Opinion ID: 2708737
Heading Depth: 3
Heading Rank: 2

Heading: Exposure to Enhanced Penalties

Text: When IDPH finds deficiencies at a nursing facility and sets about selecting which remedy (or remedies) to impose, it is required to look at a number of factors to determine the seriousness of the deficiency (the “initial assessment”). The mandatory factors pertain to the scope and severity of the particular deficiency found—those factors are summarized in the table infra at 3. However, IDPH and CMS are not limited to considering the mandatory factors. Following the initial assessment, CMS and the State may consider other factors, which may include, but are not limited to the following: (1) The relationship of the one deficiency to other deficiencies resulting in noncompliance[ and] (2) The facility’s prior history of noncompliance in general and specifically with reference to the cited deficiencies. 42 C.F.R. § 488.404(c). Bryn Mawr argues that, the moment it had the deficiencies at issue in this case on its record, its legal status was altered because there was the potential that future deficiencies would be punished with a harsher remedy based on the past deficiencies. The Secretary responds that Bryn Mawr’s argument is too contingent and too speculative to amount to an alteration of a right—if Bryn Mawr is found deficient in the future IDPH may select a harsher remedy based on past deficiencies. In return, Bryn Mawr points to Humphries v. Cnty. of L.A., 554 F.3d 1170, 1187–88 (9th Cir. 2009) rev'd and remanded on other grounds sub nom. L.A. Cnty., Cal. v. Humphries, 131 S. Ct. 447 (2010). No. 12-3678 17 In Humphries, the Ninth Circuit held that parents had been deprived of a liberty interest by being erroneously listed on a child abuse registry, when California “law effectively require[d] agencies to check [that] stigmatizing list and investigate any adverse information prior to conferring a legal right or benefit” (such as licensure, child custody, or employment).7 Id. at 1188. The Ninth Circuit reasoned that being on the list was “an added burden on entities wishing to confer legal rights or benefits, mak[ing] the chances of receiving a benefit conferred under California law less likely, and practically guarantee[ing] that conferral of that benefit will be delayed.” Id. at 1192. Therefore, the legally imposed burden on those entities was a “tangible burden” on the parents’ ability to obtain any of the rights meted out by those entities which was tantamount to an alteration of the parents’ rights. Id. at 1191–92.8 7 The Ninth Circuit used the phrase “effectively required” because only some agencies were actually required to check the list, but the court reasoned that the fact an entity “may” check the list “in conjunction with a rule or custom of ‘must’ can equally deprive a citizen of a liberty interest giving rise to a procedural due process claim.” Id. at 1191 (emphasis added). 8 The Second Circuit has reached a similar result where the legal impediment was even more onerous. See Valmonte v. Bane, 18 F.3d 992, 1001 (2d Cir. 1994) (“Valmonte has alleged that because of her inclusion on the Central Register, and because all child care providers must consult that list, she will not be able to get a job in the child-care field. In other words, by operation of law, her potential employers will be informed specifically about her inclusion on the Central Register and will therefore choose not to hire her. Moreover, if they do wish to hire her, those employers are required by law to explain the reasons why in writing.” (Emphasis added)). But see Smith v. (continued...) 18 No. 12-3678 IDPH and CMS are required to look at Bryn Mawr’s compliance history in the event of future noncompliance to see whether the agency may allow Bryn Mawr an opportunity to correct. See, e.g., State Operations Manual § 7304.2.1 (Rev. 63 2010) (necessitating a check of compliance history). But that check does not alter Bryn Mawr’s rights, see infra 12–13, nor does it burden IDPH or CMS’s determinations of whether to confer (or rather maintain) Bryn Mawr’s “rights or benefits” (participation in the Medicaid program without any remedies). IDPH or CMS will impose a remedy if there is a new deficiency and may look to Bryn Mawr’s compliance history as a factor in selecting a remedy. But the lack of a requirement that IDPH consider the prior deficiencies in selecting a remedy is only one thing that distinguishes this case from Humphries. The agencies that found Bryn Mawr deficient are the same agencies that would later determine whether to consider those deficiencies in crafting a remedial plan. And if they decide to base the remedial plan on that past deficiency as well, Bryn Mawr is entitled to challenge the past deficiency at the same hearing that it challenges the new deficiency. See 42 C.F.R. § 488.408(g)(1); Fort Tyron Nursing Home v. HCFA, DAB CR425 (H.H.S. 1996).9 Accordingly, any burden the deficiency finding has on Bryn Mawr’s rights is entirely speculative up until the (...continued) Siegelman, 322 F.3d 1290, 1297 (11th Cir. 2003) (rejecting the claim that being placed on a child abuse index was a deprivation of a liberty interest when the system contained no similar legal strictures). 9 Available at http://www.hhs.gov/dab/decisions/civildecisions/1996/cr425. pdf. No. 12-3678 19 time that Bryn Mawr would be entitled to a hearing to challenge it. This is a far cry from the state law in Humphries that required potential employers, licensing agencies, and family courts to look at a list and investigate the accusations of child abuse before bestowing any number of rights. The parents were constantly at risk of being denied rights because of the burden the law put on the agencies. And, after each denial, they are left at risk of rejection as they proceed, with the stigma still attached, to the next agency that must follow the law. The legal burdens on these agencies was a tangible burden on the parents. Bryn Mawr is in no such dilemma. Should its speculative harm of enhanced penalties manifest itself, it would immediately be afforded the opportunity to clear its name—once and for all. The Ninth Circuit concluded that legally burdening numerous agencies and entities by “effectively” requiring them to check a defamatory list is a tangible burden on an individual’s obtaining rights that is tantamount to altering that individual’s rights. We need not decide whether we agree with the Ninth Circuit. Bryn Mawr lost an opportunity to correct, and that is not a right. What is a right is Bryn Mawr’s ability to continue operating as a Medicaid facility without remedies imposed. That right is not burdened by the deficiency finding until (or unless) the finding is used to justify a remedy, at which time a hearing is afforded to challenge the deficiency finding. One final possibility merits consideration. IDPH and CMS could decide to select a more serious remedy for a new deficiency because of the past deficiencies, see 42 C.F.R. § 488.404 (permitting consideration of prior noncompliance in selecting a remedy), but without explicitly stating that the 20 No. 12-3678 remedy is being imposed for the past deficiencies. This does not appear to be the practice, but neither CMS nor IDPH have pointed us to a regulation that requires them to cite a past deficiency as a basis for a remedy. If this were to occur, it would be impossible for Bryn Mawr to challenge the past deficiency collaterally. Compare 42 C.F.R. § 488.408(g)(1) (permitting an “appeal [of] a certification of noncompliance leading to an enforcement remedy”) with id. at § 488.408(g)(2) (forbidding appeal of the “choice of remedy, including the factors considered by CMS or the State in selecting the remedy, specified in § 488.404.”) (emphasis added); see also 42 C.F.R. § 488.404(c)(2) (listing “[t]he facility’s prior history of noncompliance in general and specifically with reference to the cited deficiencies” among “factors which may be considered in choosing a remedy”) (emphasis added). Accordingly, a remedy could be enhanced because of (but not imposed based on) the past deficiencies and the regulations would quite explicitly forbid challenging that deficiency because it was merely a “factor in selecting the remedy” instead of a “certification of noncompliance leading to an enforcement remedy.”10 At first glance, this appears problematic. For example, if there had been a subsequent finding of noncompliance, IDPH would have imposed remedies. See State Operations Manual § 7304.2.1 (Rev. 63 2010). These remedies could be based on the new deficiency alone. However, instead of a $200 per day civil 10 We cannot be sure the Secretary would interpret her regulations this way, and we do not purport to definitively interpret them here because we have not been called on to interpret them since this situation has not occurred. We are merely weighing a harm that Bryn Mawr speculates could occur. No. 12-3678 21 money penalty, it could have imposed a $300 per day civil money penalty because, in its internal deliberations, it decided to consider Bryn Mawr’s “prior history of noncompliance.” 42 C.F.R. § 488.404(c)(2). This internal deliberation, and the deficiencies it considered, would be unchallengeable. 42 C.F.R. § 488.408(g)(2). However, any due process argument based on this fails for the same reason that Bryn Mawr’s argument on the loss of the opportunity to correct fails. It always lies within IDPH or CMS’s discretion to pick a remedy within a category—that is, it could impose a $300 civil money penalty regardless of whether it considered the prior deficiency. The fact that state and federal regulators may consider a defamatory statement (in fact, their defamatory statement) in the later exercise of their discretion is not an alteration of Bryn Mawr’s legal rights. Brown, 462 F.3d at 72911. If, as a result of the prior defamatory statement, new remedies not previously available to IDPH or CMS became available, that might be an alteration of Bryn Mawr’s rights, but there is no allegation that such is the case here.