Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Arthur Almer Ridge, ) Date: June 3, 2009

)
Petitioner, )
)

-Vv.- ) Docket No. C-09-226

) Decision No. CR1959
The Inspector General. )
)

DECISION

In this case, the parties agree that Petitioner, Arthur Almer Ridge, was convicted
of deviate sexual assault relating to the neglect or abuse of a patient in connection
with the delivery of health care services. He is therefore subject to exclusion from
participation in federal health care programs under section | 128(a)(2) of the Social
Security Act (Act). The sole issue in dispute is the length of his exclusion. The
Inspector General (1.G.) proposes a 10-year exclusion, and, for the reasons set
forth below, I find that the imposition of a 10-year exclusion is reasonable.

I. Background

By letter dated November 28, 2008, the I.G. notified Petitioner that, because he
had been convicted of a criminal offense related to the neglect or abuse of patients
in connection with the delivery of a health care item or service, he was excluded
from participation in Medicare, Medicaid, and all federal health care programs for
a period of 10 years. The letter explained that section 1128(a)(2) of the Act
authorizes the exclusion. I.G. Exhibit (Ex.) 4.

Petitioner concedes that he was convicted and is subject to exclusion under section
1128(a)(2). P. Br. at 1, 2, 6-7; Order and Schedule for Filing Briefs and
Documentary Evidence, at |. The parties agree that no factual issues are in
dispute, and that the case can be resolved based on written submissions, without
the need for an in-person hearing. CMS Br. at 7; P. Br. at 4. Both parties have
submitted written arguments, and the I.G. has filed 12 exhibits (I.G. Exs. 1-12). In
the absence of objection, I receive into evidence I.G. Exs. 1-12.

II. Issue

Because the parties agree that the I.G. has a basis upon which to exclude Petitioner
from program participation, the sole issue before me is whether the length of the
exclusion (10 years) is reasonable. 42 C.F.R. § 1001.2007.

III. Discussion

Section 1128(a)(2) requires that an individual or entity convicted of “a criminal
offense relating to neglect or abuse of patients in connection with the delivery of a
health care item or service” be excluded from participation in federal health care
programs.’ See also 42 C.F.R. § 1001.101(b). Individuals excluded under section
1128(a)(2) must be excluded for a period of not less than five years. Act, section
1128(c)(3)(B). The Secretary of Health and Human Services has delegated to the
LG. the authority to impose exclusions. 42 C.F.R. § 1001.101. So long as the
period of exclusion is within a reasonable range, based on demonstrated criteria, I
have no authority to change it. Joann Fletcher Cash, DAB No. 1725, at 17
(2000), citing 57 Fed. Reg. 3298, 3321 (1992).

Based on the aggravating factors present in this case, the 10-year
exclusion falls within a reasonable range.”

Federal regulations set forth criteria for determining the length of exclusions
imposed pursuant to section 1128 of the Act. 42 C.F.R. § 1001.102. Evidence
that does not pertain to one of the aggravating or mitigating factors listed in the
regulation may not be used to decide whether an exclusion of a particular length is
reasonable.

Among the factors that justify lengthening a period of exclusion beyond the five
year minimum are the following: 1) in convictions involving patient abuse or

neglect, the action that resulted in the conviction was premeditated, was part of a
continuing pattern of behavior, or consisted of non-consensual sexual acts; 2) the

' “Federal health care program” means any plan or program that provides health
benefits, whether directly, through insurance, or otherwise, that is funded directly,
in whole or in part, by the United States government, and includes any state health
care program. Act, section 1128B(f). A “state health care program” includes a
state’s Medicaid program. Act, section 1128(h)(1).

> | make this one finding of fact/conclusion of law.
sentence imposed by the court included incarceration; and 3) the convicted
individual or entity was the subject of another adverse action by a federal, state, or
local government agency or board, if the adverse action was based on the same set
of circumstances that serves as the basis for imposition of the exclusion. 42
C.F.R. § 1001.102(b). The presence of an aggravating factor or factors not offset
by any mitigating factor or factors justifies lengthening the mandatory period of
exclusion.

The I.G. argues that these three factors justify lengthening the period of
Petitioner’s exclusion from the five year minimum to 10 years. I agree.

Non-consensual sexual acts. Petitioner was a licensed practical nurse working in a
skilled nursing facility. On August 22, 2006, he was supposed to administer
medication to one of the facility residents, a 34-year-old quadriplegic woman. The
woman had been adjudicated incapacitated and disabled in 1989. She was unable
to speak, received nourishment and medications through a gastrostomy tube, and
was completely dependent on facility staff. Another facility employee observed
Petitioner performing a sexual act on this defenseless resident. I.G. Exs. 3, 5, 6,
11. On January 25, 2007, Petitioner pled guilty to deviate sexual assault, a class C
felony. I.G. Exs. 1, 2, 7, 8. He admits that his actions “did consist of non-
consensual sexual acts,” although he questions whether that fact alone justifies
extending his exclusion by five years. P. Br. at 6.

I find that, by itself, the sexual assault justifies extending Petitioner’s exclusion by
at least five years. In determining the length of an exclusion, the I.G. must
evaluate an individual’s future trustworthiness. Narendra M. Patel, M.D., DAB
No. 1736, at 25 (2000). As a nurse, Petitioner was entrusted with caring for a
defenseless and vulnerable resident. But he betrayed that trust when he assaulted
her. Few actions could demonstrate more dramatically that an individual simply
cannot be trusted and should therefore be excluded for a substantial period of time.

Incarceration. According to the I.G., the Court sentenced Petitioner to four years
incarceration. Petitioner admits that he was initially sentenced to four years, but
points out he served only four months, and was then placed on probation. P. Br. at
6. However, release from confinement earlier than expected does not eliminate
incarceration as an aggravating factor. See, Jason Hollady, M.D., a/k/a Jason
Lynn Hollady, DAB No. 1855, at 9-10 (2002) (where the Board found irrelevant to
the issue of whether his sentence included incarceration, the fact that, a few days
after the beginning of his sentence, the petitioner was put on a work release
program).
Another adverse action. Following his conviction, Petitioner voluntarily
surrendered his state license to practice as a licensed practical nurse. He argues
that, because he took the action voluntarily, his surrender does not constitute a
reasonable cause for extending the period of his exclusion. P. Br. at 6. I disagree.

Loss of a nursing license, whether voluntary or imposed, must be considered an
“adverse action” within the meaning of the regulation, and must be considered an
aggravating factor so long as “the action is based on the same set of circumstances
that serves as the basis for imposition of the exclusion.” 42 C.F.R.

§ 1001.102(b)(9). On January 23, 2007, Petitioner entered into a settlement
agreement with the Missouri State Board of Nursing “for the purpose of resolving
the question of whether [Petitioner’s] license to practice as a licensed practical
nurse [would] be subject to discipline.” I.G. Ex. 9, at |. In that agreement,
Petitioner stipulated that his license was subject to disciplinary action based on his
guilty plea to a charge involving moral turpitude, i.e., his conviction on charges of
deviate sexual assault. Based on this agreement and the licensing board’s actions,
I find aggravating the surrender of Petitioner’s nursing license.

The parties agree that no mitigating factors justify reducing the period of
exclusion.

IV. Conclusion
The parties agree that Petitioner is subject to exclusion under section 1128(a)(2) of

the Act, and, for the reasons discussed above, I find that the 10-year exclusion
imposed by the .G. falls within a reasonable range.

/s/ Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Decision No. CR1956
Centers for Medicare & Medicaid
Services.

In the Case of: )
)

Venetian Gardens (CCN: 36-6348), ) Date: June 1, 2009
)
Petitioner, )
)

-V.- ) Docket No. C-08-722

)
)
)
)

DECISION GRANTING SUMMARY JUDGMENT TO
CENTERS FOR MEDICARE & MEDICAID SERVICES

I grant summary judgment to the Centers for Medicare & Medicaid Services (CMS)
sustaining its determination to impose the following remedies against Petitioner,
Venetian Gardens:

e A civil money penalty of $4150 to remedy Petitioner’s noncompliance with
Medicare participation requirements on May 17, 2008; and

¢ Civil money penalties of $100 per day for each day of a period that began on May
18 and which ran through July 17, 2008 to remedy Petitioner’s noncompliance
with Medicare participation requirements during that period.

I. Background

Petitioner is a skilled nursing facility doing business in the State of Ohio. It participates
in the Medicare program. Its participation in Medicare is governed by sections 1819 and
1866 of the Social Security Act and by implementing regulations at 42 C.F.R. Parts 483
and 488. Its right to a hearing in this case is governed by regulations at 42 C.F.R. Part
498.
CMS determined to impose the remedies that I describe at the inception of this decision
based on findings of noncompliance with Medicare participation requirements that were
made during compliance surveys conducted at Petitioner’s facility on May 28 (May
survey) and June 18 (June survey), 2008. Petitioner requested a hearing and the case was
assigned to me for a hearing and a decision. The parties exchanged proposed exhibits

and filed pre-hearing briefs.

I scheduled an in-person hearing. However, CMS moved for summary judgment

as to

two of the noncompliance findings that were made at the May survey and one of the
noncompliance findings that was made at the June survey. The two May survey findings

are Petitioner’s alleged failures to: provide one of its residents with adequate sup:
and assistance devices in order to prevent accidents as is required by 42 C.F.R.

ervision

§ 483.25(h)(2); and complete a required interdisciplinary team assessment to determine
whether that resident could safely self-administer medications as is required by 42 C.F.R.
§ 483.10(n). Petitioner opposes CMS’s motion concerning these two deficiency findings.

The June survey finding about which CMS has moved for summary judgment is

Petitioner’s alleged failure to comply with the consultation and notification requirements
of 42 C.F.R. § 483.10(b)(11). Petitioner is no longer contesting this latter finding of

noncompliance and, therefore, I do not address it in this decision except where I
the reasonableness of CMS’s remedy determinations.

liscuss

CMS filed a total of 24 proposed exhibits which it designated as CMS Ex. | — CMS Ex.

24. Petitioner filed a total of 15 proposed exhibits which it designated as P. Ex. 1
Ex. 15. Petitioner attached an additional exhibit to its brief in opposition to CMS

—P.
*s

motion for summary judgment which it designated as P. Ex. A. I am receiving all of
these exhibits into the record of this case and I cite to some of them in this decision.
However, I make no evidentiary findings from these exhibits. I base my fact findings

solely on the undisputed material facts as averred by the parties.
IL. Issues, findings of fact and conclusions of law
A. Issues

The issues in this case are whether the undisputed material facts establish that:

1. Petitioner failed to comply substantially with Medicare participation

requirements.

2. CMS’s determination of immediate jeopardy is not clearly erroneous.

3. CMS’s remedy determinations are reasonable.
B. Findings of fact and conclusions of law

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

1. The undisputed material facts establish that Petitioner failed to
comply substantially with Medicare participation requirements.

I find the following facts to be undisputed.

Shortly after midnight on May 18, 2008 an individual who is identified in the May survey
report as Resident # 79, a resident of Petitioner’s facility, was struck and killed by an
automobile while he operated his motorized wheelchair, alone and unsupervised, on a
State highway near Petitioner’s facility. CMS Ex. 5, at 1-4. At the moment of impact
Resident # 79 was in the right of way and not on the shoulder or berm of the highway.

Id. at 4. Local authorities reported that, prior to the accident, they had received calls
about a person in a motorized wheelchair swerving in the roadway. Id.

Resident # 79 was a 56-year old individual who suffered from ailments which included
end stage Parkinson’s disease with tremors. CMS Ex. 9, at 26, 65, 71. The resident also
had psychological problems which included anxiety and mania. /d. at 14,23. He was
profoundly physically impaired. His condition was so compromised that he required total
care from Petitioner’s staff for most activities of daily living. Jd. at 26. Resident # 79
was assessed as having uncontrollable movements and poor coordination. /d. at 28, 63.
He was incapable of ambulating independently and was dependent on a wheelchair for
mobility. His impairments were of such severity that his balance was unsteady even
when he sat. /d. at 34,51. Petitioner’s staff determined that the resident needed
assistance for locomotion while in a wheelchair. Jd. at 28. His motor control was so
limited that when he attempted to use a recumbent bicycle in physical therapy, he
required maximum assistance from Petitioner’s staff to place his feet on the pedals. Jd. at
74. The staff found the resident to be at risk for sustaining falls. Jd. at 63-64.

The care plan that Petitioner’s staff developed for Resident # 79 on December 17, 2007
and continued after March 30, 2008 acknowledges the resident’s severe impairments. It
states that he “requires 24 hour care and supervision ... .” CMS Ex. 9, at 13.

Resident # 79 often left Petitioner’s facility alone and unaccompanied by members of the
staff or of his family. CMS Ex. 9, at 1-3. Petitioner’s staff was aware that the resident
would leave the facility without being supervised or assisted. /d. at 18; Petitioner’s brief
in opposition to CMS’s motion for summary judgment (brief in opposition) at 5.
Petitioner’s staff maintained a sign out sheet for those residents who left the premises.
CMS Ex. 9, at 1-3. On December 20, 2007 Resident # 79 signed an agreement in which
he promised that he would provide the staff with an approximate time of return whenever
he signed himself out of the facility. /d. at 72. Resident #79 would often sign himself
out of the facility but without stating his destination or the time when he was expected to
return to the premises. /d. at 1-3. At other times he would state various destinations that
were off the premises of the facility and which could only be reached by traveling on a
public highway. Jd. On the evening of May 17, 2008, the resident signed himself out at
7:50 p.m. without stating a destination or an expected time of return. CMS Ex. 9, at 3;
CMS Ex. 5, at 4.

There are no records showing that Petitioner’s staff assessed Resident # 79 in order to
determine whether the December 17, 2007 or the March 30, 2008 care plans should be
modified or re-written so as to provide supervision or assistance to the resident when he
left the premises. There are no records showing that Petitioner’s staff ever systematically
assessed the risks that Resident # 79 exposed himself to when he traveled alone from the
facility in his motorized wheelchair. Nor are there records showing that Petitioner’s staff
discussed with the resident’s physician the fact that the resident was leaving the facility
unaccompanied and the risks that he was encountering by doing so.

Resident # 79 used a model of motorized wheelchair known as the Quantum 6000. CMS
Ex. 4. This vehicle has a top speed of 6.5 miles per hour. Jd. at 4; P. Ex. 3, at 6. The
manufacturer has provided safety warnings to the chair’s users. CMS Ex. 4 at 2-3. For
example, the manufacturer warns about the risks of using the chair while under the
influence of medications and counsels against using the chair at all while under the
influence of alcohol. /d. at 3. The manufacturer also warns against the user reaching,
leaning, or bending while driving the chair. Jd. It specifically counsels that a user should
“practice bending and reaching in the presence of a qualified healthcare professional.”
Id. at 2. There are no facility records which show that Petitioner’s staff trained Resident
# 79 to avoid these possible hazards associated with using the chair while he was away
from the facility. See CMS Ex. 9, at 12. Nor are there records showing that the facility
staff assessed Resident # 79 for the risks associated with the use of the chair, planned
interventions designed to minimize those risks, or discussed those interventions with the
resident.

Petitioner’s staff allowed Resident # 79 to take medications with him and to self-
administer those medications when he was outside of the facility unsupervised. P. Ex. 3,
at 10, § 12. Among the resident’s medications were controlled substances for pain
including Percocet and Oxycodone (Oxycontin). CMS Ex. 9, at 81, 87. There is no
record that Petitioner’s staff conducted an interdisciplinary team assessment in 2008 to
determine whether it was safe for Resident # 79 to self-administer medications.
2. The undisputed material facts establish that Petitioner failed to
comply substantially with Medicare participation requirements.

a. The undisputed material facts establish that Petitioner failed to
comply substantially with the requirements of 42 C.F.R.
§ 483.25(h)(2).

The facts that I discuss above establish that Petitioner failed to provide Resident # 79
with adequate supervision and assistance devices to prevent accidents as required by
section 483.25(h)(2). Petitioner’s staff knew that the resident was a gravely impaired
individual with serious balance and positioning issues. The staff concluded that the
resident needed constant care and supervision. Indeed, the resident’s care plan in effect
at the time of his death was premised on that conclusion. But, in spite of that knowledge,
Petitioner’s staff did very little to protect the resident against the risks he encountered
when he left the facility unaccompanied. The minimal assistance that the staff did
provide to the resident — such as warning the resident to be safe when he left the facility
unattended, or urging him to watch out for traffic on such occasions, or putting a flag
and reflective tape on the resident’s motorized wheelchair — were at best half measures.

Indeed, the undisputed facts establish a wholesale disregard by Petitioner’s staff of the
resident’s safety and welfare. It should have been evident to the staff that any individual
— but especially one as physically impaired as was Resident # 79 — would encounter very
serious hazards if he or she traveled alone at night on a public highway in a motorized
wheelchair with a maximum speed of 6.5 miles per hour. But, Petitioner’s staff ignored
these hazards. The staff did not assess the risks that the resident was encountering.
Indeed, and judging from the absence of any facility records documenting those risks, the
staff appeared to ignore them completely. They planned no interventions to protect the
resident when he was outside of the facility by himself. Nor did the staff document
discussing with the resident comprehensively the risks that he encountered or the
protections that might have been available to him.

While some nurses notes document that safety was at least discussed with the resident on
some occasions, the instructions appear to be superficial and sporadic. P. Ex. 4, at 26
(“be aware of the traffic and please be careful”); P. Ex. 4, at 28 (“instructed [resident] on
safety, & weather pt states ‘I understand I won’t be gone [longer than a] 1/2 hr at the
most’ pt signed out. Appropriate clothing on”); P. Ex. 4, at 30 (“[resident] signed out
[resident] was educated on safety & states understanding”); P. Ex. 4, at 31 (‘“[resident]
signed out, educated re: safety, traffic & weather [resident] stated he understands”); P.
Ex. 4, at 39 (“[resident] signed out per protocol. [E]ducated [resident] re: safety.
Verbalizes understanding”). Other nurses notes document that he left the facility but do
not mention safety instruction. P. Ex. 4 at 28, 32. One social service note dated May 15,
2008 indicates that Resident # 79’s social service designee spoke with him “about the
safety of being on the highway [with] scooter. Res. Stated he follows all traffic rules.”

P. Ex. 10, at 3. Resident # 79 signed the sign out log 31 times from March through May
2008; Petitioner has provided only six instances of cursory instruction about safety while
the resident was outside the facility.

Moreover, because staff did not assess the risks that the resident might encounter and
care plan for them, any safety instructions would have been ad hoc and would not have
had the benefit of care planned interventions and options for the resident. Nothing in the
record shows that the resident ever received instruction on the risks associated with
operating the wheelchair in general much less at night on a public highway.

A skilled nursing facility is not simply a federally-compensated hotel for sick and
impaired residents. The facility owes a duty of care to each of its residents. That duty
includes protecting each resident against all known or knowable accident hazards.
Petitioner’s first obligation in providing care to Resident # 79 was to assess him to
identify each and every risk that was specific to his condition. The staff failed to make
that assessment because it failed to consider what unique risks might be encountered by
the resident if he left the premises unsupervised in his motorized wheelchair. The records
are simply devoid of any evidence that Petitioner’s staff focused on and addressed that
issue.

Second, Petitioner was obligated to plan the resident’s care so as to address all identified
or identifiable risks. There was a patent failure in planning Resident # 79’s care because
the care plan — while it stated that the resident needed 24-hour supervision — failed to
discuss at all how the resident would be protected when he was off premises.

Finally, the facility had a duty to implement all reasonable protective measures in order
to prevent the resident from having foreseeable accidents. There was a complete failure
of Petitioner’s staff to perform that duty. The staff ignored the obvious risks posed by the
resident’s use of a motorized wheelchair with a maximum speed of 6.5 miles per hour,
often at night, on a public highway. These risks were exacerbated by the resident’s
severely impaired physical condition, his uncontrollable movements, his poor
coordination, and his loss of balance. The facility’s records reveal only minimal and
sporadic efforts by the staff to counsel him about safety hazards or to offer the resident
assistance. Thus, the staff would occasionally warn the resident to be safe while he was
away from the facility. But, nothing in the facility’s records show any comprehensive
planning for the resident’s safety. For example, there is no documentation that the staff
offered to drive the resident to destinations away from the facility so as to avoid the
hazards the resident would encounter by using his motorized wheelchair alone.

I have considered Petitioner’s arguments in opposition to CMS’s motion and I find them
to be without merit. I conclude that they are irrelevant or incorrect as a matter of law
even if I assume Petitioner’s fact contentions to be true.
In opposing CMS’s motion, Petitioner asserts repeatedly that it provided assistance and
support to Resident # 79 consistent with regulatory requirements. Below, I discuss
Petitioner’s assertions in detail and I explain why, even assuming their truth, they do not
support a finding that Petitioner provided the resident with requisite assistance and
supervision. It is true, as I discuss, that Petitioner did provide some sporadic assistance
and support to the resident. The staff would, on occasion, warn the resident to be safe or
careful while he was away from the facility. There appeared to have been some
discussions with the resident about how to operate his motorized wheelchair safely. And,
the staff did equip the chair with reflective tape and a flag. But, these measures pale in
comparison to the hazards faced by the resident when he was away from the facility
alone. What is singularly lacking in the facts alleged by Petitioner is anything showing
that its staff ever comprehensively identified these risks and attempted to deal with them.
In short, the measures undertaken by Petitioner — assuming everything that Petitioner
asserts to be true — were half measures at best. Petitioner’s staff should have known that
the assistance that it offered to the resident was woefully inadequate given the risks he
encountered every time he left the facility.

Petitioner contends that the proximate cause of Resident # 79’s death was not any
compliance failure by the facility. According to Petitioner:

the death resulted because of the misfeasance of an inattentive, drugged and
handicapped driver, Mr... ., who hit what he thought to be a dog with his
14-year-old, dilapidated car on a clear night on an open, flat road devoid of
any other traffic.

Petitioner’s brief in opposition at 5. This argument is irrelevant even assuming the truth
of the facts alleged by Petitioner concerning the circumstances of Resident # 79’s death.
It does not matter to my decision that the negligence of another individual may have
caused the resident’s death. The issue before me is whether Petitioner and its staff failed
comprehensively to address hazards to Resident # 79 that should have been addressed.
The hazards encountered by this profoundly impaired individual traveling at a maximum
speed of 6.5 miles per hour in the vehicle right of way on a public highway at night were
present whether or not his death was caused by the negligence of someone else. Indeed,
Petitioner’s noncompliance would be just as evident even if there had never been an
accident and the resident was presently alive.

Petitioner also asserts that what is really at issue in this case is that Resident # 79 was:
a competent person, with free-will and civil rights, including the right to
refuse care, be left alone, and, most importantly, to come and go as he

pleased....

Petitioner’s brief in opposition at 5-6.
As support for these assertions Petitioner relies on advice that the State of Ohio’s public
ombudsman’s office allegedly gave to Petitioner’s consultant. According to the
consultant, that office advised her that it would have had a “big problem” if Petitioner
had attempted to restrict the resident’s freedom to leave Petitioner’s facility as he pleased.
P. Ex. 3, at 10,11. And, according to Petitioner, the ombudsman’s office advised the
consultant that, even on the night of the resident’s death, the facility “appropriately
recognized [the resident’s] right to leave the facility as he chose.”! Id.

Petitioner’s arguments and the reported conversation between the consultant and the State
of Ohio’s ombudsman are irrelevant. This case is not about the resident’s right to refuse
care nor is it about the resident’s civil rights. What is at issue here is Petitioner’s
obligation to offer supervision and assistance to its residents. That duty exists even ifa
resident, such as Resident # 79, exercises his or her free will and decides to decline that
which Petitioner offers. Koester Pavillion, DAB No. 1750, at 28 (2000). Moreover, had
Resident # 79 actually rejected Petitioner’s offer to provide care, the resident’s care plan
should have documented that. 42 C.F.R. § 483.20(k)(1)(ii). Where a resident refuses to
accept care that is offered by a facility the facility has the burden of documenting that
refusal. Innsbruck HealthCare Center, DAB No. 1948, at 7-8 (2004).

The resident’s care plan is devoid of any reference to a possible refusal by the resident to
accept supervision and/or assistance while away from the facility. Petitioner’s nursing
notes are similarly devoid of such a reference. But, even assuming that Petitioner’s staff
counseled the resident about the risk of leaving the facility alone, that advice did not
excuse Petitioner from assessing the resident, planning his care, and at least offering to
implement that which they had planned. I emphasize: Petitioner has come forward with
absolutely nothing to show that its staff ever comprehensively assessed the risks that
Resident # 79 faced when out of the facility alone, nor has it offered anything to show
that Petitioner planned the resident’s care in light of those risks.

Petitioner contends that there were standing orders by a physician that allowed the
resident to leave the facility unaccompanied and with his medications. As support for
this assertion Petitioner relies on a physician’s orders dated December 2007 and February
2008. Petitioner’s brief in opposition at 7-8; P. Ex. 4, at 15, 18-19. Petitioner also offers
an April 2009 affidavit from the resident’s former treating physician. P. Ex. A, at 2.

' The asserted communication with the ombudsman occurred after the resident’s fatal
accident. There are no facts to show that Petitioner’s staff consulted with the
ombudsman while the resident was alive and engaging in his unsupervised trips from the
facility. Nor are there facts to describe exactly what was the substance of any
communications between the consultant and the ombudsman. For example, it is
unknown whether the consultant described the extent of the resident’s impairments and
the circumstances under which he was out alone from the facility.
For purposes of this decision I am accepting as true Petitioner’s contention that the
resident’s physician ordered that the resident could leave the facility unaccompanied and
with his medications.’ However, that has no bearing on the outcome of this case. The
risks to Resident # 79 resulting from him being out of the facility alone were evident.
Petitioner’s staff was required to assess those risks and to plan interventions to protect the
resident even if the physician authorized the resident being outside alone.

Petitioner asserts that its staff gave training to the resident and that the resident was made
aware on numerous occasions how to operate his motorized wheelchair. “In fact,”
according to Petitioner, “safety precautions/training and instructions were provided so
often that [Resident # 79] protested the frequency with which they were given.”
Petitioner’s brief in opposition at 9. Petitioner contends, additionally, that the resident
expressed awareness and an understanding of this training and the operating instructions
and safety directions attendant with his wheelchair use as well as the risks involved with
using the wheelchair. Jd.

However, Petitioner cites to nothing in the resident’s treatment record to support these
assertions and, in fact, the exhibits offered by Petitioner consisting of the resident’s
treatment record provide no facts to show that the staff gave Resident # 79 anything more
than cursory instructions about the hazards of operating his motorized wheelchair. There
is no documentation showing that the staff ever discussed with the resident the inherent
safety risks of operating the wheelchair while on a public highway at night. Nor is there
anything to show that the staff ever discussed with Resident # 79 the risks that he would
encounter if he operated the wheelchair away from the facility while under the influence
of controlled substances.

The sole support offered by Petitioner for its assertion that its staff gave safety training to
the resident is in an affidavit offered by Petitioner’s consultant, an individual who was
not involved in providing direct care to the resident. P. Ex. 3, at 3-5, 14. But, what the
consultant cites as support for her conclusion consists only of sporadic warnings to the
resident to be careful or to watch out for traffic while away from the facility.

> There are facts from which one easily could infer a different conclusion. On March 21,
2008 the physician issued an order which authorized the resident to leave the facility,
with a pass, and accompanied by his family. CMS Ex. 7, at 1. This order comes later in
point of time than those relied on by Petitioner and it would be reasonable for me to infer
that the physician, recognizing the resident’s severe limitations, envisioned him leaving
the facility only in the company of a family member. I do not decide this question
because I rely only on the undisputed facts. However, the fact that this latter order was in
the resident’s record certainly should have, at the very least, put the staff on notice of a
possibility that the physician did not want the resident leaving the facility unaccompanied
and the staff clearly should have addressed this possibility in its assessment and care plan
for the resident.
10

I make no credibility finding about the consultant’s assertions.’ For purposes of this
lecision I accept as true her assertion that the resident received training from Petitioner’s
staff in the use of his motorized wheelchair to the extent that it is supported by the
exhibits which the consultant cites. But, such training was clearly inadequate to address
the risks that the resident encountered when he left Petitioner’s premises alone and at
night. Sporadically warning the resident to watch out for traffic when he was away from
the facility or to be safe or careful does not approach the comprehensive support and
assistance that this resident was entitled to receive. Petitioner has cited to nothing to
show that the staff ever comprehensively discussed with Resident #79: the hazards of
traveling unaccompanied on a state highway; the risks of driving a motorized wheelchair
in the dark on a road that was made for vehicles traveling at a much faster pace than 6.5
miles per hour; the risks of using the chair outside of the facility’s premises while under
the influence of controlled substances including Oxycontin; or the inherent dangers
resulting from the resident’s greatly impaired physical condition.

Petitioner contends that Resident #79 frequently signed himself out of the facility in
accordance with the facility’s protocol. Petitioner’s brief in opposition at 10. It contends
that the protocol allowed for documentation about the safety instructions that were given
to the resident concerning his use of his motorized wheelchair. Jd.

There is no factual basis for me to conclude that Resident # 79 complied with Petitioner’s
sign out protocol. However, even if Petitioner’s assertion of compliance by the resident
is true, it is irrelevant. The facility resident sign out sheet, cited by Petitioner in support
of its contention, very clearly shows that Resident # 79 often left the facility without
complying with the facility’s sign out protocol. CMS Ex. 9, at 1-3. He had agreed to
state his destination and expected time of return whenever he signed himself out. Jd. at
72. But, the resident frequently signed himself out without stating his destination or the
expected time of his return. Indeed, on May 17, 2008, the evening of the resident’s
death, he signed himself out without stating his destination or the expected time of his
return. Jd. at 3.

Furthermore, Petitioner has not provided any explanation of its sign out protocol.
Petitioner’s consultant states that the protocol “allowed for documentation about Resident
#79’s use and safety instruction for his wheelchair.” P. Ex. 3, at 5 (emphasis added).
The consultant’s declaration cites to nursing notes where staff provided cursory safety

* The consultant’s affidavit is filled with similar unsupported assertions of fact. See P.
Ex. 3. The absence of corroboration of the statements by a consultant, who was not
involved in providing care to the resident, and who was not present at Petitioner’s facility
on a daily basis when care was being provided to Resident # 79, raises obvious questions
about her credibility. I make no credibility findings in this decision because I am issuing
summary judgment in favor of CMS. Rather, I am assuming the consultant’s statements
to be true even if they find no support in the record of the resident’s care.
11

instruction to the resident, such as “‘be safe”, when he left the facility but does not explain
what the protocol actually requires. See discussion above. The consultant does not assert
that the protocol requires any particular safety instructions (e.g., regarding time of day,
weather conditions, mode of transportation, medication) or safety instruction each time a
resident leaves the facility.

Petitioner would be noncompliant even if Resident # 79 had followed the facility’s sign
out protocol to the letter. The fact that the resident may have told the staff where he was
going and when he expected to return to the facility did not compensate for the facility’s
failures to: assess the risks to the resident of his being away unaccompanied; plan
comprehensive interventions to protect the resident; and to at least offer those
interventions to the resident. The staff’s knowledge that the resident was out on a public
highway in his motorized wheelchair at night absent any meaningful and comprehensive
attempt to ameliorate the obvious hazards that the resident encountered did nothing
whatsoever to reduce the risks to the resident from such activity.

Petitioner asserts that it protected Resident # 79 by adding reflective tape and a flag to the
resident’s wheelchair. Regardless of how many reflectors or flags Petitioner put on the
resident’s wheelchair those steps do not take the place of supervision, particularly when
the resident’s care plan specifically called for 24 hour supervision. Reflectors and flags
may have provided added safety to the resident, but they are not, given the hazards that
were faced by the resident, meaningful assistive devices and adding them to his
wheelchair falls far short of the regulation’s requirement for comprehensive assessment,
planning, and assistance.

Petitioner contends that, had it provided Resident # 79 with the supervision and
assistance required by 42 C.F.R. § 483.25(h)(2), it would have had to make “a Hobbesian
choice of facing a lawsuit for invasion of privacy and/or false imprisonment and a survey
finding of want of substantial regulatory compliance for failing to abide by resident’s
rights laws.” Petitioner’s brief in opposition at 13. The choice posited by Petitioner is a
false choice. The regulation does not put a facility in the position of having to decide
whether to comply by violating a resident’s rights. Petitioner could have complied
completely with regulatory requirements without violating the resident’s rights by
assessing the resident’s needs, planning his care, and offering him appropriate
interventions. Discharging those regulatory obligations would not have infringed at all
on the resident’s rights including his right to reject that which Petitioner’s staff might
have offered to him.

Petitioner argues that to hold it liable for noncompliance with the requirements of 42
C.F.R. § 483.25 would be to violate a rule of reason governing application of that
regulation. It contends that the regulation, in not imposing a strict liability standard on a
facility, only requires a facility to do that which is practicable. According to Petitioner, it
would have been impracticable for the facility to provide Resident # 79 with one-on-one
12

supervision or other interventions that would have assured his safety when he was away
from Petitioner’s premises. Therefore, according to Petitioner, it should not be held
accountable for whatever might possibly have occurred to the resident during his
absences from the premises.

Petitioner is correct in asserting that the regulation does not require a facility to
accomplish the impossible. For example, the facility could not force Resident # 79 to do
something that was against his will. However, there were many things that Petitioner
could have done — and did not do — to protect the resident consistent with the facility’s
duties under the regulation. All of these things were practicable and reasonable. The
facility could have done a comprehensive assessment of the risks faced by the resident
when he left the facility. It could have discussed those risks in detail with the resident
and documented those discussions, including the resident’s reactions and his own
comments in response to that which was told to him by the facility’s staff. It could have
developed interventions designed to protect the resident and offered those interventions
to the resident. For example, if the resident expressed a desire to visit a commercial
establishment off the facility’s premises the staff might have attempted to find a way to
drive the resident there. Or, it could have offered to accompany him. What is singularly
lacking in this case are facts showing that Petitioner’s staff conceived of or offered any
assistance to Resident # 79.

b. The undisputed material facts establish that Petitioner failed to
comply substantially with the requirements of 42 C.F.R.
§ 483.10(n).

The undisputed material facts provide overwhelming support for my conclusion that
Petitioner failed to comply substantially with regulatory requirements in allowing
Resident # 79 to self-medicate. The regulation states that:

An individual resident may self-administer drugs if the interdisciplinary
team, as defined by § 483.20(d)(2)(ii), has determined that this practice is
safe.

The regulations define an interdisciplinary team as consisting of the resident’s attending
physician, a registered nurse with responsibility for the resident, and other appropriate
staff in disciplines as determined by the resident’s needs, and to the extent practicable,
the participation of the resident, the resident’s family or the resident’s legal
representative. 42 C.F.R. § 483.20(k)(2)(ii).4

+ There is a misprint in the reference at 42 C.F.R. § 483.10(n) to 42 C.F.R.

§ 483.20(d)(2)(ii). A skilled nursing facility’s interdisciplinary team is defined at 42
C.F.R. § 483.20(k)(2)(ii) and not 42 C.F.R. § 483.20(d) (subsection (d) addresses
maintenance and use of comprehensive assessment records).
13

There are no facts showing that Petitioner had an interdisciplinary team conduct an
assessment of Resident # 79 in order to determine whether it was safe to allow the
resident to self-administer drugs, including the controlled substances Percocet and
Oxycontin, while he was away from Petitioner’s premises unaccompanied. Nor is there
anything to show that an interdisciplinary team even considered the possibility that the
resident’s self administration of medications including controlled substances during
periods — including nights — when he operated his motorized wheelchair on a public
highway might be dangerous to the resident’s safety.

Petitioner argues that there was “no safety issue” associated with allowing Resident # 79
to self-administer medications. Petitioner’s brief in opposition at 15. Petitioner premises
that assertion on alleged facts that the resident was not cognitively impaired, that he had
well-functioning arms, hands, and fingers, and that he was physically capable of
administering medication to himself. Jd. But, these asserted facts do not excuse
Petitioner’s failure to comply with regulatory requirements. There was an explicit
regulatory duty, which Petitioner ignored, to have an interdisciplinary team evaluate the
safety factors and risks associated with allowing the resident to self-medicate before the
resident began doing so. Such evaluation needed to be updated periodically in order to
take into account any changes in the resident’s condition. The record of this case is
devoid of any facts showing that Petitioner’s staff accomplished this duty.

Furthermore, the resident’s physical capabilities and even his cognitive state were not the
only things that Petitioner’s staff needed to take into consideration in agreeing to allow
the resident to self-medicate. For example, Petitioner’s staff knew or should have known
that the manufacturer of the resident’s motorized wheelchair had warned against the use
of the chair while a patient was under the influence of medications. Petitioner’s staff
certainly needed to address that issue, among many other things, in the context of an
interdisciplinary review.

Nor is it sufficient to assert that the resident’s physician approved the resident’s self-
medication. A purpose of requiring an interdisciplinary team to evaluate the issue of self-
medication by a resident is to give the physician input that might otherwise be missing
when the physician exercises his or her judgment. A facility’s staff serves as the eyes
and ears of a physician who is not on premises and attending to a resident 24 hours per
day. But, the record of this case is devoid of any facts showing that Petitioner’s staff
performed that function. For example, there are no facts in this case to show that
Resident # 79’s physician was aware that the resident was using his motorized wheelchair
to travel alone and at night on a public highway.” Yet, precisely those facts should have

* The resident’s treating physician avers in her affidavit that:
14

been considered by an interdisciplinary team and brought to the physician’s attention in
order to determine whether it would have been safe for Resident # 79 to self-medicate
while away from Petitioner’s premises.

3. The undisputed material facts establish CMS’s determination of
immediate jeopardy level noncompliance not to be clearly erroneous.

CMS determined that Petitioner’s noncompliance with the requirements of 42 C.F.R.
§ 483.25(h)(2) was so egregious as to comprise immediate jeopardy for residents of
Petitioner’s facility. An immediate jeopardy level deficiency is one that causes, or is
likely to cause, one or more residents of a facility to suffer serious injury, harm,
impairment, or death. I find that the undisputed material facts of this case
overwhelmingly support my conclusion that the noncompliance was at the immediate
jeopardy level of scope and severity.

The undisputed facts establish an overwhelming likelihood that Resident # 79 would
suffer serious injury, harm, impairment or death as a consequence of Petitioner’s failure
to offer him reasonable assistance and supervision. It should have been obvious to
Petitioner’s staff that an individual as impaired as was Resident # 79 was flirting with
disaster every time he drove his motorized wheelchair alone on a state highway. Yet, and
despite that knowledge of looming disaster, Petitioner’s staff did nothing to assess the
risk, plan to ameliorate it, and offer reasonable interventions to the resident.

Petitioner has offered no facts which, if true, would establish the determination of
immediate jeopardy to be clearly erroneous. Petitioner argues that the facts of the
resident’s accidental death on May 18, 2008 are relevant to deciding whether or not
Petitioner’s noncompliance was at the immediate jeopardy level. “[O]therwise,”
according to Petitioner, “one is left to conclude that the mere fact that [Resident # 79]
was out of the Facility, alone, supports not only the deficiency finding but also its scope
and severity.” Petitioner’s brief in opposition at 11. Petitioner goes on to argue that the
resident’s fatal accident was due entirely to the negligence of the driver of the vehicle
which struck the resident.

I was the attending physician to Resident 79 . . . Thus, I am specifically
familiar with the conditions, behaviors and diagnoses for Resident 79.

P. Ex. A, at 1. Assuming these representations to be true they do not amount to saying
that her knowledge of the resident’s condition and behaviors was equal to that of
Petitioner’s staff. The physician does not aver that she was with the resident throughout
the day as were members of the staff. Nor does she aver that she was aware that the
resident was leaving the facility alone on his motorized wheelchair to travel on a public
highway.
15

My finding of immediate jeopardy rests on the likelihood that Petitioner’s failure to offer
reasonable assistance and supervision to Resident # 79 would result in at least serious
injury and not on facts showing that this failure actually caused the accident of May 18.
The likelihood of serious injury or worse was high even if Petitioner’s failure to offer
supervision and assistance to the resident was not the proximate cause of the May 18
accident.°

Immediate jeopardy does not exist here based on the “mere fact” that Resident # 79 left
Petitioner’s facility alone on the evening of May 17, 2008. It rests on the facility’s failure
to assess the risks and hazards that the resident faced when he went outside alone, its
failure to plan reasonable interventions, and its failure to offer them to the resident.

4. The undisputed material facts establish CMS’s remedy determinations
to be reasonable.

There are two remedies that are at issue here: a one-day civil money penalty of $4150 to
remedy Petitioner’s immediate jeopardy level noncompliance on May 17, 2008; and civil
money penalties of $100 per day for each day of a period running from May 18 through
July 17, 2008 to remedy Petitioner’s non-immediate jeopardy level noncompliance
during this period. The undisputed material facts establish these remedies to be
reasonable.

a. The undisputed material facts establish that a one-day civil
money penalty of $4150 to remedy Petitioner’s immediate
Jeopardy level noncompliance is reasonable.

Civil money penalties for immediate jeopardy level noncompliance fall within a range of
a minimum of $3050 to a maximum of $10,000 per day. 42 C.F.R. § 488.438(a)(1)(i).
There are regulatory factors which govern the amount of a civil money penalty falling
within this range. These factors include: the seriousness of the noncompliance; a
facility’s compliance history; its culpability for the noncompliance; and its financial
condition. 42 C.F.R. §§ 488.438(f)(1)-(4); 488.404 (incorporated by reference into 42
CER. § 488.438(£)(3)).

The undisputed material facts of this case establish that the seriousness of Petitioner’s
immediate jeopardy level noncompliance is more than sufficient to justify the one-day
$4150 civil money penalty that CMS determined to impose. Petitioner’s noncompliance
was egregious. It should have been obvious to the staff that Resident # 79 was at grave

° That is not to say that the circumstances of the accident — if they were the consequence
of Petitioner’s failure to provide supervision and assistance to the resident — would be
irrelevant. It is, however, unnecessary that I address those circumstances in order to
decide this case.
16

danger every time he exited Petitioner’s premises alone. As I have discussed he was a
profoundly physically impaired individual operating a piece of equipment that was
patently unsafe to operate on a public highway at night. Petitioner’s staff knew or should
have known that the resident’s impairments gravely compromised his ability to be away
safely from the facility by himself. They knew or should have known also that the
circumstances under which he was away from the facility — alone, at night, under the
influence of controlled substances including Oxycontin, and operating a motorized
wheelchair with a maximum speed of 6.5 miles per hour on a public highway among
much faster moving motor vehicle traffic — was a recipe for disaster. But, despite that,
Petitioner failed categorically to discharge its obligations to assist and protect this
resident.

The $4150 civil money penalty is, in fact, a pittance when compared to the seriousness of
Petitioner’s noncompliance. To begin with, it is near the bottom of the range of penalties
that may be imposed for immediate jeopardy level noncompliance. Also, CMS has, in its
discretion, opted not to impose any penalties for the weeks in which the staff failed to
protect Resident # 79 while he engaged in identical behavior to that which he was
engaging in on the night of his death. In short, Petitioner is fortunate that CMS did not
elect to impose a much greater civil money penalty than that which it determined to
impose.

Petitioner has offered no argument or facts to show the penalty amount to be
unreasonable. Mainly, it argues that the undisputed material facts do not establish
immediate jeopardy level noncompliance. I have addressed that issue at Finding 2 of this
decision.

Petitioner has not contended that it lacks the wherewithal to pay the penalty. It asserts
that CMS has not offered any facts concerning Petitioner’s compliance history.
However, and as I have discussed, the seriousness of the noncompliance in and of itself
justifies the penalty amount. Facts showing a poor compliance history might provide
additional support for the penalty but such facts are unnecessary here. And, Petitioner
‘as offered nothing to show that a reduction of the penalty amount might be justified in
light of its compliance history.

b. The undisputed material facts establish that civil money
penalties of $100 per day for each day of a period that began on
May 18 and which continued through July 17, 2008 to remedy
Petitioner’s non-immediate jeopardy level noncompliance are
reasonable.

Civil money penalties for non-immediate jeopardy level noncompliance fall within a
range of from $50 to $3000 for each day of noncompliance. 42 C.F.R.
17

§ 488.438(a)(1)(ii). The same regulatory factors for deciding on a penalty amount within
this range apply here as apply to immediate jeopardy level penalties.

The undisputed material facts show that Petitioner’s non-immediate jeopardy level
noncompliance persisted through July 17, 2008. CMS determined that Petitioner did not
attain full compliance with the requirements of 42 C.F.R. §§ 483.25(h)(2) and 483.10(n)
until that date. Petitioner has offered no facts showing that it corrected these deficiencies
at any time earlier than July 18. CMS Ex. 1, at 1-2.’

Petitioner argues that its noncompliance with the requirements of 42 C.F.R. § 483.10(n)
necessarily ended with the death of Resident # 79 on May 18, 2008. I disagree. The
noncompliance lies in the staff’s failure to comprehend the necessity for performing the
assessment required by the regulation as a prerequisite for allowing any resident — not
just Resident # 79 — to self-medicate. The failure to perform that assessment in Resident
#79’s case illustrates the staff’s lack of understanding of its obligations. But, the
resident’s death, without any facts showing corrective action by Petitioner, does not
establish that the staff had recognized the error of their ways and corrected the
deficiency.

I find that the penalty amount is amply justified by the undisputed facts showing the
seriousness of Petitioner’s noncompliance. Indeed, the seriousness of Petitioner’s
noncompliance as is demonstrated by the failure of Petitioner to perform the required
assessment of Resident # 79’s ability to self-medicate before allowing him to do so would
very easily justify a much higher daily penalty amount than $100.

A daily penalty amount of $100 is a minimal penalty, comprising only three percent of
the maximum allowable non-immediate jeopardy daily penalty amount. Petitioner does
not argue that the amount is unreasonable assuming that it was deficient during the May
18—July 17, 2008 period. Petitioner does not assert that it lacks the resources to pay the
penalty nor does it contend that there are facts showing that a penalty amount of $100 per
day — assuming noncompliance — would be unreasonably high.

This resident was already at great risk of life and limb when he made his unaccompanied
excursions away from the facility in a motorized wheelchair. Combining those
excursions with unsupervised consumption of medications, including controlled
substances, clearly greatly exacerbated the risk to the resident. Yet, there are no facts to
show that Petitioner’s staff was sensitive to this heightened risk. Rather, the staff simply

’ Petitioner’s noncompliance during this period also included noncompliance with the
requirements of 42 C.F.R. § 483.10(b)(11), beginning on June 18, 2008 (the date of the
June survey) and continuing through July 17, 2008. As I discuss in the introduction to
this decision, Petitioner is not challenging this noncompliance. Its plan of correction for
this deficiency specified that compliance would be attained on July 18. CMS Ex. 14.
18

handed medications over to the resident without having an interdisciplinary team look at
the possible adverse implications. That level of noncompliance, coupled with
Petitioner’s continued noncompliance with the requirements of 42 C.F.R. § 483.25(h)(2)
and its noncompliance during part of the May 18—July 17 period with the requirements of
42 C.F.R. § 483.10(b)(11), demonstrates that $100 per day is truly a minimal penalty
amount.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Centers for Medicare & Medicaid
Services.

In the Case of: )
)
Cass County Memorial Hospital, ) Date: May 22, 2009

(CCN: 16-5560), )
)
Petitioner, )

) Docket No. C-09-188

-V.- ) Decision No.CR1955
)
)
)
)

DECISION GRANTING SUMMARY DISPOSITION TO
CENTERS FOR MEDICARE & MEDICAID SERVICES

I grant summary disposition to the Centers for Medicare & Medicaid Services
(CMS) sustaining its determination to terminate the Medicare participation of
Petitioner, Cass County Memorial Hospital.

I. Background

Petitioner is a critical access hospital located in Atlantic, lowa. Its premises
include a 10-bed skilled nursing facility (SNF). The SNF was certified to
participate in the Medicare program. As a Medicare participant the SNF was
required to comply with the requirements of sections 1819 and 1866 of the Social
Security Act (Act) and of implementing regulations at 42 C.F.R. Parts 483 and
488. Its hearing rights in this case are governed by regulations at 42 C.F.R. Part
498.
Petitioner’s SNF was surveyed for compliance on November 14, 2008 (November
survey). The surveyors found that Petitioner was not complying with Medicare
participation requirements and CMS concurred in that finding. On December 2,
2008, CMS told Petitioner that its SNF’s participation in Medicare would be
terminated effective January 1, 2009. CMS advised Petitioner that the basis for
termination was that its SNF was not primarily engaged in providing skilled
nursing services.

Petitioner requested a hearing and the case was assigned to me for a hearing and a
decision. CMS then moved for summary disposition. Petitioner opposed the
motion.

CMS attached 11 exhibits to its motion and it designated these exhibits as CMS
Ex. 1-CMS Ex. 11. Petitioner attached 14 exhibits to its brief in opposition to
CMS’s motion and it designated these exhibits as P. Ex. 1-P. Ex. 14. In addition,
Petitioner submitted the affidavit of its administrator, which it designated as P. Ex.
A. I receive all of these exhibits into the record and I cite to some of them in this
decision as references. However, I make no evidentiary findings based on the
exhibits. I base my decision on the law and the undisputed facts as averred by the
parties.

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

The issue that I decide is whether Petitioner was in compliance with Medicare
participation requirements.

B. Findings of fact and conclusions of law

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

1. In order to be eligible for participation in the Medicare
program a SNF must be an institution or a distinct part of an
institution that is primarily engaged in providing skilled
nursing care to residents and it must comply with all Medicare
participation requirements set forth in the Act and regulations.

Section 1819(a)(1)(A) of the Act defines a skilled nursing facility to be “an
institution (or a distinct part of an institution) which — (1) is primarily engaged in
providing to residents — (A) skilled nursing care and related services... .”
The intent of the Act is clear. In order to qualify as a SNF a facility must, at a
minimum, be organized as an entity whose purpose is to provide skilled nursing
care in compliance with Medicare participation requirements. That means that its
services must be provided separately and apart from any entity within which the
facility is organized. Commingling the physical premises or the services offered
by a SNF with those of other enterprises makes it difficult or impossible for CMS
to ascertain whether those services are being offered in compliance with the
requirements of law.

The Secretary of the United States Department of Health and Human Services
describes via regulation the criteria that a facility must meet to satisfy the
requirement that it be a distinct part of another institution. 42 C.F.R. § 483.5(b).
In addition to satisfying all other Medicare participation criteria a distinct part
SNF must be physically distinguishable from the larger institution that houses it.

Being “primarily engaged” in providing services means actually providing the
services for which certification is sought or received. Arizona Surgical Hospital,
LLC, DAB No. 1890 (2003). The capacity to provide services is not legally the
equivalent to actually providing them. A SNF which merely has the capacity to
provide services but which does not actually provide them is not primarily
engaged in providing services and not eligible to participate in the Medicare
program. See United Medical Home Care, Inc., DAB No. 2194 (2008).

The Act and implementing regulations at 42 C.F.R. Part 483 set forth a
comprehensive regulatory scheme that every SNF must comply with as a
prerequisite to participating in Medicare. For example, a SNF must:

e Maintain a quality assessment and assurance committee, consisting
of its director of nursing services, a physician designated by the
facility, and at least three other members of the facility’s staff, which
meets at least quarterly to identify issues with respect to which
quality assessment and assurance activities are necessary, and which
develops and implements appropriate plans of action to correct
identified deficiencies. Act, section 1819(b)(1)(B);

e Use the services of a registered professional nurse at least eight
consecutive hours a day, seven days a week. Act, section
1819(b)(4)(C)(i); and

Failure to comply with any participation requirement, including the ones that I
have cited, is grounds for termination of participation in Medicare. Act, section
1866(b)(2).
2. The undisputed material facts of this case establish that
Petitioner failed to qualify for participation as a distinct part of
an institution that is primarily engaged in providing skilled
nursing care to residents. They establish also that Petitioner
was not complying with Medicare participation requirements.

These are the facts which I find to be undisputed and the basis for my decision.
Petitioner’s primary function is as a hospital. It operates three corridors, or
hallways, in which it houses patients. Petitioner purported to operate its SNF as
seven rooms in one of those hallways. Other rooms in that hallway are reserved
for hospital inpatients. The facility’s nursing station is at the convergence of the
three hallways in the hospital. The nurses who sit at that station oversee both the
operations of the hospital and those of the SNF. The hospital does not restrict
access to its SNF so that either patients or staff of the hospital may freely
commingle with SNF residents, to the extent that there are any of them.

The SNF is not physically separated from the hospital itself. There is no separate
entrance or exit for the SNF. There is no sign to demarcate the SNF from the
hospital. Visitors entering the facility could not distinguish that part which is the
hospital from the SNF.

Petitioner’s SNF has no full-time staff who are dedicated to its operations.
Staffing is comprised of hospital staff who are assigned to the SNF on an as-
needed basis. Records of the staff are not maintained separately for SNF
personnel. Petitioner does not have separate management for its SNF. The SNF
does not have a quality assurance committee that is separate and distinct from that
which the hospital has, nor is there a physician who has been assigned to sit
exclusively as a member of the SNF’s quality assurance committee.

As of November 14, 2008, Petitioner’s SNF had a total of two residents. Both of
these individuals were hospice patients.

These undisputed facts establish that Petitioner was not operating its SNF in
compliance with Medicare participation requirements. Consequently, CMS was
authorized to terminate Petitioner’s participation in Medicare. First, Petitioner’s
SNF was not a distinct part of Petitioner. The facts show that Petitioner did not
maintain a separate facility for its SNF. Rather, the SNF — to the extent that it
existed at all — consisted merely of a few beds on one corridor of Petitioner’s
hospital. There was nothing about the SNF’s operation that supports a finding that

it was a distinct part within the hospital. It was not physically distinguishable
from the hospital. It had no separate entrance or exit. It had no sign demarcating
itas a SNF. It had no separate nursing station. Hospital staff and patients were
free to commingle with any potential residents in the SNF. It had no dedicated
staff and no dedicated quality assurance committee.

Second, the undisputed facts establish that, as of the November survey,
Petitioner’s SNF was not primarily engaged in providing nursing care to residents.
As of the November survey the SNF had only two residents and these were
individuals who were enrolled in the Medicare hospice program. I take notice that
hospice care is a special program developed to provide care to an individual who
has been certified to be within the final six months of his or her life. Although
hospice care clearly includes many of the elements of skilled nursing care it does
not include all of those elements. For example, SNFs are expected to provide care
for individuals who are anticipated to have only short stays while they recover
from medical problems and, for these individuals, SNFs must provide therapeutic
and recuperative care.

In any event, the number of residents at Petitioner’s SNF as of the November
survey was de minimis and insufficient for Petitioner to establish that it met
Medicare participation requirements. There simply were insufficient residents on
board for CMS to ascertain whether the SNF was providing all requisite services
in a manner that complied with Medicare participation requirements. See United
Medical Home Care, Inc., DAB No. 2194.

Third, the undisputed facts show that, in at least two respects, Petitioner’s SNF
failed to satisfy Medicare participation requirements. Petitioner failed to maintain
a quality assessment and assurance committee that complied with statutory
requirements. Act, section 1819(b)(1)(B). A facility’s quality assurance
committee must consist of the facility’s director of nursing services, a physician
designated by the facility, and at least three other members of the facility’s staff.
That committee must meet at least quarterly to identify issues with respect to
which quality assessment and assurance activities are necessary. And, the
committee must develop and implement appropriate plans of action to correct
identified quality deficiencies. Id.

Petitioner had no dedicated quality assessment and assurance committee.
Moreover, Petitioner has furnished no facts showing that whatever quality
assurance committee it may have had for its hospital operations met at least
quarterly to review the activities of the SNF.
Petitioner is additionally required by statute to use the services of a registered
professional nurse at least eight consecutive hours a day, seven days per week.
Act, section 1819(b)(4)(C)(i). The Act contains no exceptions to this requirement.
It does not, for example, allow a hospital with a distinct part SNF to assign staff to
the SNF on an as-needed basis. The undisputed facts show that Petitioner had no
dedicated staff assigned to it. Staff were assigned as the need arose. That is a
clear violation of the law.

Petitioner makes a number of arguments in response to CMS’s motion. None of
them raise valid defenses. As an element of these arguments Petitioner avers facts
which it contends raise disputes which may not be adjudicated by summary
judgment. I accept as true all of the facts asserted by Petitioner. None of them
call into question the undisputed facts that I rely on for this decision. Nor do these
facts establish a basis for me to rule against CMS as a matter of law. I find
Petitioner’s arguments to be without merit even if the facts on which Petitioner
relies are true.

Petitioner asserts that it is a critical access hospital enrolled in the Medicare
program under 42 C.F.R. Part 485. Petitioner’s brief at 2. It asserts that it has
“authority to utilize its licensed hospital beds as swingbeds for the provision of
skilled nursing care.” /d.; P. Ex. A, at 2 6. From this assertion Petitioner
appears to be arguing that it is authorized explicitly by some entity to operate its
SNF as an integrated element of its hospital operations and not as a distinct part of
the facility. Thus, it seems to be contending that it enjoys some explicit exemption
from the Act’s requirement that the SNF be operated as a distinct part.

It is unclear to me the nature of Petitioner’s asserted authority to operate
swingbeds which have the dual function as hospital and skilled nursing beds.
Petitioner has cited to no source of this alleged authority. It has provided me with
no document showing that any agency of government ever authorized it explicitly
to commingle its SNF and hospital operations. But, even assuming that some
agency granted Petitioner this authority as part of its hospital license or even as
part of its hospital certification, that does not amount to an exception from the
law’s requirement that Petitioner operate its SNF as a distinct part of its hospital
facility. Petitioner has identified no facts to show that CMS ever granted it such
an exception. As I explain above, there are sound reasons for requiring a SNF that
is operated by another entity to function as a distinct part of that entity.

Petitioner then appears to argue that it is entitled to receive an exception or a
waiver from Medicare participation requirements even if it has not been formally
granted one. It argues that it has always been aboveboard in its intentions to
commingle its SNF operations with those of the hospital and that this was
understood and accepted by relevant authorities. Petitioner’s brief at 2-4.
As support for this argument Petitioner contends that it obtained a certificate of
need from the State of Iowa to operate its SNF as a distinct part of the hospital.
This certificate, according to Petitioner, was granted on the basis of a plan that it
presented to the lowa Department of Public Health which implied that it would be
using hospital beds as SNF beds for approximately 15 percent of inpatient days at
the hospital. Jd. According to Petitioner, it made it:

clear from the beginning that it had no intention of hiring any new
staff or changing any of . . . [Petitioner’s] then current staffing levels
to account for the change from acute care to skilled beds... . Thus,
rom its inception, the SNF was not intended to be separately staffed.

Petitioner’s brief at 4.

Petitioner also argues that its SNF has been subject to surveys in the past that were
conducted on behalf of CMS but that it had never been told that the SNF had run
afoul of, or was being operated contrary to, basic Medicare participation
requirements. Petitioner’s brief at 4-6. It also asserts that it had very limited SNF
activities in both 2007 and 2008, consisting of only 20 days of resident stay in the
SNF in 2007 and 43 days of resident stay in the SNF in 2008. Petitioner seems to
suggest that CMS either knew or should have known about these very limited SNF
operations but never cited them prior to November 2008 as a basis for terminating
Petitioner’s SNF certification. Jd.

I conclude that Petitioner is not entitled to a waiver of Medicare requirements
governing distinct part SNFs even if it always made its intentions known to
commingle its hospital and SNF care and even if CMS may have known about
such commingling and the very limited scope of Petitioner’s SNF care. First, I
have no authority to order CMS to waive Medicare requirements. I am unaware of
any authority which would allow me to compel CMS to grant such a waiver.

Second, Petitioner’s argument seems to devolve into an assertion that it is entitled
to operate its SNF as an entity whose activities are commingled with those of
Petitioner’s hospital because various government agencies knew what Petitioner
was doing but chose not to object. Effectively, Petitioner’s argument is an
assertion of equitable estoppel or laches against CMS.

The fact that entities of government — including CMS — might have been aware
that Petitioner commingled its SNF and hospital activities does not provide any
legal justification for Petitioner to continue to do so. Petitioner’s argument is
without merit because there is nothing in either the Act or implementing
regulations that allows for CMS to be estopped as Petitioner contends it should be.
Petitioner’s next argument is to assert that CMS’s termination of its Medicare
participation was arbitrary and capricious. It characterizes the CMS determination
to terminate its participation as “‘a clear case of an administrative agency abusing
its discretion in a most arbitrary and capricious manner.” Petitioner’s brief at 7.
This argument is a restatement of Petitioner’s equitable estoppel argument. /d., at
6-8. I find it to be without merit for the same reason that I find Petitioner’s other
iteration of the same argument to be without merit. Nothing in the Act or in
implementing regulations would allow me to apply the doctrine of equitable
estoppel against CMS.

Petitioner then asserts that it should have been given an opportunity to remediate
the noncompliance identified by CMS. It contends that, absent a finding of
immediate jeopardy-level noncompliance, it should have been given a period of
time within which it could have corrected any problems identified at the
November survey or subsequently by CMS. Petitioner’s brief at 8-9.

However, Petitioner concedes that CMS has the authority to terminate the
participation of a SNF where there is noncompliance, whether or not that
noncompliance is at the immediate jeopardy level. Petitioner’s brief at 8. Indeed,
CMS’s authority to terminate a provider’s participation for any level of
noncompliance is made explicit in the Act. Act, section 1866(b)(2)(A).
Consequently, there is no merit to Petitioner’s argument that CMS should have
allowed it the opportunity to remediate before terminating Petitioner’s Medicare
participation.

Besides, it would not have been possible for Petitioner to remediate the
noncompliance that CMS identified. Petitioner’s noncompliance was fundamental
and irremediable. In order to comply with Medicare participation requirements
Petitioner would have had to: physically segregate its SNF operations from those
of its hospital; hire and employ a dedicated staff that provided care only to SNF
residents; establish separate committees to evaluate and oversee the care provided
by the SNF; and, above all, to serve a meaningful population of residents. These
changes in operation are antithetical to what Petitioner had established. As
Petitioner acknowledges, its entire SNF operation was premised on the idea that it
could commingle its SNF and hospital activities and devote time and space to SNF
functions only on an as needed basis.

Petitioner contends that it does in fact have a quality assurance committee that is
responsible to oversee the care provided by its SNF. Petitioner’s brief at 10; P.
Ex. A, at 7 § 26. The “fact” that Petitioner relies on is a bare conclusion by
Petitioner’s administrator that Petitioner has such a committee. /d. That assertion,
assuming it to be true, begs the question of whether Petitioner’s quality assurance
committee satisfies legal requirements for a SNF quality assurance committee.
Petitioner has provided no documentation to explain how its quality assurance
committee is structured or how it operates. In particular, Petitioner does not deny
CMS’s assertion that it had no separate quality assurance committee dedicated
only to overseeing SNF operations which was composed of the individuals whose
membership is required by law and which met on at least a quarterly basis.

Petitioner argues additionally that it has staffed its hospital and the SNF in
compliance with Iowa state regulations that, allegedly, allow for the sharing of
certain categories of staff between a hospital and a SNF. Petitioner’s brief at 10-
11. However, in making this argument Petitioner concedes that: Iowa regulations
require a SNF and a hospital to maintain separate staff for licensure purposes; and,
that it does not maintain separate staff for its SNF.

Regardless of what Iowa law might say, Medicare requirements for participation
as a SNF are clear. Iowa’s laws do not trump the federal statutes governing
Medicare participation. A participating SNF must have dedicated staff and, in
particular, the dedicated services of a registered professional nurse at least eight
hours a day and seven days a week. Petitioner acknowledges that it did not satisfy
these requirements.

Petitioner also effectively concedes that it has not had residents receiving skilled
nursing care since February 2008. Petitioner’s brief at 11. It asserts that it has
“not been able to identify any regulatory requirement that a distinct part SNF unit
must maintain any particular census, or have individuals admitted at all times in
order to keep the provider agreement in good standing.” Jd. Petitioner may be
correct in asserting that there is no regulation that states this requirement verbatim.
However, and as the Departmental Appeals Board has held, actively providing
care to residents is an essential element of a provider being primarily engaged in
providing services. United Medical Home Care, Inc., DAB No. 2194, at 10, 12;
Arizona Surgical Hospital, LLC, DAB No. 1890, at 6-8. Having the hypothetical
or potential capacity to provide care is simply not the equivalent of actually
providing such care. Arizona Surgical Hospital, LLC, DAB No. 1890, at 8.

Finally, Petitioner asserts that CMS’s determination to terminate its Medicare
participation was made in a manner that is contrary to Medicare participation
regulations. Petitioner’s brief at 14-16. As support for this argument Petitioner
cites to 42 C.F.R. § 424.540, a regulation which addresses the circumstances when
CMS may deactivate a provider or supplier’s Medicare billing privileges. Among
the reasons allowing deactivation stated by the regulation is failure by a provider
or supplier to submit Medicare reimbursement claims for a period of 12
consecutive calendar months. 42 C.F.R. § 424.540(a)(1). Petitioner asserts that
this regulation:
10

stands for the fact that the mere presence of periods of inactivity,
even lengthy periods of up to and in excess of one year, are
insufficient to find that a SNF is not primarily engaged in the
provision of services to residents and thus ineligible to participate in
the Medicare program.

Id., at 15.

I find this argument to be unpersuasive. The section of the regulations cited by
Petitioner is intended to give CMS discretion to cease accepting Medicare
reimbursement claims from a provider or a supplier that has been inactive for a
period of 12 consecutive months or more. It gives CMS a tool that it may use in
addition to terminating a provider’s participation where that provider is not
primarily engaged in providing services to beneficiaries. But, that tool does not
limit CMS’s authority, it supplements it. Thus, CMS could terminate the
participation of a provider who had ceased claims activity for 12 or more
consecutive months if it found that the provider had ceased providing any care to
beneficiaries and it could also cease accepting and processing reimbursement
claims from that provider. But, nothing in the regulation cited by Petitioner limits
CMS’s choice of remedies.

/s/
Steven T. Kessel
Administrative Law Judge