Court Opinion

ID: 813663
Source: CourtListenerOpinion
Date Created: 2012-12-14 20:32:04+00
Date Added: 2024-06-11T18:00:49.353646
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                               No. 11-1817

UNIVERSAL HEALTHCARE/KING,

                Petitioner,

           v.

KATHLEEN SEBELIUS, Secretary of the United States Department
of Health and Human Services; UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES,

                Respondents.

On Petition for Review of an Order              of the United     States
Department of Health and Human Services.        (A-11-38)

Argued:   September 19, 2012                 Decided:   December 14, 2012

Before NIEMEYER and DIAZ, Circuit Judges, and Max O. COGBURN,
Jr., United States District Judge for the Western District of
North Carolina, sitting by designation.

Petition for review denied by unpublished opinion.     Judge
Cogburn wrote the opinion, in which Judge Niemeyer and Judge
Diaz joined.

ARGUED:   Joseph  L.  Bianculli,   HEALTH  CARE   LAWYERS,  PLC,
Arlington, Virginia, for Petitioner. Adam C. Jed, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Respondents.     ON
BRIEF: William B. Schultz, Acting General Counsel, Dana J.
Petti, Chief Counsel, Region IV, Elizabeth C. Benton, Assistant
Regional Counsel, DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Atlanta, Georgia; Tony West, Assistant Attorney General, Michael
S. Raab, Helen L. Gilbert, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Respondents.

Unpublished opinions are not binding precedent in this circuit.

                                2
COGBURN, District Judge:

       Universal Healthcare/King (“Universal”) challenges a civil

monetary penalty (“CMP”) imposed by the Centers for Medicare &

Medicaid Services (“CMS”) for violations of the Medicare and

Medicaid    statutes        and   regulations.            The    challenged      CMP   was

sustained by an administrative law judge (“ALJ”) and affirmed by

the Departmental Appeals Board (“DAB”) of the U.S. Department of

Health and Human Services.               Because we find no error in the

DAB’s decision, we deny Universal’s petition for review.

                                         I.

       Universal is a Medicare nursing facility located in King,

North    Carolina.           Nursing     facilities         participating        in    the

Medicare     Program     must     comply      with    federal       “Long      Term    Care

Requirements of Participation” as set forth in 42 C.F.R. Part

483, which implements provisions of 42 U.S.C. §§ 1395i-3(b)-(e).

Those regulations establish numerous clinical, operational, and

other responsibilities for participating nursing facilities as

well as provide a number of rights for facility residents.                              Id.

Compliance    with      these     regulations        is   evaluated       via    periodic

inspections or “surveys,” which are usually conducted, as in

this    matter,   by    a    State     Survey     Agency        (“SSA”)   acting      under

contract    as    the   agent     of    Respondent        Secretary       of    the    U.S.

Department of Health and Human Services.                        In September 2009, an

                                              3
SSA conducted a survey at Universal’s facility in King, which

revealed that Universal had violated several of the regulations.

Based on those findings, CMS imposed per diem CMPs on Universal

for the period of March 21 through September 27, 2009, in the

amount of $3050 per day, totaling $587,950.

      The regulations are enforced by the Secretary as provided

by    42    U.S.C.        §    1395i-3(h).          That    statute          authorizes          the

imposition        of   various        sanctions      tied       to    the    “severity”         and

“scope”      of    noncompliance,          which    are    in       turn    measured       by   the

actual      or    potential         impact   of    the     noncompliance            on    nursing

facility residents.                 Id.    Among the sanctions available to the

Secretary are two types of CMPs: a “per diem” CMP, which may be

imposed “for the number of days a facility is not in substantial

compliance”        with       the    regulations;     and       a    “per    instance”          CMP,

which may be imposed for “past noncompliance” corrected prior to

a survey.         Significantly, per diem CMPs can accrue in an amount

of up to $10,000 per day, and may “continue until [t]he facility

has        achieved           substantial         compliance[.]”                42         C.F.R.

§ 488.454(a)(1).               On    the   other    hand,       per    instance          CMPs    are

limited to a cap of $10,000 per survey.                             42 C.F.R. §§ 488.430,

488.438.

      Supporting its imposition of a per diem CMP, CMS found that

Universal committed violations of 42 C.F.R. § 483.25(l), which

requires         proper       monitoring     of     prescription            drugs    given        to

                                               4
residents,        § 483.75(j)(1),        which      regulates        provision     of

laboratory services for residents, and § 483.20(d), which sets

patient     recordkeeping      requirements.         These     violations     stemmed

largely      from    a    series    of        serious       errors     committed   by

petitioner’s staff in caring for “Resident #1,” a 78-year-old

woman who ultimately died in March 2009.                    It is undisputed that

it    was   the   death   of   Resident       #1   which     spurred    the   survey.

Universal contends that the ALJ, the Board, and ultimately the

Secretary erred in upholding the duration of CMS’s per diem CMPs

by failing to consider its evidence that its self-implemented

corrective measures had returned the facility to “substantial

compliance” in April 2009, long before the September survey.

                                         II.

                                         A.

       On February 10, 2009, Universal’s nurses noted swelling in

Resident #1’s right lower leg, and reported such condition to

the    patient’s    physician,     who    ordered       a    Doppler    test,   which

disclosed a blood clot.            Based on the presence of the blood

clot, the physician ordered 10 mg of Coumadin daily and Lovenox

(both anti-coagulant drugs), as well as daily Prothrombin Time

and International Normalized Ratio tests (“PT/INR”).                       The tests

are used to monitor the effectiveness of anticoagulant therapy,

                                          5
a highly risky treatment process that requires close monitoring

and a detailed care plan.

     As    the    record    establishes      and    petitioner   concedes,     the

facility   badly       mishandled   Resident       #1’s   anticoagulant   therapy

care plan.       Initially, petitioner’s staff failed to perform the

daily PT/INR tests as ordered and, when such test was eventually

performed, the results indicated an elevated level of Coumadin.

The patient’s doctor was notified and over the next month he

made a series of adjustments to the patient’s medications.

     After       the    patient’s    March     10     PT/INR   test   showed    a

“critical[ly] high” Coumadin level, her physician altered her

regimen of medication and then ordered another PT/INR test two

days later.       That test, on March 12, again showed somewhat high

results, but the physician ordered the Coumadin to be resumed at

6 mg/day and that another PT/INR test be conducted on March 21.

Unfortunately, the nurse who took the March 21 order entered it

on the resident’s Medication Administration Record (“MAR”) in a

confusing manner, resulting in neither the lab’s technician nor

petitioner’s nurse conducting a PT/INR test on that day.                        On

March 23, such error was caught by a nurse and blood was drawn

for the lab work. 1

     1
       It is undisputed that a MAR is prepared each month for
each resident, listing on the left side of the form all
medications the resident is to receive, with a series of boxes
(Continued)
                                        6
        On March 24, the lab reported that the late sample was too

small    to     test,   so    a   nurse    attempted          to    draw    blood     again;

however, the patient refused to allow the draw.                         While a patient

has a right to refuse treatment, 42 C.F.R. § 483.10(d)(3), the

nurse did not immediately inform a supervisor or the resident’s

physician,      as    required.       During         the     last   attempt      to   obtain

consent, a nurse noted unusual bruising around the resident’s

breast    and    shoulder     area,    injuries            which    could   be    signs    of

Coumadin overdose.           This nurse did, however, report the bruising

and refusal to allow a blood draw to the patient’s physician,

who then ordered the resident to be sent to a hospital for

evaluation.       In the late afternoon of March 24, a PT/INR test

indicated a very high Coumadin level.                        Later that evening, the

hospital administered a small dose of Vitamin K (the antidote

for   Coumadin       overdose),    but     the       resident’s      family      thereafter

declined      further    treatment        or       medical    intervention,         and   the

resident died on March 25, 2009.

                                           B.

      After Resident #1’s death, Universal’s staff reviewed her

record and its lab policies to determine what, if anything, its

corresponding to dates and times that a nurse initials when he
or she administers the medication. Nurses use the patient’s MAR
each day, and an order for a lab test on a particular day is
ordinarily noted in the box for that day.

                                               7
nurses   had    done   wrong.     That   review      unearthed       Resident   #1’s

missed and delayed lab tests and the fact that she had refused

blood draws several times on March 24 before the nurses informed

the physician.         In response, on March 26 and 27, Universal’s

Director of Nursing provided in-service training to all licensed

nurses   regarding      the     necessity     of     immediately      notifying     a

supervisor or the Director of Nursing of any instance in which

any ordered lab tests--especially PT/INRs--could not be obtained

for any reason, including resident refusal.                    The Director of

Nursing also revised Universal’s protocol for posting physician

orders for future lab tests to assure that a certain date was

marked on each resident’s Medication Administration Record.

     Based on the Director of Nursing’s findings, Universal’s

Administrator also contacted a nurse consultant to expand the

investigation.          That     nurse       audited    the        facility’s     lab

procedures, as well as the medical records of every resident

receiving      anticoagulant     therapy,     and    found    no    other   errors.

Nevertheless,      Universal’s      managers        decided    to      revise     its

Laboratory       Procedure      Policy       to     clarify    all      lines      of

communication, and to create a simplified reporting and tracking

form for anticoagulant lab tests.                   All of these reports and

findings, including the results of the investigations and the

revised protocols, were addressed at a Quality Assessment and

Assurance Committee Meeting on April 1, 2009, by Universal’s

                                         8
managers,   Director        of    Nursing,      and    Resident       #1’s      physician.

Petitioner’s    clinical         staff    presented,      and   the     QAA      Committee

approved, the new protocols at that time.

       On April 3, 2009, petitioner’s Director of Nursing began

training nurses on the new lab, documentation, and reporting

protocols, which was completed on April 7, 2009.                                No errors

involving any lab tests occurred thereafter and the SSA found

and cited none during the six-month interim until the September

2009 survey.

                                           C.

       The SSA’s September 2009 survey cited Universal for the

deficiencies relating to the care of Resident #1.                          Following the

survey   and    at    the     SSA’s      direction,       Universal        developed     a

comprehensive        “Plan       of      Correction,”         which        it    formally

implemented on September 28, 2009.                    Universal contends that at

no point during the survey did the team critique its internal

investigation     into       Resident      #1’s       death   or     its     April   2009

corrective action.          Further, Universal contends that the survey

team did not find any new errors since the implementation of the

April measures.

       The survey team recommended to CMS that it only impose a

$10,000 per instance CMP for past noncompliance.                           CMS rejected

that   recommendation,        however,      determining       that     petitioner      was

noncompliant for the entire period from March 21 (the date of

                                            9
the missed PT/INR) through September 27, 2009 (the day before

Universal      implemented    its    comprehensive           Plan    of    Correction).

Accordingly, it imposed a CMP in the amount of $3050 per day for

each day of noncompliance, totaling $587,950.

     Universal requested review of this sanction by an ALJ, and

offered statements of several witnesses that Universal’s April

2009 lab protocol and its implementation was fully consistent

with all pertinent professional and regulatory standards, and

that Universal had resumed compliance with the cited regulations

by no later than April 7, 2009.                  Defending its penalties, CMS

argued before the ALJ that Universal’s April corrective actions

had failed to adequately address its deficiencies.

     Agreeing      with   CMS,    the     ALJ    determined         that   Universal’s

April   2009    corrective    measures         were    too    narrowly      focused   on

“only one element of petitioner’s noncompliance,” and failed to

“address the totality of the noncompliance.”                      J.A. 16, 14.        The

ALJ explained      that   while     the   April        measures     did    address    the

problem   of    petitioner’s      failure       to     perform      physician-ordered

testing, they failed to address other problems, “such as the

failure of the staff to plan for the care of residents receiving

anticoagulants or the failure [to report abnormal test results

to   physicians].”        J.A.      16.         “For    that     reason,”     the     ALJ

explained,      “they   are   inadequate        proof     that      Petitioner      self-

corrected its deficiencies by April 7, 2009.”                              Id. at 14.

                                          10
Ultimately       finding        that        petitioner       had     not     implemented

comprehensive corrective actions addressing the entire range of

deficiencies         until   it       formalized     the    Plan    of    Correction    on

September 28, 2009, the ALJ affirmed CMS’s determinations as to

the duration of petitioner’s noncompliance, and held that CMS’s

penalties were reasonable.                  J.A. 15, 17.       The Board sustained

this     determination,        which        became    the    final       action   of   the

Secretary.

                                            III.

        Universal      raises         two    challenges       to     the     Secretary’s

imposition of the per diem CMP.                    First, Universal contends that

the    Secretary      failed      to    consider     its    proffered       evidence    of

resumed compliance with the Secretary’s regulations as of April

7, 2009.       Second, Universal contends that the final decision of

the Secretary should be reversed and remanded because she failed

to apply the correct legal standard in allocating the burden of

proof, arguing that the ALJ’s determination as to the duration

of Universal’s noncompliance was based only on a “presumption,”

which    is    inconsistent       with      applicable      law.     We    address     each

contention.

                                            A.

       Under    42    U.S.C.      §    1320a-7a(e),        “[t]he    findings     of   the

Secretary with respect to questions of fact, if supported by

                                              11
substantial evidence on the record considered as a whole, shall

be conclusive.”         Id.     Substantial evidence means “such relevant

evidence   as    a     reasonable      mind       might    accept       as    adequate   to

support a conclusion.”           Richardson v. Perales, 402 U.S. 389, 401

(1971).      “When     the     question      before      the    court    is    whether   an

agency has properly interpreted and applied its own regulation,

the   reviewing        court    must    give       the    agency’s       interpretation

‘substantial deference.’”              Md. Gen. Hosp. v. Thompson, 308 F.3d

340, 343 (4th Cir. 2002).

                                          1.

      Despite Universal’s argument that the Secretary failed to

consider its evidence of resumed compliance, we cannot say that

the Secretary’s decision to uphold the imposition of a per diem

CMP is unsupported by substantial evidence.

      As a condition of participation in the Medicare program,

certified nursing facilities must meet a variety of requirements

to ensure the safety of the residents under their care.                               Under

42 C.F.R. § 483.25(l)(1), a facility must ensure that “[e]ach

resident’s      drug     regimen”       is     free      from    drugs        given   “[i]n

excessive dose,” “[f]or excessive duration,” “[w]ithout adequate

monitoring,” “[i]n the presence of adverse consequences which

indicate the dose should be reduced or discontinued,” or “[a]ny

combinations” thereof.             Under 42 C.F.R. § 483.75(j)(1), each

facility must provide or obtain laboratory services that are

                                             12
timely    and   that     meet    quality       requirements.           Under      the   DAB’s

interpretation of the regulations, once a facility is determined

to be out of compliance, it need not be “affirmatively” shown

“that    noncompliance         exists    on     each    day    that    a    remedy      is    in

effect    after   the     first    day    of       noncompliance.”           In    re    Texan

Nursing & Rehab. of Amarillo, LLC, DAB No. 2323, at 20 (July 2,

2010)     (internal       quotation        marks        omitted);       42     C.F.R.         §§

488.440(a)(1), 488.454(a)(1).

        While Universal presented some evidence to the contrary,

the     Secretary      had      before        her      substantial         evidence      that

petitioner      failed    to    satisfy       these     requirements         until      on    or

about    September       28,    2009.         The    regulations       require         that   a

skilled    nursing      facility        “have       systems    in     place”      to    ensure

careful monitoring for, inter alia, “any unusual bleeding or

symptoms of bleeding”; to “anticipate and plan for [the] risk”

of bleeding; and to ensure “gentle handling,” for example “in

transfers to avoid bumps.”                    J.A. 31-32, 35.              Review of the

administrative record reveals that the Secretary had before her

statements from an experienced pharmacist and surveyor, as well

as petitioner’s own pharmacist consultant, that, at the time of

the survey, Universal still lacked adequate systems to ensure

that     residents     taking      Coumadin          were     monitored      closely         for

possible subtle signs of Coumadin toxicity.                         Further, the record

contains evidence that in September 2009 Universal had yet to

                                              13
implement systems to protect patients from possible trauma, such

as    bruising,     which    is    dangerous        to     a   person      with     impaired

clotting.

       In   addition,       the    regulations            require     that     a     nursing

facility have a system in place to ensure that labs are drawn

when ordered, drawn correctly, processed correctly, and that the

results are reported to doctors.                    Although Universal submitted

evidence to the Secretary in support of its argument that it

satisfied this requirement by April 7 by implementing a new lab

protocol,    such     argument     assumes         that    PT/INR      tests      alone    are

sufficient        under      the       regulations             to     detect        “adverse

consequences” or an “excessive dose” of Coumadin.                          See 42 C.F.R.

§ 483.25(l)(1).        Universal did not, however, make such argument

in the course of the administrative proceeding and has not shown

any   exceptional      circumstance      warranting            its   consideration        for

the first time on appeal.              42 U.S.C. § 1320a-7a(c).                    Moreover,

substantial    evidence      supports        the    Secretary’s         conclusion        that

adequate     systems      for     monitoring        residents         on   anticoagulant

therapy     require    not      only   lab    tests,       but      also   protocols       for

monitoring and observation of residents by direct caregivers.

The Secretary had ample evidence that petitioner did not return

to substantial compliance with these standards until September

28, 2009, when it implemented the Plan of Correction.                              By way of

example, the Secretary had evidence before her that before the

                                             14
survey Universal did not have any system in place for ensuring

that special instructions for Coumadin were placed in care plans

or that subtle signs of injury were recorded.

     Moreover, the Secretary had before her substantial evidence

that, despite the April measures, Universal continued to lack an

effective system for ensuring that labs were properly drawn and

results reported.         Even during the September survey, Universal’s

own consulting pharmacist expressed concern that she was unable

to   obtain   or       review     information     about     labs      and   that    she

periodically discovered labs had been missed.                         Likewise, the

Secretary’s conclusion that there was a systematic failure based

on petitioner’s failure to “anticipate and plan for [the] risk”

of   bleeding,     to     “monitor[]      for    adverse       drug    reactions    or

overdoses,”      “to     instruct       staff”    on    touching      and    handling

residents on Coumadin, and “to detect the errors that rank and

file care givers were committing,”                     J.A. 31-32, 37 (internal

quotation marks omitted), is supported by substantial evidence.

All in all, the final decision of the Secretary is supported by

substantial evidence.

                                         2.

     Finally, Universal contends that the Secretary’s decision

should be reversed and remanded because she failed to apply the

correct   legal    standard        in    allocating      the    burden      of   proof.

Universal     contends          that    the     Secretary’s      conclusion        that

                                          15
petitioner did not achieve compliance until September 2009 was

based      only    on   a    presumption,       which   is   inconsistent     with

applicable law.

     We will not reach the merits of this contention inasmuch as

Universal failed to raise such argument before the Secretary

below. 2     As “[n]o objection that has not been urged before the

Secretary shall be considered by the court, unless the failure

or neglect to urge such objection shall be excused because of

extraordinary circumstances,” 42 U.S.C. § 1320a-7a(e), and no

exceptional        circumstance     has     been   suggested,    we    will   not

consider     the    merits     of   this    contention.       Woelke   &    Romero

Framing, Inc. v. NLRB, 456 U.S. 645, 665 (1982); United States

v. L. A. Tucker Truck Lines, Inc., 344 U.S. 33, 36-37 (1952).

                                       IV.

     In sum, we conclude that the Secretary’s imposition of a

per diem CMP of $587,950 was supported by substantial evidence.

Universal’s petition for review is therefore

                                                                           DENIED.

     2
        While Universal’s procedural default on this contention
prevents consideration of the merits of such argument on appeal,
we note that Universal explicitly acknowledged that once it had
been determined to be deficient in its care of Resident #1,
there was a “presumption of continuing noncompliance.” J.A. 85.
Indeed,   Universal   argued  before  the  Secretary   that  the
applicable presumption was rebuttable. Id.; accord J.A. 46.

                                           16