Bender Terrace, DAB CR5303 (2019)

DECISION

Bender Terrace (Petitioner) is a skilled nursing facility (SNF) that participates in the Medicare program.  Following a complaint survey in September 2016, the Texas Department of Aging and Disability Services (state agency) determined that Petitioner was not in substantial compliance with regulations applicable to long-term care facilities and that some of the noncompliance posed immediate jeopardy to resident health and safety.  The Centers for Medicare & Medicaid Services (CMS) accepted the state agency’s findings and imposed a Denial of Payment for New Medicare and Medicaid Admissions (DPNA) from October 27, 2016, through December 4, 2016, a $10,641 per-day civil money penalty (CMP) from September 12 through 28, 2016, a $1,453 per-day CMP from September 29 through October 12, 2016, and a $303 per-day CMP from October 13 through December 4, 2016, for a total CMP of $217,298.  Petitioner requested a hearing to challenge the survey findings and CMS’s enforcement remedies.

CMS moved for partial dismissal of the hearing request as untimely and later moved for summary judgment.  Petitioner opposed the motion to dismiss, but did not respond to the motion for summary judgment.

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As explained below, I dismiss as untimely part of Petitioner’s request for hearing.  For the remaining timely portions of the hearing request, I grant summary judgment in CMS’s favor.  The undisputed material facts of this case establish that:  Petitioner was not in substantial compliance with regulatory requirements during the cited period and the CMP imposed is reasonable.

I.  Background

The Social Security Act (Act) sets forth requirements for the participation of an SNF in the Medicare program and authorizes the Secretary of Health and Human Services (the Secretary) to promulgate regulations implementing those statutory provisions.  42 U.S.C. § 1395i-3.  The regulations are found at 42 C.F.R. Parts 483 and 488.

To participate in the Medicare program, an SNF must maintain substantial compliance with program participation requirements.  See 42 U.S.C. § 1395i-3(a)(3).  To be in “substantial compliance,” an SNF’s deficiencies may “pose no greater risk to resident health or safety than the potential for causing minimal harm.”  42 C.F.R. § 488.301.  A “deficiency” is a violation of a participation requirement established by 42 U.S.C. § 1395i-3(b), (c), or (d), or the regulations at 42 C.F.R. pt. 483, subpt. B.  42 U.S.C. § 1395i-3(h)(1); 42 C.F.R. § 488.301.  “Noncompliance” means “any deficiency that causes a facility to not be in substantial compliance.”  42 C.F.R. § 488.301.  Broadly, noncompliance that subjects an SNF to enforcement remedies is divided into deficiencies that immediately jeopardize the health or safety of residents and those that do not.  42 U.S.C. § 1395i-3(h)(1).  “Immediate jeopardy” exists when “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 a resident.”  42 C.F.R. § 488.301. When a facility violates a statutory or regulatory requirement, and there is no immediate jeopardy, the facility will only be subject to enforcement remedies if the violation does not pose a risk for more than minimal harm.  42 C.F.R. §§ 488.402(b), 488.301.

The Secretary contracts with state agencies to conduct surveys to determine whether SNFs are in substantial compliance.  42 U.S.C. §§ 1395aa(a), 1395i-3(g); 42 C.F.R. § 488.10.  These surveys can be unannounced surveys that occur at least once every 15 months, or can be in response to a complaint. 42 U.S.C. § 1395i-3(g)(1)(C), (2), (4).  When the results of a survey show that an SNF is not in substantial compliance with the program participation requirements, the Secretary may impose enforcement remedies against the SNF.  42 U.S.C. § 1395i-3(h)(2); 42 C.F.R. § 488.406.  One of the enforcement remedies is a CMP.  42 U.S.C. § 1395i-3(h)(2)(B)(ii).  CMS may impose a per‑day CMP for the number of days an SNF is not in substantial compliance or a per-instance CMP for each instance of the SNF’s noncompliance.  42 U.S.C. § 1395i-3(h)(2)(A), (h)(2)(B)(ii)(I); 42 C.F.R. § 488.430(a).  The regulations state that a per-day CMP may range from either $50 to $3,000 per day for less serious noncompliance, or $3,050 to $10,000 per day for more serious noncompliance that poses immediate

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jeopardy to the health and safety of residents.  42 C.F.R. § 488.438(a)(1).  However, CMS updated these amounts under the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015, Pub. L. No. 114-74, § 701, 129 Stat. 584, 599 (2015) raising the per-day CMP range to between $103 to $6,188 per day for less serious noncompliance and $6,291 to $20,628 per day for more serious noncompliance that poses immediate jeopardy to the health and safety of residents.  45 C.F.R. § 102.3 (2016); 81 Fed. Reg. 61,538, 61,549 (Sept. 6, 2016).  These inflation-adjusted amounts apply to CMPs assessed after August 1, 2016, for deficiencies occurring on or after November 2, 2015.  Id. at 61,538.

If CMS imposes a CMP based on a noncompliance determination, then the facility may request a hearing before an administrative law judge (ALJ) to challenge the noncompliance finding and enforcement remedy.  42 U.S.C. §§ 1320a-7a(c)(2), 1395i-3(h)(2)(B)(ii); 42 C.F.R. §§ 488.408(g), 488.434(a)(2)(viii), 498.3(b)(13); see also 5 U.S.C. §§ 554, 556.  The hearing before an ALJ is a de novo proceeding.  CarePlex of Silver Spring, DAB No. 1683 (1999) (holding that ALJs hold de novo hearings based on issues permitted under the regulations and ALJ review is not a quasi-appellate review); see also Claiborne-Hughes Health Ctr. v. Sebelius, 609 F.3d 839, 843 (6th Cir. 2010) (The Departmental Appeals Board (DAB) “reviewed the finding under the de novo standard that the ALJ would have applied.”).  A facility has a right to appeal a “certification of noncompliance leading to an enforcement remedy.”  42 C.F.R. § 488.408(g)(1); see also 42 C.F.R. §§ 488.330(e), 498.3.  However, CMS’s choice of remedies and the factors CMS considers when choosing remedies are not subject to review.  42 C.F.R. § 488.408(g)(2).

In regard to the burden of proof, CMS must make a prima facie case that the SNF failed to comply substantially with federal participation requirements and, if this occurs, the SNF must, in order to prevail, prove substantial compliance by a preponderance of the evidence.  Hillman Rehab. Ctr., DAB No. 1611 at 8 (1997); see Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004); Batavia Nursing & Convalescent Ctr., DAB No. 1904 (2004), aff’d, Batavia Nursing & Convalescent Ctr. v. Thompson,129 F. App’x 181 (6th Cir. 2005); Emerald Oaks, DAB No. 1800 (2001).

Petitioner is an SNF that operates in Lubbock, Texas.  Based on a complaint, the state agency surveyed Petitioner’s facility from September 17, 2016 to September 28, 2016, and found that the facility was out of substantial compliance with the following requirements:

• 42 C.F.R. § 483.13(c) (Tag F224) (prohibit mistreatment/neglect/ misappropriation) at a scope and severity level of “K”;
• 42 C.F.R. § 483.13(c)(1)(ii)-(iii), (c)(2)-(4) (Tag F225) (investigate/report allegations/individuals) at a scope and severity level of “E”;

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• 42 C.F.R. § 483.13(c) (Tag F226) (develop/implement abuse/neglect, etc. policies) at a scope and severity level of “K”;
• 42 C.F.R. § 483.25(h) (Tag F323) (free of accident hazards/supervision/devices) at a scope and severity level of “K”;
• 42 C.F.R. § 483.75(e)(2)-(3) (Tag F494) (nurse aide work > 4 mo-training/competency) at a scope and severity level of “D”; and
• 42 C.F.R. § 483.75(l)(1) (Tag F514) (resident records-complete/accurate/accessible) at a scope and severity level of “D.”

CMS Exhibit (Ex.) 2.  Three of the deficiencies, involving tags F225, F226, and F323, were cited at the immediate jeopardy level, all at a scope and severity level “K,” meaning pattern of noncompliance that poses immediate jeopardy to resident health and safety.  CMS Ex. 1 at 1; see also State Operations Manual (SOM), ch. 7, § 7400.5 (Sep. 10, 2010).  CMS issued an initial determination adopting the state agency’s deficiency determinations and imposing a $6,150 per day CMP from September 12, 2016 through September 28, 2016, and a $1,000 per day CMP from September 29, 2016, until further notice from CMS.  CMS Ex. 1 at 1-2.

In a revisit survey on October 13, 2016, the state agency found that the facility was still out of substantial compliance with the following program requirement:

• 42 C.F.R. § 483.75(l)(1) (Tag F514) (requiring a facility to maintain accurate clinical records on residents) at a scope and severity level of “E.”

CMS Ex. 17.  CMS issued another initial determination adopting the state agency’s deficiency determination and imposing a DPNA effective October 27, 2016, as well as continuing the $1,000 per day CMP until further notice.  CMS Ex. 1 at 8.

The state agency conducted a second revisit survey on November 2, 2016, in which the state agency found that Petitioner’s facility was still out of substantial compliance with program requirements, namely:

• 42 C.F.R. § 483.25(h) (Tag F323) (free of accident hazards/supervision/devices) at a scope and severity level of “E.”

CMS issued another initial determination adopting the state agency’s deficiency determination and indicated that the DPNA and the non-immediate-jeopardy-level CMP were still in effect until further notice.  CMS Ex. 1 at 18.  The initial determination mistakenly indicated that the facility was not in substantial compliance with the six requirements from the first initial determination, including some at the immediate jeopardy level.  Compare CMS Ex. 1 at 18 with CMS Ex. 1 at 1.  However, the relevant CMS Form 2567 (statement of deficiencies) for the second revisit survey indicates that

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there was only one deficiency cited, Tag F323, at a scope and severity level of “E,” and, consistent with those findings, the initial determination imposed a per-day CMP amount in the non-immediate jeopardy range.  CMS Ex. 1 at 18; CMS Ex. 22.

During this process, CMS also issued two revised determinations to change the per-day CMP amounts that had been imposed against Petitioner in the earlier initial determinations.  CMS Ex. 1 at 12-14, 22-24.

On December 13, 2016, CMS provided a notice letter explaining that the facility had returned to substantial compliance on December 5, 2016.  CMS also provided that the following enforcement actions would be imposed:

1. DPNA from October 27 through December 4, 2016; and
2. Per-Day CMPs in the following amounts, for a total CMP amount of $217,298:
   • $10,641 from September 12 through 28, 2016 (17 days)
   • $1,453 from September 29 through October 12, 2016 (14 days)
   • $303 from October 13 through December 4, 2016 (53 days)

CMS Ex. 1 at 29-30.

On February 6, 2017, Petitioner filed a single request for hearing (Hearing Request) to dispute the findings and remedies from all of the surveys.  The case was assigned to Judge Carolyn Cozad Hughes for a hearing and decision.

On February 14, 2017, Judge Hughes issued a Pre-Hearing Order establishing a briefing schedule, and, in accordance with that order, CMS filed a prehearing brief (CMS Br.) and proposed 37 exhibits (CMS Exs. 1-37).  Petitioner filed a prehearing brief (P. Br.) and proposed 3 exhibits (P. Exs. 1-3).

After the parties filed their prehearing briefs and exhibits, CMS moved to dismiss as untimely the part of the Petitioner’s request for hearing that addressed the September 2016 survey (CMS MTD).  Petitioner filed a response to CMS’s motion for partial dismissal (P. Resp.) and one exhibit in support.

CMS then moved for summary judgment and filed a supporting brief (CMS MSJ).  Petitioner did not file a response to the motion for summary judgment.

This case was reassigned to me on November 20, 2018.

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II.  Evidentiary Ruling

I admit all of the proposed exhibits into the record.  Petitioner did not object to any of CMS’s exhibits, and expressly stated in its exhibit list that it would rely on nearly all of CMS’s exhibits.  Although CMS objected to P. Exs. 1-2, on the basis that the statements in those exhibits were not in the requisite form for written direct testimony, I overrule CMS’s objection.  The statements in P. Exs. 1-2 are dated October 21, 2016 and October 25, 2016, and may be accepted, not as written direct testimony, but as statements made contemporaneously with the surveys under review.

III.  Issues

1. Whether partial dismissal of the hearing request for untimeliness is appropriate;
2. If partial dismissal is appropriate, whether summary judgment for the remaining part of the hearing request is appropriate;
3. Whether Petitioner was in substantial compliance with the participation requirements at 42 C.F.R. § 483.75(l)(1) and 42 C.F.R. § 483.25(h); and
4. If Petitioner was not in substantial compliance, whether the CMP imposed is reasonable.
5. If Petitioner was not in substantial compliance, whether the DPNA is legitimate.

IV.  Partial Dismissal of the Request for Hearing

CMS moves for dismissal of Petitioner’s challenge to the remedies imposed based on the September 28, 2016 survey because Petitioner filed its hearing request 16 days after the January 21, 2017 deadline without good cause.  CMS MTD at 1.  As explained below, I grant CMS’s motion and dismiss Petitioner’s hearing request as it relates to the remedies imposed in CMS’s November 22, 2016 revised determination based on the September 28, 2016 survey.

An SNF is entitled to notice and an opportunity for a hearing when a CMP has been imposed.  42 U.S.C. §§ 1320a-7a(c)(2), 1395i-3(h)(2)(B)(ii).  In order for an SNF to exercise the right to a hearing, an SNF must file its request for an ALJ hearing no later than 60 days from the date that it receives notice from CMS.  42 C.F.R. § 498.40(a)(2).  Receipt of the notice is presumed to be five days after the date of the notice unless shown otherwise.  Id §§ 498.40(a)(2), 498.22(b)(3).  An SNF may request that an ALJ extend the date to file a hearing request, but must show good cause in order for the ALJ to grant

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such a request.  Id. § 498.40(c).  If a hearing request is untimely and there is no good cause to extend the filing date, then an ALJ may dismiss the hearing request.  Id. § 498.70(c).

In the present case, the first initial determination was dated October 19, 2016, which was based on the September 28, 2016 survey.  CMS Ex. 1 at 1-4.  The initial determination stated that Petitioner had both immediate jeopardy and non-immediate jeopardy deficiencies, and imposed a $6,150 per-day CMP for 17 days of immediate jeopardy from September 12 through 28, 2016, and, for non-immediate jeopardy deficiencies, a $1,000 per-day CMP starting on September 29, 2016, and continuing until further notice.  CMS Ex. 1 at 2.  The initial determination stated that if Petitioner disagreed with the determination of noncompliance, then it had to file a hearing request by December 18, 2016.  CMS Ex. 1 at 3-4.

The second initial determination was dated November 3, 2016, and this was based on the October 13, 2016 revisit survey.  CMS Ex. 1 at 8.  The determination stated that Petitioner was still not in substantial compliance, and that the $1,000 per day CMP that began on September 29, 2016, was to continue until further notice.  CMS Ex. 1 at 8.  The determination stated that if Petitioner disagreed with the determination of noncompliance for the October 13, 2016 survey, then Petitioner had to file a hearing request “no later than January 2, 2017 . . . for the October 13, 2016 survey.”  CMS Ex. 1 at 8-9.

In a November 22, 2016 revised determination (42 C.F.R. § 498.30), CMS raised the CMP amounts for the immediate jeopardy deficiencies from $6,150 to $10,641 per day and the non-immediate jeopardy deficiencies from $1,000 to $1,453 per day.  CMS Ex. 1 at 12.  The revised determination stated that Petitioner could request a hearing to appeal, but needed to do so by January 21, 2017.  CMS Ex. 1 at 13.  Accordingly, the revised determination applied to the two initial determinations and started a new 60-day clock for requesting a hearing related to the September and October surveys.  42 C.F.R. § 498.40(a)(2) (indicating a hearing request must be filed within 60 days from receipt of a revised determination).

The third initial determination, dated December 6, 2016, was based on the November 2, 2016 revisit survey.  CMS Ex. 1 at 18.  CMS maintained the $1,453 per day CMP until further notice.  CMS Ex. 1 at 18.  The notice also specified that if Petitioner disagreed with the determination of noncompliance with the November 2, 2016 survey, then Petitioner needed to file the request for hearing “no later than February 4, 2017 . . . for the November 2, 2016 survey.”  CMS Ex. 1 at 18-19.

On December 8, 2016, CMS issued another revised determination, but one that affected the CMPs imposed after September 29, 2016, only, not any of the CMPs imposed from September 12 through 28, 2016.  CMS Ex. 1 at 22.  The notice indicated that CMS was imposing the $1,453 per-day CMP from September 29 through October 12, 2016, and

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imposing a $303 per-day CMP from October 13, 2016 until further notice.  CMS Ex. 1 at 22.  The revised determination stated that Petitioner needed to file a hearing request by February 6, 2017 if it disagreed with the determination of noncompliance.  CMS Ex. 22-23.  Significantly, the notice stated that the “Federal Civil Money Penalty of $10,641.00 per day for the seventeen (17) days beginning September 12, 2016, and continuing through September 28, 2016, for a total of $180,897.00” remained unchanged by the notice.  CMS Ex. 1 at 22-23.

In a final, December 13, 2016 notice, CMS stated that Petitioner had returned to substantial compliance as of December 5, 2016.  CMS Ex. 1 at 29.  CMS specified all of the enforcement remedies imposed, including the determination that the $303 per-day CMP would be imposed from October 13 through December 4, 2016.  CMS Ex. 1 at 29-30.  The notice stated that CMS had not received a request for hearing or a waiver of appeal rights from Petitioner, but that there was still time to file an appeal or to waive the right to a hearing.  CMS Ex. 1 at 29-30.  Further, the notice stated:

REMINDER:  If you waive your right to a hearing (IN WRITING) no later than January 21, 2017, for the September 28, 2016, survey and February 6, 2017, for the October 13, 2016, survey, the total amount of the civil money penalty will be reduced by 35%. (A waiver would reduce the CMP from $217,298.00 to $141,243.70.)

CMS Ex. 1 at 29 (emphasis added).

Petitioner filed a hearing request on February 6, 2017, expressly appealing remedies imposed as a result of all three surveys, which took place on September 28, 2016, October 13, 2016, and November 2, 2016.  Hearing Request at 1.

Because there was a revised determination, dated November 22, 2016, for the CMP related to the September 2016 survey, Petitioner had 60 days or until January 21, 2017, to file a timely appeal for that determination.  42 C.F.R. § 498.40(a)(2) (the affected party or its legal representative or other authorized official must file the request in writing within 60 days from receipt of the notice of initial, reconsidered, or revised determination); CMS Ex. 1 at 12.  Although there were later determinations and revisions for the later surveys, those notices expressly stated that the CMP imposed from September 12 through 28 (for the September 2016 survey) was not revised.  CMS Ex. 1 at 22-23.  Therefore, Petitioner had to request a hearing with respect to the September 2016 survey by January 21, 2017, but Petitioner did not do so until February 6, 2017.

Petitioner did not include a good cause statement as to why Petitioner filed a late hearing request related to the remedies imposed based on the September survey.  Neither did Petitioner request an extension of time to file that hearing request.  Instead, Petitioner argues that it filed timely to dispute all of the remedies imposed based on all three

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surveys.  Petitioner asserts that all results and remedies imposed from the entire survey cycle are appealable based on the last notice issued rather than requiring multiple hearing requests based on each determination.  P. Resp. at 8-10.  Petitioner asserts that all of the notice letters speak of continuing non-compliance and that “they are continuing with the exact same remedies as the remedies being imposed for each of the previous surveys. . . . if you were to follow the logic of CMS, it would necessarily lead to conclusions that make no sense and would defy logic and any notion of judicial efficiency.”  P. Resp. at 9.

There is nothing in the regulations to support Petitioner’s reading.  42 C.F.R. § 498.40(a)(2); Mimiya Hospital, DAB No. 1833 (2002)(finding a request for hearing untimely as to the first survey, but timely as to the second); see also Hillcrest Healthcare, LLC, DAB No. 1879 (2003)(upholding the ALJ’s dismissal of a request for hearing as to the first survey, where the timeliness of the hearing request as to the second survey was a separate matter).  This case is no different than many survey and certification cases that involve more than one survey conducted to ensure that a facility achieves substantial compliance.  The November 22, 2016 revised determination clearly indicated that Petitioner had until January 21, 2017, to file a request for the September survey.  CMS Ex. 1 at 12.  Additionally, CMS’s final revised determination stated that the immediate jeopardy CMP was not subject to the revision, and, as quoted above, CMS delineated two dates for filing waivers of hearing rights, January 21, 2017 for the September survey and February 6, 2017 for the October and November surveys, which were the same due dates for hearing requests related to this case.  CMS Ex. 1 at 29; see also 42 C.F.R. § 488.436(a) (filing a waiver of a hearing has the same 60-day deadline as to file a request for hearing for an initial or revised determination.).  With the final revised determination, Petitioner essentially received a reminder that it had until January 21, 2017, to file a request for hearing with respect to the September 2016 survey.  The notices therefore reasonably informed Petitioner of the due dates for appeal.  See Waterfront Terrace, Inc., DAB No. 2320 at 6, 8 (2010) (holding that no good cause existed to justify extending the filing deadline where the notice letter reasonably informed the Petitioner of its appeal rights).

The notice letters do not speak of a continuation of the same noncompliance, as Petitioner contends, but rather “continuing noncompliance with Medicare/Medicaid requirements.”  P. Resp. at 8-9.  The nature of a facility’s noncompliance may change after revisit surveys, when some deficiencies are corrected or new ones are found, and those changes may result in different remedies.  The language in the notice letters, moreover, is consistent with the DAB’s position that “once a facility has been found to be out of substantial compliance, it remains so until it affirmatively demonstrates that it has achieved substantial compliance once again.”  Premier Living & Rehab Ctr., DAB No. 2146 at 23 (2008).  And a facility remains out of substantial compliance until it has achieved substantial compliance with all program requirements, not just the ones it was cited for initially.

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Because Petitioner did not file a hearing request until February 6, 2017, and did not assert good cause for failing to do so, Petitioner’s hearing request as to the findings in the September 2016 survey is untimely and is therefore dismissed.  42 C.F.R. § 498.70(c).  As a result, the September survey findings, including the findings of substantial noncompliance, immediate jeopardy, and the $10,641 per-day CMP imposed from September 12 through 28, 2016, are binding.  42 C.F.R. § 498.32(b).

In light of the partial dismissal, only the October and November 2016 surveys remain.  Although Petitioner raises several arguments regarding CMS’s immediate jeopardy determination, the only immediate jeopardy findings and remedies in this case were based on the September 2016 survey, not the October and November surveys.  P. Br. at 17-20.  Accordingly, Petitioner’s arguments regarding CMS’s immediate jeopardy determination are beyond the scope of my review.

I may not review CMS’s scope and severity findings for the October and November surveys.  Under the regulations, I may review CMS’s scope and severity findings only if: 1) a successful challenge would affect the range of the CMP; or 2) CMS has made a finding of substandard quality of care that results in the loss of approval of a facility’s nurse aide training program.  42 C.F.R. §§ 498.3(b)(14), 498.3(d)(10); Cedar Lake Nursing Home, DAB No. 2344 at 9 (2010); Evergreen Commons, DAB No. 2175 (2008); Aase Haugen Homes, DAB No. 2013 (2006).  Here, because the remaining CMPs were imposed at the non-immediate jeopardy level only, a successful challenge would not affect the range of the CMPs imposed.

V.  Undisputed Facts, Conclusions of Law, and Analysis

My numbered conclusions of law are set forth in bold and italics.  I decide this case on summary judgment based on the undisputed facts in this case related to the October and November 2016 surveys.

1. Summary judgment with respect to remaining parts of Petitioner’s request for hearing is appropriate.

When appropriate, an ALJ may decide a case arising under 42 C.F.R. part 498 by summary judgment.  Livingston Care Ctr. v. U.S. Dep’t of Health & Human Servs., 388 F.3d 168, 172 (6th Cir. 2004) (citing Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 749-50 (6th Cir. 2004)); see also Fal-Meridian, Inc. v. U.S. Dep’t of Health & Human Servs., 604 F.3d 445, 449-50 (7th Cir. 2010); Cedar Lake Nursing Home v. U.S. Dep’t of Health & Human Servs., 619 F.3d 453, 457 (5th Cir. 2010).  “Matters presented to the ALJ for summary judgment will follow Rule 56 of the Federal Rules of Civil Procedure and federal case law . . . .”  Civil Remedies Division Procedures § 19(a).

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As stated by the United States Supreme Court:

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment ‘shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.  By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original).

To determine whether there are genuine issues of material fact for an in-person hearing, the ALJ must view the evidence in the light most favorable to the non-moving party, drawing all reasonable inferences in that party’s favor.  Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300 at 3 (2010) (citations omitted).  To defeat a well-pleaded motion for summary judgment, the non-moving party must come forward with some evidence of a dispute concerning a material fact; mere denials in its pleadings are not sufficient.  Id.

As explained below, CMS has alleged facts in support of its motion for summary judgment that establishes the facility’s noncompliance during the October and November 2016 surveys, namely, that the facility failed to maintain complete and accurate clinical records and to prevent accident hazards.  Notably, Petitioner did not file a response to CMS’s motion for summary judgment.  Petitioner’s prehearing brief addresses the findings of noncompliance, but focused the brief almost entirely on the deficiencies from the September 28, 2016 survey, which is no longer at issue in this case.  When Petitioner addresses matters relevant to this case, those arguments center not on what the facts are, but rather on the legal significance of those facts.  Those arguments are addressed more fully in my analysis below.  There is no genuine dispute of material fact.  Consequently, I conclude that summary judgment is appropriate for deficiencies that remain to be adjudicated in this case.

2. Petitioner was not in substantial compliance with the participation requirement at 42 C.F.R. § 483.75(l)(1) (Tag F514) (October 2016 Survey).

An SNF must “maintain clinical records on all residents, which records include plans of care . . . and residents’ assessments.”  42 U.S.C. § 1395i-3(b)(6)(C).  The Secretary promulgated a regulation requiring an SNF to maintain clinical records on each resident in accordance with accepted professional standards and practices that are (i) complete,

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(ii) accurately documented, (iii) readily accessible, and (iv) systematically organized.  42 C.F.R. § 483.75(l)(1).

CMS alleges the following are the material undisputed facts related to the deficiency under 42 C.F.R. § 483.75(l)(1), which the surveyors identified during the October 2016 survey:

32. Resident 1B was a 71-year-old female admitted to Bender Terrace on August 3, 2015, and readmitted on May 12, 2016. CMS Ex. 17 at 3.

33. Resident 1B was diagnosed with, among other conditions, Chronic Obstructive Pulmonary Disease (COPD) and dementia. CMS Ex. 17, at 3, 4; CMS Ex. 20, at 19.

34. According to Family A, Resident 1B had a surgical procedure and returned to the facility with orders from the cardiologist for continuous oxygen.  CMS Ex. 17, at 3.

35. On September 25, 2016, Resident 1B arrived to the UMC Emergency Room (ER) by ambulance due to difficulties in breathing. CMS Ex. 20, at 17, 21; CMS Ex. 19, at 25.  The physician found that she had significant respiratory distress. CMS Ex. 20, at 3.  A few days later, Resident 1B died. CMS Ex. 20, at 1.

36. The surveyor’s review of Resident 1B’s closed electronic and paper records revealed that, on May 13, 2016, Resident 1B was ordered continuous oxygen at 2 liters and staff was to check oxygen saturation every shift.  CMS Ex. 17 at 4.

37. The resident was apparently non-compliant with the order so, on May 26, 2016, the order was changed from continuous oxygen to as needed. Id. at 2.  However, this change was not made in the Orders section of the Resident 1B’s health record. Id. at 4.

38. Bender Terrace continued to assess Resident 1B’s saturation levels each shift until August 14, 2016 when oxygen was given on an as needed basis.  Id. at 2.

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39. The order for continuous oxygen was again discontinued due to “non-use” as were the checks of oxygen saturation levels each shift.  Id.

40. The decrease in saturation level checks coincided with the resident’s increased shortness of breath. Id. at 2. Her family noticed her breathing difficulties and requested chest x-rays.  Id. at 4.

41. After the chest x-rays were performed around August 21, 2017, Resident 1B was diagnosed with pneumonia and emphysema. CMS Ex. 17 at 3; CMS Ex. 19 at 19.

42. The surveyor found that Resident 1B’s saturation levels were not entered under the Vitals section of her medical record each time they were assessed.  Id. at 3-4.  ADON 1 also confirmed the surveyor’s findings. CMS [Ex.] 16, at 5-6; CMS Ex. 21 at 1-14.

CMS MSJ at 7-8.

In short, CMS alleges that the facility failed to record the order on May 16, 2016, for the resident to change from continuous oxygen to oxygen as needed and to discontinue the checks for the resident’s oxygen saturation levels at every shift.  CMS MSJ at 7; CMS Ex. 17 at 2-4.  Additionally, CMS also alleges that the facility failed to record the resident’s oxygen saturation levels in the “Vitals” section of her record each time they were assessed.  CMS MSJ at 8.  The surveyor found that, from August 14 through September 24, 2016, there was just one entry, dated August 16, documenting an oxygen saturation check.  CMS MSJ at 8; CMS Ex. 17 at 3-6.  Based on these findings, CMS alleges that Petitioner was not in substantial compliance with § 483.75(l)(1) during the October survey.  CMS MSJ at 16.

As noted, Petitioner did not respond to CMS’s summary judgment motion and did not dispute CMS’s list of undisputed material facts.  Further, in its prehearing brief, moreover, Petitioner did not dispute that the facility failed to record the oxygen order and the oxygen saturation checks in the “Orders” and “Vitals” sections of the clinical record.  Instead, Petitioner argued that the “citation cannot stand for the proposition that all clinical records are perfect and absent of any mistakes” and that “to imply such a standard would be the equivalent of imposing a strict liability standard.”  P. Br. at 17.  Petitioner argues that “the mere assertion by CMS that a single, isolated mistake or a handful of minor clerical errors over a couple of months should not be sufficient to establish that the facility was in noncompliance.”  P. Br. at 17.

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Petitioner’s arguments downplay the importance of medical records.  Far from holding Petitioner to a “perfect” standard, CMS alleges—and Petitioner has offered no evidence to the contrary—that the facility failed to record the resident’s oxygen order and that, during a nearly six-week period from August 14 through September 24, 2016, there was just one entry in the “Vitals” section documenting an oxygen saturation check.

The regulation in this matter, § 483.75(l)(1), established criteria for assessing compliance with the clinical record, which is part of the more general statutory duty that an SNF be administered in a manner that enables it to use its resources effectively and efficiently to attain or maintain the highest practical physical, mental, and psychological well-being of each resident.  42 U.S.C. § 1395i-3(d)(1)(A), (f)(5)(F).  As the Departmental Appeals Board (Board) has noted, “documenting a resident’s medical condition and care is a critical nursing function.”  Autumn Ridge Rehab. Ctr., DAB No. 2467 at 20 (2012).  Petitioner’s failure to document Resident 1B’s care in the proper places in the clinical record certainly placed the resident at risk for more than minimal harm.  As the DAB stated in another case where resident medical records were compromised:

Moreover, such false records create a potential for more than minimal harm to residents given that they are intended to be relied on in making treatment decisions.  Even though these records did not form the basis for treatment decisions for this resident because she had been hospitalized by the time they were made, the nurse’s recording of false data casts doubt on the reliability of the facility’s other records.  Based on these facts, we conclude that Life Care was not in substantial compliance with section 483.75(l)(1).

Life Care Center of Gwinnett, DAB No. 2240 at 19 (2009).  Although the present case only involves the omission of information and not false information, Petitioner’s conduct also casts doubt on Petitioner’s record keeping.  Keeping accurate records directly relates to an SNF being administered so that residents can attain or maintain the highest practical physical, mental, and psychological well-being.  Accordingly, I conclude, based on the undisputed facts in this matter, that Petitioner was out of substantial compliance with the requirement that facilities maintain clinical records that are (i) complete, (ii) accurately documented, (iii) readily accessible, and (iv) systematically organized.  42 C.F.R. § 483.75(l)(1).

3. Petitioner was not in substantial compliance with the participation requirement at 42 C.F.R. § 483.25(h) (Tag F323) (November 2016 Survey).

A long-term care facility must ensure that the resident environment remains as free of accident hazards as is possible and that each resident receives adequate supervision and assistance devices to prevent accidents.  42 C.F.R. § 483.25(h).  Therefore, subsection

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483.25(h)(1) requires that a facility address foreseeable risks of harm from accidents “by identifying and removing hazards, where possible, or, where the hazard is unavoidable because of other resident needs, managing the hazard by reducing the risk of accident to the extent possible.”  Maine Veterans’ Home - Scarborough, DAB No. 1975 at 10 (2005) (explaining the inherent standard of care in section 483.25(h)(1)).  The provisions of section 483.25(h) “come into play when there are conditions in a facility that pose a known or foreseeable risk of accidental harm.”  Meridian Nursing Ctr., DAB No. 2265 at 9 (2009), aff’d sub. nom., Fal-Meridian, Inc. v. U.S. Dep’t of Health & Human Servs., 604 F.3d 445 (7th Cir. 2010).

CMS alleges the following are the material undisputed facts related to the deficiency under 42 C.F.R. § 483.25(h), which the surveyors identified during the November 2016 survey:

43. During this revisit survey, the Surveyor, Sandra Moncrief, toured the 300 Hall with Bender Terrace’s DON.  CMS Ex. 34 at 2.

44. Surveyor Moncrief observed the utility room closed, but the key to the door had been left in the lock.  Id.  In the room, she observed a 32 ounce bottle labeled “Spray Cleaner with Bleach” in plain view and within reach of ambulatory residents.  Id.  The label stated the product caused serious eye and skin irritation.  Id.  The SDS [Safety Data Sheet] for the product also advises to get immediate medical attention if ingested.  Id.

45. Surveyor Moncrief also observed that the door to a Beauty Shop in another hall was propped open by two cans, with no staff present.  CMS Ex. 34 at 2; CMS Ex. 30.  Chemicals such as hair clipper oil, hair spray, hair color, and nail clipper removal were within reach of 5 nearby residents.  CMS Ex. 34 at 2-3.

46. The Beauty Shop operator acknowledged she was supposed to lock the door when she leaves the Beauty Shop. Id.  When Surveyor Moncrief asked the Beauty Shop operator for the SDS of the products in the shop, she stated she did not have any.  Id.  Her review of the products’ SDS revealed that most products were harmful to resident health safety if not properly used.  See CMS Ex. 29.

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47. Residents 1C, 2, 3, 4, and 5 were sitting in a common area, 9 steps away from the Beauty Shop during the time the Beauty Shop door was propped open. CMS Ex. 34 at 2.

48. Surveyor Moncrief’s review of the residents’ records revealed the following:

a. Resident 1C – Diagnosis: Dementia Non Alzheimer's, Respiratory distress syndrome, Anxiety Disorder and Major Depression. CMS Ex. 24.

b. Resident 2 – Diagnosis: Dementia Non- Alzheimer's, Alzheimer's disease, Depression. CMS Ex. 25.

c. Resident 3 – Diagnosis: Non-Alzheimer's Dementia, Anxiety and Depression. CMS Ex. 26.

d. Resident 4 – Delirium Disorganized thinking, Diagnosis: Anxiety, Depression and shortness of breath. CMS Ex. 27.

e. Resident 5 – Short and long term memory problems, Cognitive skills: moderate independence, some difficulty in new situations only. Diagnosis: Non Alzheimer's Dementia, Anxiety, and Depression. CMS Ex. 28.

49. Bender Terrace’s Safety and Supervision of Residents policy stated that the facility strives to make the environment as free from accident hazards as possible and employees should be trained to try and prevent avoidable accidents. CMS Ex. 34 at 5.

CMS MSJ at 8-9.

CMS alleges that the facility’s failure to secure the utility room and beauty shop with dangerous substances inside amounted to noncompliance with 42 C.F.R. § 483.25(h).  CMS MSJ at 13.

Again, Petitioner provided no response to CMS’s motion for summary judgment.  In its prehearing brief, Petitioner did not dispute any facts CMS alleged, but argues that there was “absolutely no evidence presented that any of the residents in the facility . . . had actual access to any of these substances.”  P. Br. at 16.  Petitioner also asserts that, besides an incident with Resident #1, which was cited during the September 2016

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survey,1 the absence of any other incidents indicates that the facility systems were clearly working effectively and the staff monitoring must have been effective as well.  P. Br. at 16.

Contrary to Petitioner’s arguments, CMS cited to the surveyor’s testimony that she observed the spray cleaner in the utility room “in plain view and within reach of ambulatory residents” and that she observed five residents “sitting approximately 9 steps from the Beauty Shop door.”  CMS MSJ at 13; CMS Ex. 34 at 2; see also CMS Ex. 22 at 6.  Petitioner has offered no evidence to the contrary, to raise a dispute of material fact.

The DAB has upheld deficiencies under § 483.25(h)(1) based on unlocked utility rooms and beauty shops.  Omni Manor Nursing Home, DAB No. 1920 (2004); Northern Montana Care Center, DAB No. 1930 (2004) (“We thus agree that by leaving the beauty shop door unlocked, Northern Montana failed to ensure that the resident environment remained as free of accident hazards as is possible.”).

Finally, I disagree with Petitioner’s argument that the absence of any incidents, besides one that was cited during the September 2016 survey, saves Petitioner here.  Petitioner was fortunate that the failure to secure the utility room and beauty shop did not result in actual harm to its residents, but the facility was still out of substantial compliance with the cited regulation.  Moreover, there need not be evidence that a resident was actually harmed for me to find that Petitioner was out of substantial compliance with a regulation, simply that there was the potential to cause more than minimal harm to resident health and safety.  42 C.F.R. § 488.301.  There was certainly the potential for more than minimal harm here, with the facility’s failure to secure the rooms with dangerous substances inside.  As stated by the DAB on this issue:

We also find unconvincing Omni's argument that in order to find a deficiency, residents had to have been observed in the hallway at the time the surveyors saw the unlocked storage area.  As we have explained with respect to a facility's obligation to provide adequate supervision to prevent accidents (42 C.F.R. § 483.25(h)(2)), it is the risk , not the fact, of an accident that is the crux of this deficiency.  We find that the following rationale applies with equal force to a facility's obligation to keep the environment as free as possible of accident hazards under 42 C.F.R. § 483.25(h)(1).

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. . .

Moreover, the uncontested statements of the facility's RN and maintenance supervisors that the door should always stay locked supports a conclusion that the facility knew that the unlocked door created an accident hazard.

Omni Manor Nursing Home, DAB No. 1920 (emphasis in original).

Accordingly, based on the undisputed evidence that the facility failed to secure the utility room and beauty shop (and the dangerous substances inside), with cognitively impaired residents nearby, I conclude that Petitioner failed to mitigate accident hazards and was out of substantial compliance with 42 C.F.R. § 483.25(h).

I note that Petitioner’s remaining arguments regarding this deficiency relate to the scope and severity determination.  P. Br. at 15.  As noted, for the November 2016 survey, the facility was cited for a deficiency at a scope and severity level of “E” and CMS imposed a per-day CMP that was in the non-immediate jeopardy range.  CMS Ex. 1 at 18, 22, 29.  As I explained above in Part IV, my review of the scope and severity determination would not change the range of CMP imposed for this deficiency.

4. The CMP imposed is reasonable in duration and amount.

CMS requested in its summary judgment motion that I uphold the remedies imposed on Petitioner.  CMS MSJ at 18.  As stated earlier, Petitioner did not respond to the motion.

In regard to reviewing the amount of a CMP, I examine whether a CMP is reasonable by applying the following factors:  1) the facility’s history of noncompliance (including repeated deficiencies) in general and specifically with reference to the cited deficiencies; 2) the facility’s financial condition; 3) the facility’s degree of culpability, which includes neglect, indifference, or disregard for resident care, comfort, or safety; however, the absence of culpability is not a mitigating factor; 4) the scope and severity of the deficiency; 5) and the relationship of the deficiency to other deficiencies resulting in noncompliance.  42 U.S.C. §§ 1320a-7a(d), 1395i-3(h)(2)(B)(ii); 42 C.F.R. §§ 488.404, 488.438(f).

In assessing the reasonableness of a CMP amount, an ALJ looks at the per-day amount, rather than the total accrued CMP.  See Kenton Healthcare, LLC, DAB No. 2186 at 28 (2008).  For the deficiencies at issue in this case, the lower range of $103 to $6,188 per-day penalties applies.  45 C.F.R. § 102.3 (2016); 81 Fed. Reg. 61,538, 61,549 (Sept. 6, 2016).  The regulations leave the decision regarding the choice of remedy to CMS, and the amount of the remedy to CMS and the ALJ, requiring only that the regulatory factors

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at 42 C.F.R. §§ 488.438(f) and 488.404 be considered when determining the amount of a CMP within a particular range.  42 C.F.R. §§ 488.408; 488.408(g)(2); 498.3(d)(11); see also 42 C.F.R. § 488.438(e)(2) and (3); Alexandria Place, DAB No. 2245 at 27 (2009); Kenton Healthcare, LLC, DAB No. 2186 at 28-29.  Unless a facility contends that a particular regulatory factor does not support the CMP amount that CMS imposed, the ALJ must sustain it.  Coquina Ctr., DAB No. 1860 at 32 (2002).

I am not bound to defer to the CMS determination of the reasonableness of the CMP amount, but my authority is limited by the regulations.  The limitations as set forth in the regulations are:  (1) I may not set the CMP at zero or reduce it to zero; (2) I may not review the exercise of discretion by CMS in selecting to impose a CMP; and (3) I may only consider the factors specified by 42 C.F.R. § 488.438(f) when determining the reasonableness of the CMP amount.  I am to determine whether the amount of any CMP proposed is within reasonable bounds considering the purpose of the Act and regulations. Emerald Oaks, DAB No. 1800 at 10 (2001); CarePlex of Silver Spring, DAB No. 1683 at 14-18 (1999); Capitol Hill Cmty. Rehab. & Specialty Care Ctr., DAB No. 1629 (1997).

For the October and November 2016 surveys, CMS imposed a total CMP of $36,401, consisting of 14 days of a $1,453 per day CMP from September 29 through October 12, 2016, and 53 days of a $303 per-day CMP from October 13 through December 4, 2016.  CMS Ex. 1 at 29.  As noted, the $10,641-per-day CMP related to the September 2016 survey, which Petitioner did not timely appeal, is binding and not subject to review.

CMS raises several points in its prehearing brief to argue that the CMPs are reasonable.  CMS argues that the imposed remedies are in the lower range of what could have been imposed; that Petitioner has a substantial history of noncompliance with Medicare and Medicaid requirements; and that Petitioner’s staff neglected residents, leaving doors unsecured and exposing the residents to dangerous chemicals.  CMS Br. at 21-22.

Petitioner did not respond to these arguments.  Petitioner thus does not dispute that the CMP amounts imposed in this case are relatively low or that the facility has a “substantial” history of noncompliance, factors that I find support the reasonableness of the CMP amounts in this case.  42 C.F.R. § 488.438(a)(1); CMS Ex. 37.

Petitioner argues in its prehearing brief that its financial condition is a basis for a reduction in the CMP, asserting that it “cannot afford to absorb this level of penalty and still be expected operate as a nursing facility.”  P. Br. at 21.  In support, Petitioner refers to its March 24, 2017 request for consideration of financial hardship.  P. Br. at 21.  There, Petitioner explains that the facility’s administrator had mishandled and misallocated facility funds during her tenure by failing to put in place a proper accounting staff, which resulted in many accounting and billing mistakes.  P. Ex. 3 at 4.  Petitioner also noted that, in October and November 2016, it released the administrator from her duties and

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apparently handed over management duties to a third-party billing company.  P. Ex. 3 at 4.

Petitioner also submitted unaudited financial statements, including cash basis balance sheets, profit and loss statements, an accounts receivable aging report, and a current accounts payable report.  P. Ex. 3 at 4, 8-15.  In the financial statements, the cash basis balance sheets showed $585,648.31 in total assets as of December 31, 2016 and $435,027.09 in total assets as of February 28, 2017.  P. Ex. 3 at 8, 14.  Profit and loss statements showed that the facility had net losses of $90,627.97 in calendar year 2016 and $110,395.75 in the first two months of 2017.  P. Ex. 3 at 11-13.

The DAB has recognized that the facility has the burden of demonstrating (by a preponderance of the evidence) its inability to pay the CMPs.  Gilman Care Center, DAB No. 2357 at 7 (2010).  Furthermore, the DAB has long held that “the correct inquiry” in evaluating such a claim is “whether the facility has adequate assets to pay the CMP without having to go out of business or compromise resident health and safety.”  Id.

Even accepting the accuracy of the financial figures furnished by Petitioner for purposes of summary judgment, I do not find that the facility’s financial condition supports reducing the CMP amounts.  As noted, the balance sheets show more than $435,027.09 in assets, including an operating account of more than $37,342.95 alone.  P. Ex. 3 at 8.  A total CMP of $36,401 would represent just 8% of the value of total assets.2  The information on the profit and loss statements, moreover, does not make the requisite showing.  As the DAB has noted, partial information, such as information about a facility’s “annual profits or losses, may not be an accurate reflection of a facility’s financial health or ability to pay, and must be considered in the light of such other indicators as the facility’s financial reserves, assets, credit-worthiness, and ‘other long-term indicia of its survivability.”’  Guardian Care Nursing & Rehab. Ctr., DAB No. 2260 at 8 (2009) citing Kenton Healthcare, LLC, DAB No. 2186 (2008) (all indicia of financial situation, as well as financing options, not merely cash flow, considered for this factor) and Windsor Health Care, DAB No. 1902 (2003) (adequacy of assets, not profits, the relevant inquiry).  Though the facility presents losses of $90,627.97 in calendar year

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2016 and $110,395.75 in the first two months of calendar year 2017, there is no indication that the losses of those amounts, more than triple the $36,401 CMP being imposed here, have forced the facility to go out of business.  Thus, even accepting Petitioner’s evidence regarding its financial condition, I do not find that Petitioner has met its burden of showing that a reduction of the CMP amount is warranted.

Accordingly, for all of these reasons, I conclude that the per-day CMPs imposed here are reasonable.

5. CMS had a legitimate basis to impose a DPNA from October 27, 2016, through December 4, 2016, because Petitioner was noncompliant with SNF standards at 42 C.F.R. §§ 483.25(h) and 483.75(l)(1), and I do not have authority to reverse that decision.

CMS may impose a DPNA any time there is a breach of substantial compliance.  42 C.F.R. § 488.417(a); see Ridgecrest Healthcare, DAB No. 2598 (2014) (holding that “42 C.F.R. § 488.417(a)[] authoriz[es] a DPNA when a facility is not in substantial compliance with the participation requirements”).  Based on the violations of 42 C.F.R. §§ 483.25(h) and 483.75(l)(1) discussed above, CMS had a legitimate basis to impose a DPNA.

VI.  Conclusion

For the foregoing reasons, I dismiss Petitioner’s request for hearing with respect to the findings from the September 28, 2016 survey.  I grant summary judgment in favor of CMS and affirm its revised determination with respect to the October and November 2016 surveys because the undisputed material facts establish that Petitioner was out of substantial compliance with program requirements and that the penalties imposed are reasonable.

• 1. Petitioner is here referring to an incident from the September 2016 survey, where Resident #1 ingested some amount of shampoo while in the shower. P. Br. at 4-5. As noted, the findings related to the September 2016 are binding and are not under further review in this case.
• 2. I recognize that this calculation does not include the CMP amount imposed related to the September 28, 2016 survey. But, even if I consider the CMP amount imposed for the entire survey cycle, I find that the facility has sufficient assets to cover the total $217,298 CMP amount. Additionally, although I need not rely on it for this decision, I observe that, under 42 C.F.R. § 488.431, CMS collects the imposed CMP 90 days from the date of the initial determination notice or the date when the independent informal dispute resolution process is completed, whichever is earlier. It is thus possible that the facility’s balance sheets here, which were dated December 2016 and February 2017, show the remaining assets after having already placed the immediate jeopardy CMP amount (or even the total CMP amount) into escrow.