Court Opinion

ID: 1031335
Source: CourtListenerOpinion
Date Created: 2013-07-05 08:29:56.468951+00
Date Added: 2024-06-11T12:44:09.053703
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                              No. 09-1093

UNIVERSAL HEALTHCARE/KING,

                Petitioner,

           v.

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES,

                Respondent.

On Petition for Review of a Decision of the United              States
Department of Health and Human Services. (A-08-107)

Argued:   October 28, 2009                  Decided:   January 29, 2010

Before MOTZ and GREGORY, Circuit Judges, and Benson E. LEGG,
United States District Judge for the District of Maryland,
sitting by designation.

Petition denied by unpublished per curiam opinion.

ARGUED:   Joseph  L.   Bianculli,  HEALTH   CARE  LAWYERS,  PLC,
Arlington, Virginia, for Petitioner.    Erica Cori Matos, UNITED
STATES DEPARTMENT OF HEALTH & HUMAN SERVICES, Atlanta, Georgia,
for Respondent. ON BRIEF: Peter D. Keisler, Assistant Attorney
General, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.;
David S. Cade, Acting General Counsel, Dana J. Petti, Chief
Counsel, Region IV, UNITED STATES DEPARTMENT OF HEALTH & HUMAN
SERVICES, Atlanta, Georgia, for Respondent.

Unpublished opinions are not binding precedent in this circuit.
 PER CURIAM:

     Universal      Healthcare     (“Universal”)        is   a    skilled    nursing

facility that provides care to Medicare beneficiaries in North

Carolina.      Universal      appeals   a    final    agency     decision     of   the

Secretary    of    Health    and   Human     Services    (“Secretary”).            The

Secretary, acting through the Centers for Medicare and Medicaid

Services (“CMS”), imposed civil monetary penalties on Universal

for non-compliance with several Medicare regulations related to

residents’ well-being and safety.               Both an administrative law

judge (“ALJ”) and the Department Appeals Board (“Board”) upheld

CMS’s   findings    of    non-compliance       and    its    assessment      of    the

penalties.

     Following      the     procedure   in    these     cases,     Universal       has

appealed the Board’s decision directly to the circuit court.

There are two determinations for us to make.                        The first is

whether the Secretary’s findings of non-compliance are supported

by substantial evidence.           The second is whether the monetary

penalties are proportionate to the degrees of non-compliance.

Because the Secretary’s findings are supported by substantial

evidence,    and   because     Universal     has   failed    to    show     that   the

civil penalties are clearly erroneous, we affirm.

                                        2
                                          I.

       To participate in Medicare and Medicaid programs, skilled

nursing facilities must comply with regulations set forth at 42

U.S.C. § 1395i-3 and 42 C.F.R. § 483.                      To determine whether a

facility is in compliance, the Secretary contracts with state

agencies, which conduct inspections known as surveys.                         42 C.F.R.

§   488.10      (2009).          The     surveys     are     conducted      by   multi-

disciplinary, formally trained teams, each of which is comprised

of at least one registered nurse.                Id. § 488.31.

       During       the     surveys,      the      state     agency     records      any

deficiencies that it discovers, including their severity.                          Id. §

488.404(b).          The severity categories range from “[n]o actual

harm   with     a    potential     for   minimum     harm”    to    those   that    pose

“immediate      jeopardy      to   resident       health     or    safety.”      Id.   §

488.404(b)(1).            A facility is considered to be in substantial

compliance with the regulations if its deficiencies are ones

that pose no greater risk than the potential for minimal harm.

Id. § 488.301.

       Once a deficiency has been identified, CMS selects a remedy

to address it.         Id. § 488.408.           One potential remedy is a civil

monetary penalty, which CMS may impose on a per-day or per-

instance of non-compliance basis.                Id. § 488.430.

       A skilled nursing facility has the right to appeal CMS’s

decisions.          42 U.S.C. § 1395cc(h) (2006).                 The first level of

                                            3
appeal    is    to    an   ALJ   in   the   Department       of    Health   and   Human

Services.       42 C.F.R. § 498.44.             The ALJ is empowered to hold a

hearing and to take testimony.               Id. § 498.60.          The second level

of appeal is to the Department Appeals Board.                         Id. § 498.80.

Appeals to the Board are on the record.                           Id. § 498.86.      An

appeal    of    the    Board’s    decision      is   taken   directly       to   circuit

court.    42 U.S.C. § 1395cc(h).

     The North Carolina State Survey Agency completed surveys at

Universal on November 22, 2005 and December 10, 2005.                              Both

surveys found violations of federal requirements.                       The November

violations centered on a patient, “G.J.,” whose treatment plan

called    for    him    to   receive   a    pain     medication,      Cafergot,    each

morning after he awoke. 1              The survey team found that on the

morning of November 19, 2005, the on-duty nurse was unable to

give G.J. Cafergot because the facility’s pharmacy had run out

of the drug.          The nursing staff substituted Darvocet and failed

to obtain a reorder of Cafergot until that afternoon.

         Following the November survey, CMS notified Universal that

its treatment of G.J. violated two Medicare regulations.                            The

first regulation requires that a facility provide pharmaceutical

services adequate to meet the needs of each resident. 42 C.F.R.

     1
       This resident is referred to as Resident #1, or R1A, in
the record.

                                            4
§    483.60(a).        The    second        regulation   requires        facilities    to

provide each patient with high quality care in accordance with

the patient’s comprehensive assessment.                       Id. § 483.25.         After

determining that these infractions reached the level of “actual

harm,” CMS assessed a civil monetary penalty of $250 per day

from       November    22,    2005    until       Universal   brought     itself     into

compliance.

       The December violations centered on A.W., a 69 year old

patient who died the evening of November 3, 2005. 2                         The survey

team faulted Universal's staff for failing to monitor A.W.'s

vital signs throughout the day.                    Had they done so, the survey

concluded,       the    staff       would     have    recognized    that     A.W.     was

declining rather than merely sleeping.

       The parties dispute exactly what transpired on November 3.

It   is     undisputed       that    A.W.    awoke    agitated     and    disoriented.

After Valium was administered, he was observed to be sleeping.

At 8:45 p.m., several nurses found A.W. to be non-responsive.

They contacted his attending physician and family members, and

they arranged for emergency medical services to transport A.W.

to the hospital.         A.W. died several hours later.

       2
       Because CMS conducted two separate surveys, this resident
is referred to as Resident #1, or R1B, in the record.

                                              5
       Following the December survey, CMS notified Universal that

its treatment of A.W. violated three regulations.                       The first

regulation requires that, in the event of a “significant change

in the resident’s physical, mental or psychological status,” a

facility must immediately inform the resident, consult with the

resident’s physician, and if known, notify the resident’s legal

representative or an interested family member.                 42 C.F.R. § 483.

The    second    regulation   requires      that   a    facility   “develop   and

implement       written   policies      and    procedures        that    prohibit

mistreatment and neglect.”            Id. § 483.13(c).           CMS also found

that   Universal    violated    the    quality     of   care    regulation    with

respect to A.W.

       After determining that these violations reached the level

of “immediate jeopardy,” CMS assessed a civil monetary penalty

of $300 per day from December 10, 2005 until Universal brought

itself    into    compliance.         CMS   imposed      an    additional    civil

monetary fine of $4,000 per day for the period November 3, 2005

through December 10, 2005.

       Universal appealed CMS’s findings and the penalties that it

assessed.       After a hearing, an ALJ affirmed the CMS’s findings

and penalties.       Universal then took an appeal to the Department

Appeals Board, which affirmed the ALJ’s decision.                   The instant

appeal followed.

                                        6
                                            II.

       The    appeal    concerns       two    issues.          The    first    is    whether

Universal violated the regulations as alleged with respect to

the care given to G.J. and A.W.                         The Secretary’s findings of

fact   must     be     upheld     if   they       are     supported     by     substantial

evidence on the record as a whole.                          Woodstock Care Ctr. v.

Health Care Fin. Admin., DAB No. 1726, at 9, 38 (2000), aff’d

Woodstock Care Ctr. v. Thompson, 363 F.3d 583 (6th Cir. 2003).

The Supreme Court has described “substantial evidence” in other

contexts as “such relevant evidence as a reasonable mind might

accept   as    adequate      to   support         a    conclusion.”         Richardson    v.

Perales, 402 U.S. 389, 401 (1971).

       On the second issue, Universal bears the burden of proving

that   CMS’s    determination          of     the      level   of    noncompliance       was

clearly erroneous.           See 42 C.F.R. § 498.60.                        We review for

reasonableness as to the appropriate dollar value of the fines.

See Woodstock Care Ctr., DAB No. 1726, at 43.

                                             III.

       The November 22, 2005 Survey focused on resident G.J., who,

at   that     time,    had   resided         at       Universal     since    1998.      G.J.

suffered from several ailments, including obsessive compulsive

disorder,      obstructive        sleep       apnea,       cervical         stenosis,    and

diabetes.       G.J.’s sleep apnea required him to wear an airway

                                              7
mask while sleeping.              Frequently, G.J. would wake up with a

headache.         To address these headaches, in 1999, G.J.’s physician

ordered that Cafergot pain tablets be administered to him every

morning.         By 2005, therefore, Cafergot had been an integral part

of G.J.’s treatment plan for over five years.

            On November 19, 2005, Nurse 1 was responsible for waking

G.J.       and    administering   his    Cafergot. 3         She     discovered      that,

because of a clerical error, the pharmacy had run out of the

medication.            Instead, Nurse 1 gave G.J. Darvocet.                     When her

shift ended at 7 a.m., she advised her replacement, Nurse 2, to

immediately         order    Cafergot    and      administer    it    by     mid-morning.

Nurse 2, however, did not place an order for Cafergot until

between 10 and 11 a.m.

       Universal has an arrangement with a courier service that

allows it to rapidly obtain emergency refills of medications.

Had Nurse 2 taken appropriate action, the Cafergot would have

arrived in the morning.                 Because of the delay, however, the

Cafergot         was   not   obtained    or       administered       until    4:30     p.m.

Meanwhile, G.J. found the Darvocet to be inadequate because he

continued to complain of a headache, requiring Nurse 2 to give

him Ultram.

       3
            The    nurses’    pseudonyms       used   here     are    taken     from    the
record.

                                              8
        Universal is at fault for running out of Cafergot.              This

lapse, in and of itself, would not have triggered a penalty had

the nursing staff followed Universal’s policy and placed a rush

order    for   the   medication.     Accordingly,      Universal’s    defense

centered on three points.          First, that Darvocet and Ultram are

adequate substitutes for Cafegot.          Second, that upon discovering

the Cafergot shortage, Nurse 1 called a doctor and administered

Darvocet according to his instructions.              Third, that Universal

acted with sufficient alacrity.

        The ALJ addressed all of these issues in his opinion.              He

concluded that Cafergot was required for G.J. because it was the

only pain medication that relieved his frequent headaches.                He

rejected, as a finding of fact, Nurse 1’s statement that she

contacted a doctor who directed her to administer Darvocet.              The

ALJ concluded that this never happened.              In a twenty-seven page

written opinion, the Board affirmed all of the ALJ’s findings.

        The instant appeal reprises the same three arguments that

the Secretary rejected.        Universal’s appeal relies heavily on

the assertion that Nurse 1 called G.J.’s doctor promptly upon

discovering that the Cafergot supply had run out and that she

administered    Darvocet   according      to   the   doctor’s   instructions.

Universal argues that the ALJ and the Board simply ignored this

telling evidence.      This is not the case, however.

                                      9
      The record demonstrates that the ALJ expressly considered

Universal’s version of the facts and rejected it as implausible.

In making this finding, he concluded that there was no evidence

in the record to support Universal’s assertion that a doctor had

ordered Nurse 1 to administer Darvocet.               The ALJ observed that

G.J.’s attending physician testified at the hearing but said

nothing about instructing a nurse to order Darvocet.                 He also

noted that neither Nurse 1 nor any other witness with personal

knowledge of the events of November 19 testified at the hearing.

Finally, the ALJ observed that Nurse 1's note relating to the

receipt of Darvocet was illegible.           The Board concluded that the

ALJ's decision to reject Universal’s version of the events was

reasonable and supported by substantial evidence.

      On appeal, Universal repeats the three arguments that the

Secretary rejected.       The centerpiece of Universal’s argument is

its contention that upon discovering the shortage of Cafergot,

Nurse 1 contacted a doctor.           The ALJ’s finding on this point is

supported by substantial evidence.           As the record demonstrates,

the doctor’s testimony did not corroborate Universal’s version

of   the   facts,   the   line   on   the   nurse’s    medication   notes   is

illegible, and Universal did not offer any testimony from the

nurse.     Ultimately, the ALJ was in the best position to conclude

that the record as a whole does not support Universal’s version

of the facts.

                                       10
       The    next    issue      is    whether       Darvocet      was   an    adequate

substitute for Cafergot.              Universal would not be at fault if the

two drugs were interchangeable.                     Here, both the ALJ and the

Board reasonably concluded that they were not.                       This finding is

fully supported by the record.                For five years G.J. had received

Cafergot     exclusively,        and    he    was    on   record    as     saying    that

Cafergot      was    the    only      drug   that    alleviated      his      headaches.

Moreover, there is no evidence in the record as to the dosage of

Darvocet given to G.J.             Without evidence as to dosage, there is

no basis on which to evaluate the pain reducing ability of the

pill that G.J. took that morning.                    Moreover, the record shows

that   G.J.    found       the   Darvocet     to     be   inadequate       because   his

headache continued and the staff administered Ultram later that

morning.

       The final issue is whether Universal, having run out of

Cafergot, acted with sufficient alacrity to obtain a resupply.

The record supports the Secretary's determination that Universal

did not.       Nurse 1 discovered the shortage at 5:00 a.m., but,

despite Universal's ability to obtain an immediate resupply by

courier, the Cafergot did not reach G.J. until 4:30 p.m. that

afternoon.

       Finally, we agree that the “actual harm” finding was not

clearly erroneous because G.J. complained of pain all morning

until he received the Cafergot.

                                             11
                                         IV.

        The December 2005 survey centered on A.W., a 69-year-old

patient who had been at the assisted living facility since July,

2004.       A.W. suffered from many ailments, including a seizure

disorder,     dementia,     agitation,          and    depression.            CMS   cited

Universal     for     neglecting    to     assess       and       monitor    significant

changes to A.W.’s condition in violation of 42 C.F.R. § 483.13.

CMS   also    cited    Universal     for       failing       to    immediately      notify

A.W.’s physician and family of those changes in violation of 42

C.F.R. § 483.10(b)(11).            Although there is some dispute as to

what occurred during November 3, the survey and the ALJ agreed

on the following facts.

        A.W.’s attending physician, Dr. Newsome, had visited A.W.

the     previous    night   and     observed          that    he    was     experiencing

agitation.      The next morning, Nursing Assistant 4 found A.W.

confused,      incontinent,       and     hungry.             Nursing       Assistant     4

retrieved     A.W.’s    breakfast       and,    upon     returning,         measured    his

blood pressure as 190/120.               Nurse C, A.W.’s attending nurse,

then called Dr. Newsome for instruction. 4

        Based on his observations from the night before, as well as

the Nursing Assistant’s report, Dr. Newsome ordered that Nurse C

        4
       “Nurse C” is used in this opinion as a pseudonym for the
attending nurse.

                                           12
administer Valium to A.W.            Nurse C administered the Valium at

approximately 10:15 a.m.

     Throughout the day, Universal’s staff checked on A.W. and

observed that he was sleeping, which is what one would expect of

a patient sedated with Valium.               At 8:45 p.m., ten and a half

hours after A.W. received the Valium, several nurses found A.W.

unresponsive.        They    promptly       called   Dr.    Newsome      and    A.W.’s

family,    and    they    arranged   for     emergency      medical     services   to

transport A.W. to the hospital.              A.W. died several hours later.

The cause of death was determined to be a hypersmolar coma with

cerebal edema swelling and cerebal hernia.

     Given this chronology, Universal contends that a finding of

neglect is unsupported by the record.                    Universal claims that

during    these   visits     its   staff     observed      A.W.    sleeping,     which

would have been a normal reaction to Valium’s sedative effects.

The Secretary, concluded, however, that merely checking on A.W.

was inadequate.          Rather, the Secretary found that the change in

A.W.’s condition on the morning of November 3 was sufficiently

serious    that    Universal       should     have   taken        his   vital    signs

throughout the day.

     Despite Universal's protestations, this finding of neglect

is fully supported by the record.               The Secretary reasoned that

A.W.’s agitation and disorientation placed the staff on notice

that his condition was deteriorating.                Because A.W. was sedated

                                        13
with Valium, a casual inspection would reveal only that he was

sleeping.           Accordingly,       the       Secretary     found   that     the    staff

should have monitored A.W.’s condition by regularly taking his

vital signs so that they could respond to any untoward findings.

The Secretary reasonably concluded that merely looking in on

A.W.       was   insufficient.             Moreover,    the     Secretary      found   that

Universal        had     overstated        the    frequency    with    which    its    staff

checked A.W.            In an interview, Nurse C stated that she checked

A.W. at least eight times during a twelve hour period.                             Because

staff       made    no     record     of    these     visits,    the    ALJ     reasonably

discounted              this     recollection           as      an      “after-the-fact

reconstruction.”

       Because of Universal's failure to monitor A.W. adequately,

the staff was unaware that he was deteriorating until 8:45 p.m.

when he was found to be unresponsive.                         At that time, Universal

immediately notified Dr. Newsome and A.W.’s family.                               By that

late hour, however, Universal had already violated regulations

requiring          it    to    spot   and        promptly    communicate       significant

changes in A.W.’s condition. 5

       5
       This is not a medical malpractice case. The Secretary is
not required to establish that A.W. would not have died had he
been monitored more closely.    The issue is not whether A.W.'s
death was preventable but whether he received the care required
by the regulations.

                                                 14
      Finally, we affirm the Board’s findings that the conditions

at the facility created immediate jeopardy to residents’ health

and   safety.       The    regulations      define     immediate     jeopardy      as   a

“situation in which the provider’s noncompliance with one or

more requirements of participation has caused, or is likely to

cause,     serious    injury,       harm,       impairment      or   death    to    the

resident.”      42 CFR § 488.404(b)(iv).                 The ALJ and the Board’s

findings     were    not        clearly    erroneous.           To   the     contrary,

Universal’s     failure      to    monitor       and   assess    A.W.’s      condition

prevented Dr. Newsome from caring for his patient.

                                           V.

      Finally, we review the civil monetary penalties (“CMPs”)

assessed.     Universal does not dispute the period for which CMS

imposed penalties.          Rather, Universal contends that the fines

were unreasonable.

      CMS may impose a CMP in two ways.                   It may either impose a

per-instance CMP in the range of $1,000 to $10,000 or daily CMPs

between $3,050 and $10,000.               42 CFR §§ 488.430, 488.438.              Daily

CMPs are appropriate for deficiencies that constitute immediate

jeopardy to a facility’s residents, and sometimes for repeated

deficiencies.        Id.    §    488.438.        Based    on   the   two   violations

discussed herein, CMS imposed a CMP of $4,000 per day for the

                                           15
period November 3, 2005 through December 9, 2005 and a CMP in

the amount of $300 per day effective December 10, 2005.

     These       monetary    penalties      are   appropriate.      As    discussed

above,     the    finding    of     immediate      jeopardy   was   not    clearly

erroneous.       Accordingly, a daily CMP of $4,000 is on the low end

of the range permitted by the applicable regulations.

                                           VI.

     In sum, we conclude that the Secretary’s determination that

Universal    was     not    in    compliance      with   Medicare   participation

requirements was supported by substantial evidence.                        We also

conclude     that    CMS’s       finding   of     immediate   jeopardy    was   not

clearly erroneous, and that the civil monetary penalties imposed

were reasonable. Universal Healthcare’s petition is, therefore,

                                                                           DENIED.

                                           16