Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Karcher Estates,
(CCN: 13-5110),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-11-815
Decision No. CR2632

Date: September 28, 2012

DECISION

Following a complaint survey, the Idaho Department of Health & Welfare (state agency)
determined that Karcher Estates (Petitioner or facility) was not in substantial compliance
with certain Medicare participation requirements, and that its noncompliance posed
immediate jeopardy to the health and safety of one of its residents. Based on the state
agency’s findings, the Centers for Medicare & Medicaid Services (CMS) imposed a per-
instance civil money penalty (CMP) of $5,000 and denied the facility’s nurse aid training
and competency evaluation program (NATCEP) for two years.

For the reasons explained below, I find that Petitioner was not in substantial compliance
with the participation requirements at 42 C.F.R. § 483.13(b) and (c) for the period the
state agency cited, and that the enforcement remedies are reasonable. | therefore sustain
the per-instance CMP of $5,000 and denial of the facility’s NATCEP.

I. Case Background

Petitioner is a long-term care facility in Nampa, Idaho that participates in the Medicare
and Medicaid programs. At issue in this case is the care (or absence of care) provided to
a female resident of Petitioner’s facility, referred to throughout these proceedings as
“Resident 1” (R1). R1 suffered a stroke in early 2008 that resulted in, among other

things, right hemiparesis a
thereafter. At all times re
communicate by nodding
each party characterizes tl
parties do not dispute the
assistant (CNA) observed
under R1’s shirt, on her cl
dining area. The CNA im
The CNA discussed her o|

ind aphasia. She was admitted to Petitioner’s facility shortly
evant to this case, R1 was not able to speak but would

er head, gesturing, or using a communication board. While
e incident giving rise to the complaint survey differently, the
following events: on March 21, 2011, a certified nursing
a male acquaintance and frequent visitor of R1 with his hands
est and breasts, while the two were alone in the facility’s
mediately left the dining area without stopping the conduct.

bservations with other nursing staff, but did not immediately

notify the facility’s director of nursing (DON). Upon reentering the dining area, the CNA

said “hello” to announce

er presence, which prompted the acquaintance to remove his

hands from R1. The CNA then notified the DON about the situation, and the DON, in

turn, directed the CNA to
social worker learned of tl
contacted the police as we
abuse.'

notify the facility’s social worker about the incident. Once the
e incident, he notified R1’s family. A family member then
ll as the state ombudsman and reported the incident as sexual

The state agency completed a survey of Petitioner’s facility on March 31, 2011, and
found, among other things, that certain staff members in the facility had known of the
intimate activity between R1 and her acquaintance for a substantial period, but never
assessed R1’s ability to consent or her actual consent to such activity in light of her

aphasia and instances of co:

findings, the state agency
with Medicare program re
requirements set forth at 4

nfusion and difficulty with decision-making. Based on its
determined that Petitioner was not in substantial compliance
quirements, including, most significantly, the abuse prevention
2 C.F.R. § 483.13(b) and (c). According to the state agency,

Petitioner’s noncompliance posed immediate jeopardy to the health and safety of R1.
The state agency also found that the facility abated the immediate jeopardy on March 31,
2011, based on the facility’s corrective action plan. After a revisit survey on June 1,

2011, the state agency dete

rmined that the facility achieved substantial compliance with

Medicare participation requirements as of April 27, 2011.

Based on the state agency

’s findings, on April 18, 2011, CMS imposed a per-instance

CMP of $5,000, denied payment for new Medicare and Medicaid admissions (DPNA)
effective May 3, 2011, and, as required by statute, denied approval of the facility’s
NATCEP for two years. CMS later rescinded its DPNA because the facility had
achieved substantial compliance prior to the effective date of that enforcement remedy.

' The Nampa Police Department conducted a brief investigation but did not charge R1’s

male acquaintance with a

crime or take any further action.
Petitioner requested a hearing to challenge the state agency’s finding of noncompliance at
an immediate jeopardy level and CMS’s enforcement remedies. I held a hearing from
March 5-8, 2012, in Boise, Idaho, where I admitted CMS Exhibits (CMS Exs.) 1-25 and
27-32 as well as Petitioner’s Exhibits (P. Exs.) 1-37. Each party also presented testimony
from several witnesses. A transcript of these proceedings (Tr.) is incorporated into the
record, subject to the minor typographical changes already provided to the parties. Each
party has submitted a post-hearing brief (Br.) and reply brief (Reply Br.).

II. Statutory and Regulatory Framework

The Social Security Act (Act) establishes the requirements that a long-term care facility
must meet to participate in the Medicare and Medicaid programs, and authorizes the
Secretary of Health and Human Services (Secretary) to promulgate regulations
implementing those statutory requirements. Act §§ 1819, 1919.7 Specific Medicare
participation requirements for long-term care facilities are at 42 C.F.R. Part 483. A long-
term care facility must remain in substantial compliance with program requirements to
participate in Medicare. 42 C.F.R. § 483.1(b). “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 minimal harm.

42 C.F.R. § 488.301. By contrast, “noncompliance” means “any deficiency that causes a
facility not to be in substantial compliance.” Jd. A “deficiency” is a violation of a
statutory or regulatory participation requirement. Id.

The Act authorizes the Secretary to impose enforcement remedies against a long-term
care facility for failure to comply substantially with the federal participation
requirements. The Secretary may not continue Medicare payments to a long-term care
facility for more than six months after the facility is first found not to be in substantial
compliance. Act § 1819(h)(2)(C). Ifa facility does not return to substantial compliance
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. Act
§ 1819(h)(2)(D).

The Secretary has delegated to CMS and the states the authority to impose remedies
against a long-term care facility not in substantial compliance with program participation
requirements. State agencies survey facilities on behalf of CMS to determine whether the
facilities comply with federal participation requirements. 42 C.F.R. §§ 488.10-.28,
488.300-.335. The regulations specify the enforcement remedies that CMS may impose

> The Act, as amended, is available at http://www.ssa.gov/OP_Home/ssact/ssact.htm.
On this website, each section of the Act contains a reference to the corresponding chapter
and code in the United States Code.
if a facility is not in substantial compliance with Medicare requirements. 42 C.F.R.
§ 488.406.

CMS may impose a per-day CMP for the number of days a facility is not in substantial
compliance or a per-instance CMP for each instance of the facility’s noncompliance.

42 C.F.R. § 488.430(a). A per instance CMP, which CMS imposed in this case, may
range from $1,000 to $10,000, and the range is not affected by the scope and severity of
the facility’s noncompliance. 42 C.F.R. § 488.438(a)(2).

A long-term care facility may request a hearing before an administrative law judge (ALJ)
to challenge a noncompliance finding and enforcement remedies. Act §§ 1128A(c)(2),
1866(h); 42 C.F.R. §§ 488.408(g), 498.3(b)(13). The hearing before an ALJ is de novo.
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 (2001); Anesthesiologists Affiliated, DAB CR65 (1990), aff'd, 941 F.2d 678
(8th Cir. 1991). A facility may 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 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 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); see Hillman Rehab. Ctr., DAB No. 1611 (1997), aff'd, No. 98-3789,
1999 WL 34813783 (D.N.J. May 13, 1999).

III. Issues
The issues before me are:

1. whether Petitioner was in substantial compliance with the abuse prevention
requirements at 42 C.F.R. § 483.13(b)-(c);

2. if Petitioner was not in substantial compliance, whether its noncompliance
posed immediate jeopardy to the health and safety of its residents; and
3. if Petitioner was not in substantial compliance, whether the enforcement
remedies imposed are reasonable.

As discussed below, I find that Petitioner did not comply substantially with 42 C.F.R.

§ 483.13(b) and (c) because it failed to implement its abuse prohibition policy to assess
certain residents for the potential risk of abuse and did not intervene in any way after
observing R1 — aphasic with inconsistent communication skills and levels of cognitive
ability — and a male acquaintance engaging in intimate activity over a prolonged period.
Petitioner’s noncompliance based on these deficiencies is a sufficient basis for the
enforcement remedies imposed. I need not and therefore do not address the issue of
whether R1’s male acquaintance did, in fact, abuse R1 sexually on March 21, 2011 or
whether R1 consented to that intimate activity.

IV. Findings of Fact, Conclusions of Law, and Discussion

I make five findings of fact and conclusions of law (FFCL) to support this decision. Each
FFCL is set forth as a separate heading in bold and italic type, followed by a discussion
for that FFCL.

1. The facility had policies and procedures prohibiting abuse of its residents,
but did not implement those policies and procedures in its care of R1.

Section 483.13 requires that the facility develop a written abuse prohibition policy.

42 C.F.R. § 483.13(c). Consistent with this requirement, the facility developed “A Guide
to Abuse Prevention,” which includes policies and procedures prohibiting abuse and also
establishing report and investigation procedures. See CMS Ex. 14.° The facility policy
states, in relevant part, that “‘[r]esidents at greater risk for abuse and neglect will be
assessed by the facility.” CMS Ex. 14, at 4. Under the policy, the facility will also
evaluate residents with specified characteristics to determine “the potential to be at
greater risk for abuse and neglect.” Jd. at 4.2. Among the stated characteristics are
“{njonverbal residents or other sensory deficits.” Jd. The policy further states that
“{g]reater risk residents will be identified through the RAI [resident assessment
instrument] process.” Jd. at 43. By regulation, a comprehensive assessment using the
RAI must include, among other things, a “cognitive pattern” evaluation, and the facility

> CMS did not challenge any substantive provisions of the facility’s abuse prohibition
policy. Accordingly, I accept for the purposes of this decision that the policy sufficiently
complies with regulatory requirements.
must perform an RAI-based assessment once each year.* 42 C.F.R. § 483.20(b). The
comprehensive assessment utilizing the RAI must be used for a resident’s plan of care.
Id. § 483.20(d).

The facility policy also states that certain “staff advocates,” specifically social services,
“will be assigned to monitor and identify resident abuse or the potential for abuse and
neglect.” CMS Ex. 14, at 495. In addition, the policy requires staff to report any
instance of abuse or suspected abuse to the DON. Jd. at 12 §§ 2,4. The DON, in turn,
must “immediately examine the resident following notification of the incident.” Jd. at 12

46.

The parties do not dispute that R1 was a “nonverbal resident” for all times relevant to this
case. CMS Br. 10; P. Br. 2. By its own policy, the facility had to evaluate R1 for the
potential to be at greater risk for abuse. CMS Ex. 14, at 42. The facility’s records,
however, do not show that it ever performed such an evaluation prior to the March 21,
2011 incident. In addition, Petitioner does not cite any contemporaneous clinical notes
showing the facility performed such an evaluation during the RAI process. Rather,
Petitioner offers an empty claim by its DON, years after the fact, that its staff evaluated
R1 during R1’s initial RAI process in 2008 and determined that she was not at greater
risk for abuse. See Tr. 879-80. But without any clinical notes supporting its evaluation
or determination, the self-serving testimony that the facility carried out its policy is not
sufficient evidence that the facility performed the evaluations as its policy required. See
Western Management Corp., DAB No. 1921 at 52 (2004) (“[A] factfinder is not obligated
to indulge in such speculation and is entitled to assume, absent contrary evidence, that a
resident’s medical records accurately reflect the care and services provided (or not
provided).”).

Moreover, the DON testified that she determined during the RAI process, albeit without
documenting, that R1 was not at greater risk for abuse based on R1’s ability to “make her
needs known” and having “the capability of moving away from the visitor, anytime she
wanted to.” Tr. 880. The DON’s testimony, however, places the burden on R1 to protect
herself (by “moving away from the visitor’’) and act as her own advocate (by “making her
needs known”) if she was being abused. In doing so, the DON upends the role of the
facility to protect R1 from abuse in the first instance. See 59 Fed. Reg. 56,116, 56,130
(Nov. 10, 1994) (“Our obligation is to protect the health and safety of every resident,
including those that are incapable of perception or are unable to express themselves.”).
Participation requirements make the facility more than a passive entity waiting for R1 to
come forward with reports of abuse and, meanwhile, protect herself from potential abuse.

* The facility must also assess each resident on a quarterly basis using the “quarterly
assessment instrument” specified by the state agency. 42 C.F.R. § 483.20(c). Here, it
appears that the facility used the RAI during the quarterly assessments as well as the
annual assessments of R1. See generally CMS Ex. 23 (collected assessment records).

See 42 C.F.R. § 483.13(c) (requiring facility to develop and implement policies that
prohibit abuse, and not merely respond to reports of abuse).

This record also shows that facility staff had to “anticipate needs” for R1, to which she
would nod affirmative or negative responses. CMS Ex. 18, at 1-59. But nothing shows
that staff anticipated any needs related to the intimate activity between R1 and her male
acquaintance, including determining whether she could consent or even whether she
needed privacy. It is disingenuous, therefore, for the DON to assert that R1 could “make
her needs known” and so was not at greater risk of abuse because, presumably, she could
alert the DON to potential abuse. See Tr. 880. There is a significant difference between
R1 making her needs known as it relates to hunger, thirst, pain, sleep, and so on — her
basic activities of daily living — and to express her needs related to potential abuse.*> See
CMS Ex. 30, at 2-3 (declaration of expert witness describing communication skills
needed to convey consent to intimate activity). Alternatively, R1 could not
spontaneously tell the nursing staff that she wanted privacy to engage in the intimate
activity. See CMS Ex. 30, at 4.

Relevant clinical notes also show that R1 did not always understand facility staff, that
staff could not always understand R1, and that her responses to questions were
“inconsistent” and “not reliable.” See CMS Ex. 23, at 98 (quarterly minimum data set
(MDS) showing R1 was “sometimes understood” and “usually understands”); CMS Ex.
19, at 5 (notes of social worker, stating that R1’s “yes/no responses” were “inconsistent”
and “not reliable.”); see also id. at 3 (same). In addition, many RAI-based assessments
showed that R1 had “moderately impaired” cognitive skills for daily decision-making.
See CMS Ex. 23, at 63, 75, 87,97. The facility’s roster-sample matrix listed R1 as
having “cognitive impairment.” CMS Ex. 21, at 2. Also, the social worker noted that it
was “diff[icult] to accurately assess cog[native] status [secondary to] having aphasia
....” CMS Ex. 19, at 3; see id. at 4 (“Not able to accurately assess knowledge of place,
[or the] complete date.”). R1 also had a prolonged history of urinary tract infections

> R1’s medical record shows she would respond by nodding when the staff anticipated
her needs. See, e.g., CMS Ex. 18, at 3 (“[R1] able to make needs known by pointing to
things she wants - or answering by nodding head to yes/no questions.”). The record also
shows R1 could use a communication board to convey her needs to facility staff. CMS
Ex. 19, at 3. But nothing in the record shows that R1 had the ability or necessary tools to
communicate the much more subtle notions involved in determining whether she was in
an intimate relationship and whether she was a willing or unwilling participant.
(UTIs), which contributed, at times, to “some confusion” and “processing problems.”
See CMS Ex. 18, at 2, 26-32.°

The DON testified that there “has to be other areas of concern, not just being hard of
earing or non-verbal” to be at “greater risk” for abuse. Tr. 879. Being “moderately
impaired” for daily decision-making, having difficulty understanding caretakers, having
difficulty being understood by others, and having a history of UTIs associated with
“confusion” should have been additional “areas of concern” that the DON considered in
er evaluation, but no documentation or testimony shows that she did. Thus, the DON’s
basis for determining that R1 was not at greater risk for abuse, even if it had been
documented, was haphazard and incomplete.’ Accordingly, the facility staff failed to
evaluate R1 in accordance with its abuse prohibition policy.

The required evaluations became even more critical once facility staff knew that R1 and
er male acquaintance were engaging in intimate activity. The exact date of when the
intimate activity began is not material because, as is clear from the record, the activity
ad been going on with staff knowledge for a “long time,” at least one year prior to the
March 21, 2011 incident. CMS Ex. 20, at 8-13. At the point the intimate activity began,
the situation had potential for actual abuse. R1 was vulnerable because of her
communication deficiencies and impaired decision-making abilities, which made it
difficult for staff to assess her cognitive status. See CMS Ex. 19, at 3-5. There was no
apparent manner by which R1 could have communicated complex and intimate needs and
desires related to her activity with her male acquaintance. Moreover, her responses to
simple questions were “inconsistent” and “not reliable,” adding to the uncertainty of her

® Petitioner argues that R1 only had UTIs early on in her stay at the facility, and the UTIs
were resolved by the time R1 began the intimate activity with the male acquaintance. P.
Br. 3. Petitioner overlooks the progress note of “chronic UTI” on July 30, 2010, which
was within the time the intimate activity was occurring, and reasonably shows that staff
were still cognizant that R1’s history of UTIs remained an area of concern. CMS Ex. 18,
at 2. In any event, the abuse prohibition policy was not triggered upon the intimate
activity beginning, but upon R1 being a resident of the facility, and R1’s history of UTIs
and confusion was another warning sign the facility overlooked in recognizing the
potential for abuse, even before R1 began the intimate activity with the acquaintance.

7 Petitioner also argues that the nurses’ daily interaction with R1 gave them foundation
to determine whether she was at greater risk for abuse. P. Reply Br. 2. Again, nothing in
R1’s medical record prior to March 21, 2011 documents the scope of the interaction
(from an assessment perspective) or shows exactly how the nurses’ interaction with R1
provided an appropriate evaluation of whether R1 was at greater risk for abuse. I do not
give any weight to assertions of facility staff made during the pendency of this case that
have no support in the medical records contemporaneous with the incident at issue.
consent absent some level of evaluation. Jd. at 5. While the MDS noted that R1 was
“moderately impaired” for decisions related to daily activities (CMS Ex. 23, at 63, 75, 87,
97), it is reasonable that R1 would have also been impaired in making more complex
decisions, such as the decision to engage in intimate activity. The facility certainly
should have recognized that being cognitively impaired for decisions related to her
activities of daily living might also mean that R1 was impaired for decision-making in
other areas of her life as well. Petitioner’s attempt now to downplay the importance of
the MDS by arguing that it did not provide enough information to determine whether R1
could consent (P. Br. 10) actually underscores the need for the facility to provide a
thorough evaluation of R1’s cognitive status in light of the information revealed in the
MDS, the other clinical notes showing R1’s mental and communication deficiencies, and
knowledge of R1’s intimate activity with her male acquaintance. As Petitioner concedes,
the MDS alone, and therefore the RAI process alone, could not be a sufficient basis to
determine whether R1 consented to the intimate activity with her acquaintance. It is
therefore inconsistent for Petitioner to claim that it evaluated R1 during the RAI process
and determined she was not at greater risk for abuse (Tr. 880), but argue that the MDS,
which documents the RAI process, is not sufficient to conclude whether R1 could and did
consent to the intimate activity (P. Br. 10). Whether R1 could consent to intimate activity
was critical to whether R1 was at greater risk for abuse. Accordingly, Petitioner’s
position on these issues is not persuasive.

Petitioner also argues that the length of R1’s relationship with her male acquaintance
should be considered, and, if it is considered, that it demonstrates that there was no
potential for abuse. P. Br. 13. But Petitioner’s argument overlooks that even long-
standing friends can be abusive and R1 may have, at any time, determined she no longer
wanted to engage in such activity with her male acquaintance. In fact, shortly after the
March 21, 2011 incident, the social worker noted that R1 “was consistent” that she no
longer wanted to engage in intimate activity with her male acquaintance.’ CMS Ex. 19,
at 6; see also CMS Ex. 13, at 13 (statement of R1’s daughter, explaining that when told
she would be given privacy, R1 “adamantly shook her head in a negative response,” and
that “each response indicated that it was not her wish to be left alone with [her male

® Notes from other facility staff state that R1 told one of her daughters that the activity
was consensual and that she wanted to still receive visits from her male acquaintance.
See, e.g., CMS Ex. 13, at 22 (statement from DON describing conversation with R1’s
daughter wherein R1 conveyed to her daughter that “she did want [her male acquaintance
to continue to visit her”); but see id. at 29 (psychiatric evaluation report, stating that R1
“indicates this was clearly her choice to engage in such activity . . . . She is also clear that
if [her son] does not want her to see [her male acquaintance] anymore, that this will be
okay with her.”). The facility prohibited the male acquaintance from further visits with
R1, showing that the staff understood R1 no longer wanted the activity to continue. See
CMS Ex. 20, at 4-5.

10

acquaintance]’”). Because the facility continually failed to follow its abuse prohibition
policy, it could not have otherwise known of R1’s desire to stop the intimate activity.

Moreover, Petitioner summarily concludes that the situation prior to March 21, 2011 was
not abusive. Even if that is true, the facility had to recognize, under its own policy,
situations that had to the potential for abuse, and the circumstances here — intimate
activity involving a nonverbal resident with inconsistent responses to simple questions,
trouble understanding others, and, at times, “moderate impairment” in decisions for daily
activities — certainly raised that potential. See CMS Ex. 14, at 495. Prior to the March
21 incident, however, the facility failed to recognize the situation as having the potential
for abuse. The facility’s nursing staff stated that they were embarrassed about walking in
on RI and her male acquaintance, and would immediately leave the room if they
happened upon the two engaged in intimate activity. CMS Ex. 20, at 9. The nursing
staff’s bashfulness related to the intimate activity involving a resident with severe
communication deficiencies and difficulty making decisions related to her daily
activities, let alone intimate activity, does not meet the standard of care the facility should
have provided, and shows another failure to follow the facility’s abuse prevention policy.

Also under its policy, the facility “staff advocates” were obliged to monitor R1 and
identify the potential for abuse and neglect. CMS Ex. 14, at 495. The policy states that
“social services” represents the “staff advocates,” but it is not clear whether social
services is the only staff advocates or not. In any event, the social worker at the facility,
Ronald Tryon, noted repeatedly in his progress notes that R1 was “inconsistent [with]
nodding head, comm[unication] board,” that staff had to anticipate R1’s needs, and that
staff had to offer R1 choices when appropriate. CMS Ex. 19, at 3-6. These notes
certainly do not represent a clinical evaluation of R1’s cognitive function, but they
nevertheless show that R1 was not effective with her communication and suggest that
there may have been cognitive impairment. See, e.g., id. at 5 (“Needs reminders, cuing;
family helps [with] dec[ision] making.”); see also Tr. 821 (“To be able to take in and
comprehensively solve problems in these situations, could be challenging for [R1].”).
Intimate activity, when coupled with the social worker’s documented knowledge of R1’s
possible cognitive impairment should have been identified as a situation with the
potential for abuse. The social worker did not document R1’s intimate activity with her
acquaintance until after the March 21, 2011 incident. In fact, the social worker
acknowledged that he did not know about the intimate activity before the incident
occurred. Tr. 809, 815. But as the facility’s “staff advocate” the social worker should
have been aware of the situation soon after it started, and certainly well before the March
21, 2011 incident. See Tr. 792 (testimony of social worker, stating “[p]art of my job
description is to know what’s going on with all my residents”). The facility policy placed
that obligation squarely on social services; knowledge of the situation was not based on a
clinical evaluation or other medical assessment, but rather on an understanding of the
circumstances of R1’s daily life that could have led to the potential for abuse. The social
worker even discussed R1 with nursing staff, who had knowledge of the intimate activity,

11

on a regular basis. Tr. 662. Despite these discussions, knowledge of the intimate activity
never left a small group of CNAs (Tr. 644), marking a systemic failure in effective
communication and calling into question the accuracy of the social worker’s knowledge
of R1’s psycho-social status. There can be no doubt that engaging in intimate activity
with a male acquaintance is certainly within the purview of social situations about which
the social worker should have known. By not carrying out the duties of the “staff
advocate,” the social worker failed to identify the intimate activity along with R1’s
communication and cognitive issues as a situation that was potentially abusive, and, in
turn, failed to implement the facility policy.

Petitioner adamantly argues that the situation did not have the potential to be abusive
because R1 consented to the activity and facility staff understood the intimate activity as
consensual.’ Petitioner’s argument is not persuasive. Petitioner relies on assessments,
medical determinations, and staff assertions made after the March 21, 2011 incident. The
central issues before me, however, relate to the facility’s inaction prior to that incident.
While these later assessments may show that R1 consented to the intimate activity, it
does not absolve the facility from its failure to perform those evaluations when it first
learned of the intimate activity, as its own policy required. See CMS Ex. 14, at 4 4§ 3, 5.

Also, Petitioner dismisses any possible deficiencies in R1’s cognitive abilities through
conclusory assertions. There is no evidence showing R1 actually consented or had the
ability to consent to the intimate activity prior to March 21, 2011. Petitioner relies on the
statements of nursing staff that observed R1 grabbing the male acquaintance’s hand when
he removed it from her chest, placed her hand on the male acquaintance’s thigh, and, at
other times, “seemed to be” consenting. See CMS Ex. 20, at 8, 10, 11. Appearances —
especially when those appearances manifest themselves in settings of intimacy, potential
embarrassment, and unclear communications — can be deceiving, and without fulfilling
its obligation to protect R1 from potential abuse by evaluating R1 and the situation as a
whole, the facility could not summarily dismiss the activity as consensual. See CMS Ex.
14, at 4 4 5 (requiring facility to “monitor and identify . . . the potential for abuse and
neglect”). Here, the lack of any clinical evaluation or notes means there was simply no
way of concluding with any certainty prior to March 21, 2011, whether R1 had the
cognitive ability, communication skills, and intent to consent to intimate activity with the
male acquaintance.

Moreover, the manner in which the facility handled the March 21, 2011 incident also
highlights a breakdown in implementing its abuse prohibition policy. The CNA that

° Petitioner’s position implies that whether R1 considered herself abused is relevant to
whether the facility had to protect R1 from a potentially abusive situation. However, the
regulatory drafters rejected such a position many years ago. See 59 Fed. Reg. at 56,130.
The facility’s obligation to prevent abuse of vulnerable residents applies without regard
to a resident’s perception of the activity. Id.
12

observed the intimate activity in the dining room that day immediately left without
stopping the activity. CMS Ex. 20, at 8; Tr. 639. Had the CNA been properly trained to
recognize potentially abusive situations — per facility policy — she should have
promptly reported the incident to the DON. See CMS Ex. 14, at 1294. Rather, the CNA
discussed the incident with other CNAs, and, only after fifteen minutes had passed, she
reported it to the DON. Tr. 627. After the DON learned of the incident, she took no
immediate action, even though she acknowledged that she was unsure whether it was
abuse or not. Tr. 869. The DON directed staff to notify the social worker, but never
attempted to stop the activity. By policy, the DON had to “immediately examine [R1]
following notification of the incident.” CMS Ex. 14, at 12 46. Whether or not the CNA
reported the incident as potential abuse was not the “trigger” of the DON’s responsibility
under the policy and regulations to recognize the potential for abuse. Also, because she
was unsure whether R1 was being abused at that moment, and based on her knowledge of
R1, the DON should have recognized the situation as having the potential for abuse. Tr.
869; CMS Ex. 14, at 7. Instead, the DON took no action other than to refer the situation
to the social worker, contrary to the facility policy on handling reported instances of
possible abuse. CMS Ex. 14, at 12.

In sum, the facility repeatedly failed to carry out several provisions of its abuse
prohibition policy. The facility staff reached conclusory determinations about R1, and
ignored or completely failed to recognize a situation with the serious potential for abuse.
Even when a CNA reported the situation to facility administrators, they were uncertain of
the course of action the facility policy mandated to ensure the safety of R1.

2. The facility was not in substantial compliance with 42 C.F.R. § 483.13(c)
because it did not implement its abuse prohibition policies.

Section 483.13 requires that the facility “implement” its policy prohibiting abuse.

42 C.F.R. § 483.13(c); Columbus Nursing & Rehab. Ctr., DAB No. 2247 at 11 (2009).
The Board has said that, when reviewing the implementation of a facility’s abuse
prohibition policy, the focus is on “whether the facts . . . surrounding each instance
demonstrates an underlying breakdown in the facility’s implementation of the provisions”
of the anti-neglect and anti-abuse policies. Oceanside Nursing & Rehab. Ctr., DAB No.
2382 at 11 (2011) (citing Columbus Nursing, DAB No. 2247 at 27).

Here, as discussed above, Petitioner did not implement its abuse prohibition policy after
many opportunities to do so. Facility staff never evaluated R1 for the potential to be at
greater risk for abuse even though she was “nonverbal,” and the facility policy required
an evaluation for such residents. CMS Ex. 14, at 442. R1 was a resident of Petitioner’s
facility for approximately three years before the March 21, 2011 incident occurred; the
number of RAI-based assessments was significant. See CMS Ex. 23 (providing 11
completed MDS forms). Yet, the facility never determined with certainty whether R1
was or was not at greater risk for abuse based on her aphasia and cognitive impairments

13

related to her daily activities. Also, at least one year passed since the facility had become
aware of the intimate relationship with R1 and her male acquaintance and the March 21,
2011 incident, but the facility staff still did not evaluate R1 for the potential to be at
greater risk for abuse, and even failed to recognize during that time that the situation had
the potential for abuse, contrary to facility policy. CMS Ex. 14, at 4 92,5. Providing
vague testimony years later that the facility followed its policy despite there being no
contemporaneous documentation to that effect, as Petitioner does here (P. Br. 18-19
(citing Tr. 879-80)), does not show compliance with the facility policy, especially when
records show a vulnerable resident, specifically identified in the policy as a resident
needing an evaluation of her abuse risk, engaged in repeated intimate activities while
staff intentionally turned their backs. The staff knew of the situation, knew of R1’s
status, and did nothing. The facility policy clearly requires that the facility do something
with a resident in R1’s situation — “evaluate,” “identify,” “monitor,” “assess” — and
doing nothing, i.e., recording no evaluation, no identification, no monitoring, no
assessment, shows an underlying breakdown in the implementation of that policy.

99 66, 99 66,

Petitioner did not “implement” its abuse prohibition policy with regard to its care of R1,
and therefore was not in substantial compliance with 42 C.F.R. § 483.13(c).

3. The facility was not in substantial compliance with 42 C.F.R. § 483.13(b)
because it did not timely ensure R1 was free from abuse.

A facility must ensure that its residents are free from abuse of any kind. See 42 C.F.R.

§ 483.13(b). The Board has explained that actual abuse need not occur in order to show
that the facility failed to protect and promote a resident’s right to be free from abuse.
Western Care Management, DAB No. 1921 at 13. As explained above, Petitioner did not
identify the potential for abuse with regard to R1’s intimate activity with her male
acquaintance. R1 had serious deficiencies in her communication abilities, and her mental
status was not consistent. CMS Ex. 23, at 98; CMS Ex. 19, at 3-5. By regulation, the
facility had to ensure that R1 was not being abused in any way, including by her
acquaintance. 42 C.F.R. § 483.13(b); Holy Cross Village at Notre Dame, Inc., DAB No.
2291 at 7 (2009) (concluding that a facility violated section 483.13(b) if it “failed to
protect residents from reasonably foreseeable risks of abuse”). Even though staff
observed R1 and her male acquaintance as smiling when engaged in what “seemed to be
consensual” intimate activity (CMS Ex. 20, at 8-11), the facility did nothing to ensure
that R1 was not subject to abuse and could, at any time, be free from unwanted contact
with her male acquaintance. The facility had no system in place for R1 to convey to staff
that she no longer wanted to be involved in the intimate activity with the male
acquaintance, in part because the facility failed to recognize the potential for abuse.
Certainly, a non-verbal resident with uncertain cognitive function, difficulty
understanding others, and who engaged in intimate activity created a “reasonably
foreseeable risk of abuse” that the facility had to address and ensure was not, or did not
become, actual abuse. Holy Cross Village, DAB No. 2291 at 7; see also Western Care
14

Management, DAB No. 1921 at 15. Because Petitioner failed to recognize the potential
for abuse, it had no way of ensuring that R1 was free from abuse and did not substantially
comply with 42 C.F.R. § 483.13(b).

Petitioner argues that this case is similar to Meadville Convalescent Home, DAB CR1434
(2006), wherein I determined that the facility was in substantial compliance with section
483.13(b) because the record did not support CMS’s claim that a resident lacked the
cognitive ability to consent to sexual activity with another resident. But in Meadville,
CMS concluded that the resident did not have the capacity to consent based solely on the
MDS form. DAB CR1434 at 8-9. Here, however, CMS did not reach a conclusion about
R1’s actual capacity to consent, but demonstrated that the facility took no steps to ensure
that the intimate activity was consensual or that R1 could even consent to it, contrary to
regulatory standards. CMS also relies on clinical documentation and notes other than the
MDS, though the MDS is still relevant here. Also in Meadville, the facility immediately
stopped the sexual activity, following its policy and contributing to its overall substantial
compliance. DAB CR1434 at 13. But here, as stated above, the facility did nothing to
intervene even when its own policy required it. Therefore, I do not find my prior
decision in Meadville to be persuasive to the outcome of the case currently before me.

4. The immediate jeopardy determination was not clearly erroneous.

By regulation, an immediate jeopardy determination must be upheld unless it is clearly
erroneous. 42 C.F.R. § 498.60(c)(2). Under this standard, CMS’s determination of the
scope and severity of the facility’s noncompliance is presumed to be correct, and
Petitioner’s burden to prove it is clearly erroneous is a “heavy one.” Mississippi Care
Ctr. of Greenville, DAB No. 2450 at 15 (2012) (citing Maysville Nursing & Rehab.
Facility, DAB No. 2317 at 11 (2010)).

The facility’s policy, as required by regulation, must prohibit abuse of residents, not just
provide means of reacting to instances of abuse. See 42 C.F.R. § 483.13(c); CMS Ex. 14,
at 4. As explained above, the facility did not evaluate R1 for the potential to be at greater
risk of abuse, which violated its abuse prohibition policy. Had R1 not been involved in
intimate activity with a male acquaintance, the failure to evaluate R1 may have been a
less severe level of noncompliance. Certainly, repeatedly not evaluating R1, who had a
characteristic indentified as needing an at-risk assessment, was serious, especially when
the resident had other factors contributing to her overall risk of abuse. But Petitioner’s
failure to implement its policy became critical when facility staff observed R1 and her
male acquaintance involved in intimate activity, but did nothing in response. The staff
did not even communicate with the appropriate members of the facility for more than one
year that R1 was engaging in such activity. The likelihood of R1’s suffering serious
harm by way of repeated sexual abuse was very apparent, and certainly “reasonably
foreseeable,” but the facility never conclusively determined whether R1 was a knowing
and willing participant in the activity. The facility staff reached assumptions about R1’s
15

consent based on their brief observations of the activity. But the facility never broached
the subject with R1, and certainly never assessed R1 to determine whether she could even
comprehend the nature of what she was doing. Moreover, the facility repeatedly failed to
monitor R1 and identify the situation as one that had the potential for abuse.

The implementation of the facility’s policies broke down in a serious and systematic way,
creating a situation that had the likelihood of serious harm to R1 and residents in her
situation. Petitioner has come forward with evidence showing that R1 may have
consented to the intimate activity, but none of this evidence addresses the facility’s
response (or lack thereof) to the activity during the year it was occurring. To ignore a
situation for that long, then offer evidence after the fact that it was acceptable does not
mitigate the severity of failing to implement the policy in the first place. Petitioner’s “no
harm, no foul” position cannot support an argument that CMS was clearly erroneous in
its determination of immediate jeopardy. The facility inexplicably took no action while
the reasonable likelihood of abuse existed and was known, though not understood, by
staff. Moreover, “immediate jeopardy” does not require actual harm, but only the
likelihood of serious harm, which was certainly present while Petitioner ignored the
intimate activity between R1, a clearly a vulnerable resident, and her male acquaintance
for more than one year.

5. The enforcement remedies imposed are reasonable.

To determine whether the enforcement remedies, including the $5,000 per-instance CMP
and NATCEP denial are reasonable, I apply the factors listed in 42 C.F.R. § 488.438(f):
(1) the facility’s history of noncompliance; (2) the facility’s financial condition; (3)
factors specified in 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 listed in 42 C.F.R.

§ 488.404 include: (1) the scope and severity of the deficiency; (2) the relationship of a
leficiency to other deficiencies resulting in noncompliance; and (3) the facility’s prior
istory of noncompliance in general and specifically with reference to the cited
leficiencies.

In reaching a decision on the reasonableness of the CMP, I must consider whether the
evidence supports a finding that the amount of the CMP is at a level reasonably related to
an effort to produce corrective action by a provider with the kind of deficiency found, and
in light of the above factors. I am neither bound to defer to CMS’s factual assertions, nor
free to make a wholly independent choice of remedies without regard for CMS’s
discretion. Barn Hill Care Center, DAB No. 1848, at 21 (2002).

The per-instance CMP of $5,000 is at the middle penalty range for any scope and severity
level of noncompliance. See 42 C.F.R. § 488.438(a)(2) (stating the range for per-instance
CMPs is $1,000 to $10,000). Overall, the per-instance CMP is modest when considering
16

the possible penalty CMS could have imposed. Petitioner has not presented evidence of
any financial hardship limiting is ability to pay the CMP imposed. While Petitioner has a
history of noncompliance, none are at an immediate jeopardy level, and CMS has never
imposed an enforcement remedy against Petitioner. CMS Ex. 10. The highest scope and
severity level of noncompliance in these prior incidents was “G,” meaning isolated harm
that was not immediate jeopardy. CMS cited Petitioner at a G level on four prior
occasions. CMS Ex. 10, at 2, 4.

I find that the facility here is culpable for the deficiency because it did not follow its own
policy to recognize a situation that had the potential for abuse, and because it failed to
take any action upon learning R1, a vulnerable resident, was involved in an intimate
relationship with a male acquaintance. The facility’s conduct and corresponding
inaction show indifference to the safety of R1, who had well-documented difficulty
communicating, understanding, and making decisions related to daily living. Staff
intentionally avoided the situation and failed to recognize that it had the potential for
serious actual harm by way of abuse. As explained above, the severity in the likelihood
of harm to R1 because of the facility’s failure to take any action when required was
certainly immediate jeopardy, and shows a complete breakdown in the staff
understanding and implementing abuse prevention policy and procedures. Based upon
the severity of Petitioner’s noncompliance and the fact that the situation would not have
been recognized or addressed, as well as the facility’s culpability by being indifferent to
the situation ripe for abuse, the mid-range CMP is reasonable. Also, denial of
Petitioner’s NATCEP is mandatory when a CMP is $5,000 or above, meaning that I have
no authority to reverse or otherwise modify that enforcement remedy. See Act

§ 1819(f)(2)(B). I therefore find the penalties imposed are reasonable.

V. Conclusion

For all of the foregoing reasons, I find that Petitioner failed to implement its written
abuse prohibition policies and procedures, and was therefore not in substantial
compliance with 42 C.F.R. § 483.13(c). Lalso find that Petitioner did not recognize the
situation that had a reasonable potential for abuse, did not ensure its resident was free
from abuse, and therefore was not in substantial compliance with 42 C.F.R. § 483.13(b).
Petitioner failed to meet its heavy burden of showing that CMS was clearly erroneous in
its determination of immediate jeopardy. Finally, the enforcement remedies that CMS
imposed are reasonable. Accordingly, I sustain CMS’s determinations and enforcement
remedies.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Steve McFarland, ACNP,
Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-842
Decision No. CR2631

Date: September 28, 2012

DECISION

Steve McFarland, ACNP (Petitioner), appeals the Medicare enrollment determination of
Palmetto Government Benefits Administration (Palmetto), a Medicare contractor, and
argues that Petitioner’s Medicare enrollment date should be effective from September,
2011. However, I grant the Centers for Medicare and Medicaid Services’ (CMS) motion
for summary judgment and find that Petitioner’s effective date of enrollment is February
27, 2012, with a retrospective billing period starting on January 28, 2012, which is based
on the date Palmetto received an enrollment Web application, February 27, 2012, from
Petitioner.

I. Background

On February 27, 2012, Palmetto received Web applications! from Petitioner including a
CMS-855I (Medicare enrollment form) and a CMS-855R (Medicare reassignment form).
CMS Ex. 3, at 1. The effective date requested on the Web applications was February 9,
2012. Id. On March 23, 2012, Palmetto notified Petitioner that Palmetto had completed

' This is the term used at various places in the record to describe an application
submitted electronically via the internet.
processing Petitioner’s applications and that he was now approved to bill the Medicare
program effective February 9, 2012. CMS Ex. 1, at 1.

Petitioner requested a reconsideration review through Petitioner’s delegated official, Ms.
Moore, who requested an earlier effective date. CMS Ex. 2. Ms. Moore alleged that a
“paper” enrollment application dated September 9, 2011, had been submitted for
Petitioner. Ms. Moore also alleged that two telephone calls were made to Palmetto to
check the status of Petitioner’s application: in December 2011, an unidentified clerk said
that the application was being processed; and in February 2012, an unidentified clerk said
there was no application on file. Jd. at 2-3. Ms. Moore submitted two documents in
support of the reconsideration request: a single page of an enrollment application bearing
Petitioner’s signature and the handwritten date “9/2/11” in the Certification Statement;
and an insurance certificate indicating Petitioner’s liability coverage was effective
September 1, 2011. Id. at 6, 7.

On May 29, 2012, in a reconsideration letter, Palmetto informed Petitioner that the
retrospective date had been adjusted to January 28, 2012, 30 days from the receipt date of
the Web applications on February 27, 2012. CMS Ex. 3, at 1. On June 7, 2012,
Petitioner filed a hearing request with the Civil Remedies Division. An
Acknowledgment and Initial Docketing Order was sent to the parties on June 26, 2012.
On July 26, 2012, CMS filed a Motion for Summary Judgment and brief (CMS Br.),
accompanied by four proposed exhibits (CMS Exs. 1-4). On August 30, 2012, Petitioner
filed his response (P. Response), which was a one-page letter. Absent any objection, I
admit all proposed exhibits into evidence.

II. General Authority

The Social Security Act (Act) authorizes the Secretary of the Department of Health and
Human Services (Secretary) to promulgate regulations governing the enrollment process
for providers and suppliers. Act §§ 1102, 1866(j); 42 U.S.C. §§ 1302, 1395cc(j). Under
the Secretary’s regulations, a provider or supplier that seeks billing privileges under
Medicare must “submit enrollment information on the applicable enrollment application.
Once the provider or supplier successfully completes the enrollment process ... CMS
enrolls the provider or supplier into the Medicare program.” 42 C.F.R. § 424.510(a).

A “provider or supplier must submit a complete enrollment application and supporting
documentation to the designated Medicare fee-for-service contractor,” and the application
should include “complete . . . responses to all information requested within each section
as applicable to the provider or supplier type.” 42 C.F.R. § 424.510(d)(1)-(2).

The effective date of enrollment for nonphysician practitioners is established as follows:

The effective date for billing privileges for a . . . nonphysician practitioner

. .. and nonphysician practioner organizations is the later of the date of
filing of a Medicare enrollment application that was subsequently approved
by a Medicare contractor or the date an enrolled . . . nonphysician
practitioner first began furnishing services at a new practice location.

42 CFR. § 424.520(d).
In addition, CMS permits limited retrospective billing, such that:

[NJonphysician practitioners . . . and nonphysician practitioner
organizations may retrospectively bill for services when a. . . nonphysician
practitioner or . . . a nonphysician practitioner organization have met all
program requirements, including State licensure requirements, and services
were provided at the enrolled practice location for up to—

(1) 30 days prior to their effective date if circumstances precluded
enrollment in advance of providing services to Medicare beneficiaries, or
(2) 90 days [in certain emergencies.]

42 C.F.R. § 424.521 (a).
III. Issue

The issue in this case is whether CMS had a legitimate basis for determining January 28,
2012 as the retrospective date for Petitioner’s Medicare billing privileges.

IV. Discussion

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

a. This case is appropriate for summary judgment.

CMS argues that it is entitled to summary judgment. The Departmental Appeals Board
(Board) explained the standard for summary judgment:

Summary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law. . . . The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of
material fact for trial and that it is entitled to judgment as a matter of

law. ... To defeat an adequately supported summary judgment motion, the
non-moving party may not rely on the denials in its pleadings or briefs, but
must furnish evidence of a dispute concerning a material fact — a fact that, if
proven, would affect the outcome of the case under governing law. . . . In
determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor.

Senior Rehabilitation and Skilled Nursing Center, DAB No. 2300 at 3 (2010) (citations
omitted). An Administrative Law Judge’s (ALJ) role in deciding a summary judgment
motion differs from his role in resolving a case after a hearing. The ALJ should not
assess credibility or evaluate the weight of conflicting evidence. Holy Cross Village at
Notre Dame, Inc., DAB No. 2291 at 5 (2009). The Board has further stated, “[iJn
addition, it is appropriate for the tribunal to consider whether a rational trier of fact could
regard the parties’ presentation as sufficient to meet their evidentiary burden under the
relevant substantive law.” Dumas Nursing and Rehabilitation, L.P., DAB No. 2347, at 5
(2010).

CMS argues that it is entitled to summary judgment because this case “presents no
genuine issues of material fact.” CMS Br. at 3. Petitioner has not disputed the material
fact in this case, specifically, that Palmetto received a Web enrollment application on
February 27, 2012. Therefore, I agree with CMS that summary judgment is appropriate.

B. Palmetto’s February 27, 2012 receipt of Petitioner’s enrollment
application necessarily determines Petitioner’s effective date and
retrospective billing date.

The effective date for enrollment for nonphysician practitioners, among others, is “the
later of the date of filing of a Medicare enrollment application that was subsequently
approved by a Medicare contractor or the date an enrolled . . . nonphysician practitioner
first began furnishing services at a new practice location.” 42 C.F.R. § 424.520(d)
(emphasis added). The “date of filing” is the date that the Medicare contractor “receives”
a signed provider enrollment application that the Medicare contractor is able to process to
approval. 73 Fed. Reg. 69,725, 69,769 (Nov. 19, 2008). It is undisputed that Palmetto
received an approvable enrollment Web application on February 27, 2012. Under the
regulations, Petitioner’s effective date is February 27, 2012, and his retrospective date is
January 28, 2012, 30 days before his enrollment application was received. 42 C.F.R. §§
424.520(d) and 424.521(a)(1).
Petitioner’s reconsideration request is based on a purported “paper” enrollment form
submitted in September 2011. To support his request for an earlier enrollment date,
Petitioner relies on a single page of an enrollment application bearing Petitioner’s
signature and the handwritten date “9/2/11” in the Certification Statement, and an
insurance certificate indicating Petitioner’s liability coverage was effective September 1,
2011. CMS Ex. 2 at 6, 7. Petitioner argues in his hearing request that a “paper”
enrollment application dated September 9, 2011 was sent to Palmetto and submitted prior
to the Web applications.’ Petitioner states:

To further investigate the ... paper Medicare application contact was made [sic]
the mailing service . . . the mailing service does not keep a log of the mailings for
each day . . . [t]he paper application was not mailed certified mail therefore there
is no tracking information.

Petitioner’s Response at 1.

Nothing that Petitioner submitted amounts to evidence sufficient to prove that Petitioner
mailed a paper enrollment application in September 2011 to Palmetto. Palmetto asserts
that it “never received any enrollment applications from Petitioner during September
2011 through January 2012, either ‘paper’ or otherwise.” CMS Br. at 5. CMS submitted
a declaration from Sandy Boyer, Provider Enrollment Manager at Palmetto. CMS Ex. 4.
Ms. Boyer declares that all documents and phone calls received by Palmetto are marked,
stored, and tracked with a sophisticated computer system. Jd. at 1-2. Ms. Boyer
conducted a comprehensive search of the computer system and could find no record of
Palmetto receiving any documents from Petitioner during September 2011 through
January 2012. Jd. at 3. Ms. Boyer also could find no records of any telephone calls
received on Petitioner’s behalf before May 11, 2012. Jd. The earliest documents Ms.
Boyer found were Petitioner’s February 27, 2012 Web applications. Id.

I note that Petitioner sent his reconsideration request by certified mail but did not, by his
own admission, mail the paper application in September 2011 by certified mail. CMS
Ex. 2, at 1. In the absence of evidence that Petitioner mailed his purported enrollment
application in September 2011 to Palmetto, and given the declaration from Ms. Boyer
that Palmetto never received this application, there are no grounds to disturb CMS’s
determination that Petitioner’s retrospective billing date is January 28, 2012.

> Although Petitioner’s hearing request relies on an enrollment application dated
September 9, 2011, Petitioner’s reconsideration request and the single page of an
enrollment application that accompanied the reconsideration request and bore Petitioner’s
signature was dated September 2, 2011. CMS Ex. 2, at 2, 7.
V. Conclusion

I conclude that it is undisputed that CMS received Petitioner’s Web applications on
February 27, 2012. Iam thereby obliged to find Petitioner’s effective date of enrollment
is February 27, 2012, with a retrospective billing period starting thirty days prior, on
January 28, 2012. Therefore, I grant CMS’s motion for summary judgment.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,

Complainant

Vv.

PS Investments, LLC d/b/a Air Park BP

Respondent.

Docket No. C-12-1126
FDA Docket No. FDA-2012-H-0887

Decision No. CR2629

Date: September 28, 2012

INITIAL DECIS.

ION AND DEFAULT JUDGMENT

lenter a default judgment against Respondent, PS Investments, LLC d/b/a Air
Park BP. The Center for Tobacco Products (CTP) filed an administrative

complaint against Respondent t
sufficient to justify the impositi
did not timely answer the comp
time within which to file an ans

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

at alleges facts and legal authority that are

on of a civil money penalty of $250. Respondent
aint, nor did Respondent request an extension of
wer.

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

failed to verify the age of a person purchasing
Federal Food, Drug, and Cosmetic Act (Act) and

its implementing regulations at 21 C.F.R. Part 1140. CTP seeks a civil money

penalty of $250.
On August 21, 2012, CTP served the complaint on Respondent by United Parcel

Service, as 21 C.F.R. §§ 17.5 and 17.7 provides. 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 Respondent to pay the full amount of the

proposed penalty. Respondent did not file an answer within the time provide

by

regul

Iam

ation.

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

CF.

appropriate here, and I conclude that it is merited based on the allegations of the

R. § 17.11(a). For that reason, I decide whether a default judgment is

administrative complaint and Respondent’s failure to answer them.

For purposes of this decision, I assume that the following facts alleged in the

com]

plaint are true. Specifically:

Respondent owns a business that sells tobacco products under the name of
Air Park BP. The business is located at 19230 Woodfield Road,
Gaithersburg, Maryland 20879.

On November 9, 2011, an FDA-commissioned inspector made observations
at Respondent’s place of business that included: the sale of cigarettes or
smokeless tobacco to a minor under the age of 18; and failure to verify the
identification of the purchaser by means of photo identification containing
the bearer’s date of birth.

On January 12, 2012, CTP issued a Warning Letter to Respondent that
recited the November 9, 2011 observations. The letter informed
Respondent that the observed facts constituted violations of regulations at
21 CFR § 1140.14(a) and (b), which prohibited sales of tobacco products to
individuals under the age of 18 and that required sellers of tobacco products
to verify the age of purchasers by means of photo identification containing
the bearer’s date of birth. The letter advised Respondent that failure to
correct the violations could result in the imposition of a civil money penalty
or other regulatory action by FDA.

The Warning Letter was delivered to Respondent. On January 17, 2012,
Mr. Chris Schwartz, who represented himself as Respondent’s Manager,
contacted CTP by telephone. Mr. Schwartz asserted that Respondent took
the allegations of noncompliance very seriously and stated that Respondent
would reply in writing to those allegations. However, no written reply was
received by CTP.

e On April 10, 2012, at about 11:21A.M. ET, an inspector observed a minor
under the age of 18 buy a package of Newport Kings cigarettes at
Respondent’s place of business.

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 November 9, 2011, and on April 10, 2012. On November 9,
2011, Respondent failed to verify the age of the purchaser. These actions and
omissions by Respondent constitute violations of law for which a civil money
penalty is merited. Therefore, I find that a civil money penalty of $250 is
permissible under 21 C.F.R. § 17.2.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Better Sunrise Corporation,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-12-638
Decision No. CR2628

Date: September 28, 2012

DECISION

Petitioner, Better Sunrise Corporation (Better Sunrise), applied for enrollment in the
Medicare program, but, according to the Centers for Medicare & Medicaid Services
(CMS), it was not capable of providing the services listed on its application. The
Medicare contractor, acting on behalf of CMS, therefore denied the application.
Petitioner now appeals, and CMS has moved for summary judgment.

For the reasons discussed below, I grant CMS’s motion.

Background

On July 27, 2011, Petitioner applied to the Medicare program as an independent
diagnostic testing facility (IDTF). In its enrollment application, Petitioner indicated that
it would provide certain types of sleep studies and polysomnography that must be
performed at the testing facility. CMS Ex. 1; see CMS Ex. 7 at 10. The Medicare
contractor, Wisconsin Physicians Service Insurance Corporation, denied the enrollment
application, finding that Better Sunrise did not qualify as an IDTF, because it was not
capable of performing the studies listed in its application. CMS Ex. 9.
Petitioner sought reconsideration. In a decision dated April 2, 2012, a contractor hearing
officer affirmed the denial. CMS Ex. 10. Petitioner timely appealed.

CMS moves for summary disposition. With its motion, CMS submits ten exhibits (CMS
Exs. 1-10).

As discussed below, Petitioner did not comply with my pre-hearing order. It belatedly
submitted its response to CMS’s motion (P. Br.), along with seven exhibits (P. Exs. 1-7).

Discussion

I Because no good cause justifies Petitioner’s failure to comply
with my prehearing order or its failure to respond timely to
CMS’s motion, it is subject to sanction under 42 C.F.R.

§ 498.69(b)(2).'

In a pre-hearing order, dated May 2, 2012, I directed the parties to file their prehearing
exchanges (exhibits, witness lists and declarations, pre-hearing briefs). My order also
gave a nonmoving party 30 days in which to respond to motions for summary disposition
and explicitly warned that I might impose the sanctions authorized by section
1128A(c)(4) of the Social Security Act if a party failed to comply with my order.
Acknowledgment and Initial Prehearing Order at 2, 5, 9 (4 1, 2, 8, 11, 22).? Among
other sanctions, section 1128A(c)(4) allows me to dismiss the action or enter a default
judgment.

CMS filed its submissions, including its motion for summary disposition, on June 5,
2012, as ordered. Petitioner, however, did not comply with my order; it did not file its
pre-hearing exchange on or before the July 10, 2012 due date. Nor did it respond to
CMS’s motion within 30 days of receipt.

On July 23, 2012, I issued an order to show cause why this case should not be dismissed.
In that order I warned that, unless Petitioner showed good cause for its disregard of my
pre-hearing order, I would dismiss the case pursuant to 42 C.F.R. § 498.69(b)(2).

Petitioner responded in a submission dated August 2, 2012, received in this office on
August 3, 2012. In that submission, Petitioner says that, late in the afternoon on July 3,
its counsel left a message for CMS counsel, hoping to amend its application and thus

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

> My order is more generous to the nonmoving party than the regulations, which allow a
party just 20 days to respond to a motion. 42 C.F.R. § 498.17(b).
resolve the matter without pursuing an appeal. July 4 was, of course, a holiday, and the
weekend intervened, so the attorneys did not speak until the morning of July 9.
Dissatisfied with CMS’s ultimate response, Petitioner then decided to pursue the appeal,
but did not request additional time in which to file its submissions or otherwise inform
this office of its plans. P. Resp. to Order to Show Cause at 2.7

Petitioner thus deliberately ignored my order and missed the deadline for responding to
CMS’s motion. Adhering to deadlines is particularly important in enrollment appeals,
such as this, because the regulations impose such strict and unforgiving timeframes. My
decision must be issued within 180 days from the date the appeal was filed; the
regulation does not provide for exceptions or extensions. 42 C.F.R. § 498.79.

Moreover, that Petitioner hoped to resolve the matter by means other than this appeal
does not constitute good cause. Quality Total Care, LLC. d/b/a The Crossings, DAB No.
2242 (2009) (engaging in informal efforts to resolve a dispute and requesting a hearing
are not mutually exclusive alternatives); Hillcrest Healthcare, L.L.C., DAB No. 1879
(2003) (election to resolve dispute by other means does not excuse failure to file a timely
hearing request).

I. In the alternative, CMS is entitled to summary disposition
because the undisputed evidence establishes that Petitioner
lacked the space and equipment necessary to conduct the
attended, in-facility sleep studies listed in its application.

Summary Judgment. The Departmental Appeals Board has, on multiple occasions,
discussed the well-settled principles governing summary judgment. See, e.g.,
1866I1CPayday.com, L.L.C., DAB No. 2289, at 2-3 (2009). Summary judgment is
appropriate if a case presents no genuine issue of material fact, and the moving party is
entitled to judgment as a matter of law. 1866/CPayday, DAB No. 2289, at 2; Illinois
Knights Templar Home, DAB No. 2274, at 3-4 (2009), and cases cited therein.

* CMS points out other problems with Petitioner’s assertions. First, when Petitioner’s
counsel contacted CMS counsel, she had not even filed an appearance in this case.
Second, although she suggests that she filed an appearance and other submissions on July
20 (still well after the date they were due), neither this office nor CMS received any such
submissions. Finally, Petitioner had ample opportunities to amend its application while
the application was pending and after its denial. In fact, the contractor explicitly offered
Petitioner the opportunity to correct its deficiencies and to establish its eligibility, but the
applicant did not do so. CMS’s Reply to Petitioner’s Response to Order to Show Cause
(August 8, 2012); see CMS Ex. 5 at 8-9; CMS Ex. 6; CMS Ex. 9 at 2.
The moving party may show the absence of a genuine factual dispute by presenting
evidence so one-sided that it must prevail as a matter of law, or by showing that the non-
moving party has presented no evidence “sufficient to establish the existence of an
element essential to [that party’s] case, and on which [that party] will bear the burden of
proof at trial.” Livingston Care Ctr. v. Dep’t of Health & Human Services, 388 F.3d 168,
173 (6th Cir. 2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986)). To
avoid summary judgment, the non-moving party must then act affirmatively by tendering
evidence of specific facts showing that a dispute exists. Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986); see also Vandalia Park, DAB No.
1939 (2004); Lebanon Nursing & Rehab. Ctr., DAB No. 1918 (2004).

Program requirements. To enroll in the Medicare program, a prospective provider or
supplier must submit an enrollment application, which, in this case, was form CMS-855.
CMS Ex. 1. The application must include accurate responses, and the applicant must
submit all requested documentation. 42 C.F.R. § 424.510(d)(1) and (2). A prospective
IDTF must certify that it meets the standards and related requirements listed in 42 C.F.R.
section 410.33(g). If it fails to meet even one of those standards, its application will be
lenied. 42 C.F.R. § 410.33(h).

Among the requirements of section 410.33(g), the prospective IDTF must enroll for “any
iagnostic testing services that it furnishes to a Medicare beneficiary.” 42 C.F.R.
410.33(g)(16). It must maintain a physical facility, and that facility must “contain
space for equipment appropriate to the services designated on the enrollment application
and] facilities for . . . adequate patient privacy accommodations... .” 42 C.F.R.
410.33(g)(3)(i). The supplier is exempt from the privacy accommodations requirement
it provides its services remotely. 42 C.F.R. § 410.33(g)(3)(ii).

nm

eo

Application of law to undisputed facts. Here, the parties agree that on July 27, 2011,
Petitioner filed its Medicare application. In that application, it listed, by CPT (Common
Procedural Terminology) Code, the tests that it would perform: 95806, 95810, 95811.
CMS Ex. | at 33; P. Br. at 4. Published by the American Medical Association, the CPT
codes describe medical, surgical, and diagnostic services in order to communicate
uniform information about those services and procedures. The codes are widely used by
insurers, including the Medicare program, to determine reimbursement.

Sleep medicine services include diagnostic procedures that evaluate patients for a variety
of sleep disorders using in-laboratory and portable technology. The procedure codes
listed in Petitioner’s application all describe services that include recording, interpretation
of results, and reporting. Two of the procedure codes listed — 95810 and 95811 —
describe “polysomnography,” sleep tests that involve “continuous, simultaneous,
recording of physiological parameters for a period of at least 6 hours that is performed in
a sleep laboratory and attended by a technologist or qualified health care professional.”
The parameters measured must include “‘a frontal, central, and occipital lead of EEG,
submental EMG lead[,] and a left and right EOG” plus at least four additional parameters
(ECG, nasal and/or oral airflow, respiratory effort, oxyhemoglobin saturation, bilateral
anterior tibialis, EMG).* American Medical Association, Current Procedural
Terminology, 4th ed. at 507-09 (2012) (emphasis added); see CMS Ex. 8 at 1-2 (NCD
(National Coverage Determinations) Manual, Pub. No. 100-3, 240.4.1 (designating tests
that meet these criteria as “Type r)).

CPT 95806, on the other hand, describes an “unattended” sleep study that records heart
rate, oxygen saturation, respiratory airflow, and respiratory effort. American Medical
Association, Current Procedural Terminology, 2012 at 508.

According to the CPT, “attended” means that a technologist or qualified health care
professional is “physically present,” which means that he/she is within “sufficient
proximity” to “physically respond to emergencies, to other appropriate patient needs or to
technical problems at the bedside . . . throughout the recording session.” Id. at 507.
“Unattended” means that the technologist or qualified health care professional is not
physically present with the patient during the recording session. Jd. at 508. If the site of
the service is distant from the monitoring center, it is considered “remote” (as opposed to
on-site), and neither a technologist nor qualified healthcare professional is physically
present at the testing site. Id. at 508.

Medicare reimbursement rules incorporate the CPT definitions. See CMS Ex. 7 (Local
Coverage Determination (LCD) L31082°); CMS Ex. 8 (NCD Pub. No. 100-02, 240.4.1).
They allow reimbursement for sleep studies and polysomnography performed in a
“facility based sleep study laboratory and not in the home or mobile facility.” CMS Ex. 7
at 10. An attendant must be physically present and able to intervene, if necessary. CMS
Ex. 7 at 1, 2, 3, 10; CMS Ex. 8 at 2.

Although Medicare may sometimes pay for home-testing, those tests generally fall under
different procedure codes, G0398, G0399, and G0400, and are reimbursed at a
substantially lower rate. CMS Ex. 6; CMS Ex. 7 at 5-6.

+ An EEG (electroencephalogram) measures and records the brain’s electrical activity.
An EMG (electromyograph) measures the electrical activity of muscles. EOG
(electrooculography) measures the resting potential of the retina.

* An NCD is the Secretary of HHS’s determination as to “whether or not a particular item
or service is covered nationally” by Medicare. 42 U.S.C. § 1395ff(f)(1)(B).

° An LCD is a determination by the Medicare contractor that a particular item or service
is covered and applies in the area administered by the contractor. 42 U.S.C.

§ 1395ff(£)(2)(B).
Better Sunrise occupies a space of about 150 square feet. It has no sleep-room, no bed,
nor other equipment necessary for in-facility testing. CMS Ex. 3 at 2,5. The parties
agree that the patient remains in his/her home during the test. A Better Sunrise employee
takes equipment, including a video camera, to the residence and hooks it up. The sleep
study technologist remains in the facility and monitors the test remotely, by means of a
laptop computer. When the test is complete, an employee retrieves the equipment and
returns it to the facility. CMS Ex. 3 at 5; P. Br. at 7. If technical or other problems arise
(which seems to occur with some frequency), the “attending” technologist leaves the
facility, travels to the patient’s home, makes the necessary corrections, and returns to the
facility to continue monitoring the test. P. Ex. 1; P. Br. at 5.

I note first that Petitioner has not come forward with evidence of specific facts showing
that a dispute exists. Rather, based on the undisputed facts, Petitioner argues that its
sleep studies are “attended, in-facility studies,” because the monitoring technologist
remains in the facility, watching the patient in real time on a computer monitor, and, “can
intervene if needed.” P. Br. at 5-6. But this argument does not establish that a material
fact is in dispute. Whether this undisputed situation means that the facility is able to
perform the tests listed in its application -the dispositive issue here- is a question of law,
not of fact. This case can therefore properly be resolved on summary disposition.

Based on the undisputed facts, Petitioner is obviously incapable of performing the sleep
studies listed in its application — CPT codes 95810 and 95811. “In-facility” means that
both patient and technologist must be in the facility. Better Sunrise’s patients receive its
services at their residences, which the CPT defines as a “remote” location. American
Medical Association, Current Procedural Terminology, 2012 at 508. The sleep study is
not “attended” by the sleep technologist if he/she is not present in the same building and
able to physically respond to the patient’s needs throughout the recording session. Jd. at
507. Where the technologist has to leave the facility and travel to a different location in
order to respond, he cannot be considered “in attendance.” Moreover, as Better Sunrise’s
“intervention log” shows, it is not unusual for the sleep technologist to lose contact with
the patient — sensors fall off or are removed or disconnected from the amplifier box,
internet signals are lost. P. Ex. 1. During these periods, the sleep technologist has no
contact with the patient.

Conclusion

Without good cause, Petitioner disregarded my prehearing order, interfering with the
speedy and orderly conduct of these proceedings, and is therefore subject to sanction
under section 1128A(c)(4) of the Act. I may therefore dismiss its appeal or enter a
default judgment against it. In the alternative, CMS is entitled to summary disposition,
because the undisputed evidence establishes that Better Sunrise lacked the space and
equipment necessary to conduct the attended, in-facility sleep studies listed in its
Medicare enrollment application. I therefore grant CMS’s motion.

/s/
Carolyn Cozad Hughes
Administrative Law Judge