establishment, 601 North 55" Street, Philadelphia, PA,
on July 27, 2011, an FDA-commissioned inspector observed staff’s failure to
verify prior to sale, by means of photo identification containing the bearer’s birth
date, the age of a person purchasing tobacco products;

e Ina warning letter dated November 3, 2011, the CTP informed Respondent
Rodriguez Grocery of the inspector’s July 27, 2011 observations, and that such
actions violate federal law, 21 C.F.R. §§ 1140.14(a) and 1140.14(b). The letter
further warned that Rodriguez Grocery’s failure to correct its violation[s] could
result in a civil money penalty or other regulatory action;

e At approximately 2:04 p.m. on March 29, 2012, at Respondent’s business
establishment, 601 North 55 Street, Philadelphia, PA, an FDA-commissioned
inspector observed the sale of Newport Non-Menthol Box cigarettes to a person
younger than 18 years of age;

e At approximately 2:04 p.m. on March 29, 2012, at Respondent’s business
establishment, 601 North 55" Street, Philadelphia, PA, an FDA-commissioned
inspector observed staff’s failure to verify prior to sale, by means of photo
identification containing the bearer’s birth date, the age of a person purchasing
tobacco products.

These facts establish Respondent Rodriguez Grocery’s liability under the Act. The Act
prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. §1140.1(b). Under 21 C.F.R. §
1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any person younger
than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer must verify, by means
of photo identification containing the bearer’s date of birth, that no person purchasing the
tobacco product is younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500.00 against Respondent
Manuel Rodriguez d/b/a Rodriguez Mini Market and/or Rodriguez Grocery. Pursuant to
21 C.F.R. § 17.11(b), this order becomes final and binding upon both parties within 30
days of the date of its issuance.

/s/
Carolyn Cozad Hughes
Administrative Law Judge