Laurellwood Care Center, DAB CR5775 (2020)

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to impose a civil money penalty of $730 against Petitioner, Laurellwood Care Center, for each day of a period beginning on October 23, 2018, and running through March 12, 2019. 

I. Background

I received this case recently as a reassignment from the docket of another administrative law judge.  Upon reviewing the record, I discovered that the parties had fully briefed a motion by CMS to enter summary judgment against Petitioner.

Although CMS supported its motion with largely undisputed facts, it is unnecessary that I decide whether the motion meets the criteria for entering summary judgment.  This case is ripe for a decision based on the written record and without an in-person hearing.  That is because neither party filed a written request to cross-examine witnesses.  The initial pre-hearing order in this case told the parties explicitly that they must file written requests

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to cross-examine any witness and that their failure to do so would preclude cross-examination.  Acknowledgment and Pre-hearing Order at 7-8. 

CMS filed 37 exhibits, identified as CMS Ex. 1-CMS Ex. 37.  Petitioner filed three exhibits, identified as P. Ex. A and P. Ex. 1-P. Ex. 2.  I receive these exhibits into the record.

II. Issues, Findings of Fact and Conclusions of Law

A. Issues

The issues are whether Petitioner, a skilled nursing facility, failed to comply substantially with Medicare participation requirements, and if so, whether CMS’s remedy determination is reasonable.

B. Findings of Fact and Conclusions of Law

The parties do not dispute that Petitioner failed to comply substantially with Medicare participation requirements.  CMS established multiple failures by Petitioner to comply with regulatory requirements.  Petitioner does not challenge these deficiencies.  Instead, Petitioner focuses exclusively on CMS’s penalty determination, arguing that it is unreasonable for a variety of reasons.

The unchallenged evidence establishes that Petitioner failed to comply with the following regulations:

• 42 C.F.R. § 483.10(g)(2)-(3).  A skilled nursing facility must assure that its residents have access to relevant medical and personal records.  Additionally, they require a facility to provide these records to a resident or a responsible party within two days of receiving a request to review those records.
• 42 C.F.R. §§ 483.10(g)(14)(i)(C) and 483.25(k).  A skilled nursing facility must immediately notify a resident’s representative and consult with a resident’s physician when there is a need to alter a resident’s treatment due to adverse consequences or to initiate a new form of treatment.  Additionally, a facility must ensure that pain management is provided to residents who require it consistent with professional standards of practice, the resident’s plan of care, and the resident’s goals and preferences.
• 42 C.F.R. § 483.10(h), (j).  A resident of a skilled nursing facility has a right to personal privacy and to the confidentiality of his or her records.  The resident also has the right to voice grievances, including grievances that address the furnishing or withholding of care and the behavior of staff and of other residents.

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• 42 C.F.R. § 483.15(c)(3)-(6), (d), and (e).  A skilled nursing facility must notify a resident in advance of any decision by the facility to transfer or discharge that resident.  Ordinarily, the facility must provide that notice to the resident at least 30 days before the proposed transfer or discharge date.  In an emergency, the facility must send notice as soon as is practicable prior to the transfer or discharge.  Additionally, prior to transferring a resident to a hospital the facility must notify the resident, in writing, of a state’s bed hold policy (a policy that defines the time period during which a skilled nursing facility must reserve a bed for the transferred resident).  Finally, the facility must establish and implement a written policy that explains when transferred residents may return to its premises.
• 42 C.F.R. § 483.25(d).  A facility must ensure that its resident environment remain as free of accident hazards as is possible.  It must also ensure that each of its residents receives adequate supervision and assistance devices to prevent that resident from sustaining accidents.
• 42 C.F.R. § 483.60(i)(1)-(2).  A skilled nursing facility must store, prepare, distribute, and serve food in accordance with professional standards for food service safety.

CMS Ex. 3.  CMS found that all of these deficiencies were substantial in that they posed at least the potential for harming residents.  CMS Ex. 3.  The civil money penalty amount of $730 per day that CMS determined to impose as a remedy falls close to the bottom of the permissible range for deficiencies that are substantial but that do not immediately jeopardize residents’ health and safety.  42 C.F.R. § 488.438(a)(ii); 45 C.F.R. § 102.3; 83 Fed. Reg. 51,369 (Oct. 11, 2018) (authorizing a penalty in the range of $107 to $6,417 per day).  As CMS notes, noncompliance with any one of the regulations that I identify above would be a basis for imposing a penalty within the range of penalties that are reserved for non-immediate jeopardy level deficiencies.

Whether a penalty amount is reasonable depends on evidence pertaining to factors established at 42 C.F.R. §§ 488.438(f)(1)-(4) and 488.404 (incorporated by reference into 42 C.F.R. § 488.438(f)(3)).  These factors may include the seriousness of a facility’s noncompliance.  They may also include the facility’s financial condition.

I conclude that the seriousness of Petitioner’s noncompliance amply justifies the penalty amount that CMS determined to impose.  A penalty of $730 a day is, as I have stated, a small fraction (less than 15 percent) of the maximum daily penalty amount that CMS could have imposed.  That very light penalty stands in contrast to the potential for harm caused by Petitioner’s noncompliance.

It is unnecessary that I address all of Petitioner’s noncompliance in detail to illustrate how serious that noncompliance was.  Here, I discuss two of Petitioner’s regulatory

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violations as examples.  Those violations more than justify the penalty amount that CMS determined to impose.  The other episodes of noncompliance, episodes that Petitioner did not challenge, are additional support for my finding of reasonableness.

The evidence unequivocally establishes that Petitioner failed to manage the pain being experienced by two of its residents, identified as Residents #s 1 and 6.  Resident #1 was in the late stages of illness.  She suffered from low back pain due to an unspecified fracture in her back, Alzheimer’s disease, and failure to thrive.  CMS Ex. 9 at 1-2.  The resident was terminally ill and was receiving hospice care.

In late August 2018, the resident was sent to a hospital for pain management.  On her return to Petitioner’s facility, the resident had a prescription for Percocet, as needed.  CMS Ex. 9 at 67; CMS Ex. 32 at 1.  However, the resident received no Percocet from October 23 through October 29, 2018, because none was available.  CMS Ex. 32 at 3.  Although Petitioner’s staff notified the resident’s hospice on October 25 and 29 that the resident had no access to Percocet, staff failed to notify the resident’s family or to consult with the resident’s treating physician.  During the period when no Percocet was available, the resident refused to eat and on one occasion cried out in pain.  CMS Ex. 9 at 20-22.

Petitioner manifestly failed to attend to Resident #1’s needs.  Its staff knew that the resident had been prescribed – indeed, was dependent on – Percocet to address her pain.  The staff was under an absolute duty to consult with the resident’s treating physician and to notify the resident’s family about the lack of medication.  The failure to do so was an obvious regulatory violation.  Moreover, the staff had a duty to do everything in its power to assist the resident.  When the supply of Percocet ran out, the staff should have done more than simply notify the hospice of the problem.  It failed to look for medication from other sources that might have spared the resident from experiencing pain.

Resident #6 was paraplegic due to an automobile accident.  He suffered from chronic pain.  The resident wore a patch that disbursed the pain reliever, Fentanyl.  CMS Ex. 13 at 5, 28, 32.  On February 13, 2019, a surveyor confirmed that the resident had not received Fentanyl since the previous day.  CMS Ex. 3 at 7; CMS Ex. 13 at 14; CMS Ex. 37 at 3-4.  The resident’s failure to receive Fentanyl was evidently due to an error by a pharmacy.  Petitioner failed to consult with the resident’s treating physician about the lapse in medication.

The failure to consult with the physician constituted a breach of regulatory requirements.  Resident #6 had serious pain issues.  Yet, Petitioner’s staff allowed at least a day to elapse without consulting the resident’s physician about a circumstance that plainly could have necessitated physician intervention.

The failure by Petitioner’s staff adequately to address two of its residents’ pain issues was a serious violation.  These residents were not only in pain, but they were helpless to

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alleviate that pain without Petitioner’s intervention.  Their conditions – terminal illness in one case and paraplegia in the other – put these residents at the mercy of the staff.  The staff failed both of these residents, and they suffered as a consequence.

Additionally, Petitioner’s discharge of two of its residents (Residents #s 4 and 8), in plain violation of regulatory requirements, could have substantially harmed each of these residents.

Resident #4 was a debilitated individual who had difficulty maintaining his balance.  On January 19, 2019, the resident fell, twice.  CMS Ex. 12 at 2-3, 9-10.  On that date Petitioner’s staff transferred this resident to a local emergency room for evaluation.  In transferring the resident, Petitioner’s staff failed to complete the necessary documentation explaining the purpose of the transfer and failed to provide the resident or his immediate family with that documentation.  CMS Ex. 12 at 12-13, 15-17.  The facility’s explanation for its failure to complete the documentation is that the transfer happened on a weekend.  CMS Ex. 3 at 29; CMS Ex. 36 at 7.

The resident’s family at first did not want to return Resident #4 to Petitioner’s facility.  CMS Ex. 3 at 28-29.  However, there was no other nursing facility available to accept the resident when he was ready to return to Petitioner’s facility from the hospital.  Id.; CMS Ex. 36 at 6-7.Petitioner should have informed the resident’s family of the resident’s right to remain at Petitioner’s facility for up to 30 days while the family looked for a suitable new residence.  It did not do so.  CMS Ex. 3 at 28-29; CMS Ex. 36 at 6-7.

The essential failure by Petitioner in providing care to Resident #4 was its failure to explain the resident’s rights to the family when the resident was ready to leave the hospital.  Granting that the family may have initially resisted the resident’s return, Petitioner nevertheless should have provided the family with all of the information that the family needed to make an informed decision about whether a return would be in the resident’s best interests or under what circumstances the resident could transfer to another facility.  It manifestly failed to do so. 

Resident #8 suffered from a variety of neurological and mental impairments.  These included epilepsy, traumatic brain injury, vascular dementia, and a cognitive communication deficit.  CMS Ex. 14 at 1.  On January 25, 2019, the resident became combative, throwing coffee at another resident and striking a nursing assistant.  The staff summoned police, and the police took the resident to a facility for evaluation and treatment pursuant to a Florida law that allows individuals to be hospitalized involuntarily for evaluation of possible psychiatric issues.  Id. at 4-5, 6-7, 8.  This event plainly was an involuntary transfer of the resident.  However, Petitioner’s staff did not complete a transfer/discharge notice or other relevant paperwork describing the terms and conditions of the resident’s transfer from its facility.  Id. at 2.  When queried about the circumstances of the transfer, Petitioner’s administrator could not recall whether the

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resident or his family sought to return the resident to Petitioner’s facility.  CMS Ex. 3 at 30-31; CMS Ex. 36 at 7-8.  The facility’s Director of Nursing, however, reported that Resident #8’s responsible party expressed a desire for the resident to return to the facility when informed of the incident.  CMS Ex. 3 at 30.  The ultimate destination of the resident after his discharge from the hospital remains unknown.

Petitioner’s regulatory noncompliance as respects Resident #8 lies in its failure to properly notify the resident or his family of his rights.  There is nothing to suggest that Petitioner advised the resident or his family of his right to return to the facility after his involuntary transfer to a hospital.  Indeed, there was a wholesale failure on Petitioner’s part to document the transfer.

By definition, nursing home residents are unable to provide necessary care to support their well-being.  Regulations governing transfers and bed holds are intended to protect residents against the possibility of losing their ability to stay at a facility in the event of a temporary transfer to another facility for evaluation and/or treatment.  The danger that exists for every transferred resident is that he or she might find himself or herself homeless upon discharge from the hospital.  The regulations are drafted explicitly to protect against that possibility from occurring.  At the least, a resident and the resident’s family must be aware of the precise implications and consequences of any transfer, including a temporary transfer. 

Here, Petitioner failed to protect its residents.  The evidence amply establishes that Petitioner failed to provide the residents and their families with information that they needed to make informed judgments about returning.  That is a critical lapse in care given these residents’ greatly impaired states, and amounts to serious noncompliance. 

Petitioner has the burden, through documents and records, to show that a civil money penalty is unreasonable, i.e., that a reduction is necessary to make it reasonable.  CMS is presumed to have considered the regulatory factors, and the factors are presumed to support the civil money penalty.  Crawford Healthcare and Rehab., DAB No. 2738 at 19 (2016); Brenham Nursing & Rehab. Ctr., DAB No. 2619 at 18 (2015), aff’d, Brenham Nursing & Rehab. Ctr. v. U.S. Dep’t. of Health & Human Servs., 637 F. App’x 820 (5th Cir. 2016).  I have reviewed Petitioner’s arguments that the remedy is unreasonable.  I find these arguments to be without merit.

Petitioner argues, first, that CMS lacks authority to impose per-diem civil money penalties based on Petitioner’s failure to address the pain-related medication needs of Residents #s 1 and 6.  Petitioner’s pre-hearing brief at 3-5.  Characterizing its noncompliance as consisting of isolated instances, Petitioner argues that CMS should have imposed only a per-instance penalty, as opposed to a per-diem penalty commencing on October 23, 2018, the date when Petitioner ran out of Percocet to address the resident’s pain.

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This argument is without merit for two reasons.  First, CMS has discretion over its choice of remedies.  42 C.F.R. § 488.408(g)(2).  That choice includes both per-diem and per‑instance civil money penalties.  It elected to impose a per-diem penalty for dates commencing with Petitioner’s staff’s failure to address Resident #1’s pain.  That is justified by Petitioner’s noncompliance.  I have no authority to question CMS’s discretionary act.  Desert Lane Care Ctr., DAB No. 2287 at 20 (2009).

Second, Petitioner is wrong when it characterizes this noncompliance as being merely isolated instances.  The failure to provide Percocet to Resident #1 extended over a period of about a week.  The second failure by Petitioner to treat a resident’s pain – the failure to provide a Fentanyl patch to Resident #6 – occurred in February 2019, about four months after the noncompliance involving Resident #1.  The inference that I draw from this recurrent failure is that Petitioner’s staff continued not to recognize its failure to address appropriately the pain problems manifested by the residents.  Noncompliance was thus a continuing and unremedied problem at Petitioner’s facility.

Petitioner characterizes its failures to address its residents’ pain issues as amounting to “no harm, no evidence of indifference, or lack of attention” to residents’ needs.  Petitioner’s pre-hearing brief at 5.  Whether there was measurable harm to the two residents is not relevant to my decision that Petitioner’s noncompliance was serious.  The undisputed fact is that the two residents in question both suffered from serious and intractable pain.  Each of them had a physician’s prescription for pain medication.  Petitioner failed to immediately take necessary measures to address the absence of pain medication for these residents, leaving these residents to suffer needlessly. 

Petitioner also asserts that CMS should not be permitted to impose penalties for noncompliance occurring on dates that predate the dates of surveys at which the noncompliance was identified.  It contends that CMS’s policy is to commence penalties with the survey date and not on previous dates.  However, there is nothing in the regulations that precludes CMS from commencing penalties on the dates when noncompliance occurs, even if that noncompliance predates a survey date.  Mountain View Manor, DAB No. 1913 at 12 (2004); N. Ridge Care Ctr., DAB No. 1857 (2002).  The determination to do that is another discretionary action by CMS that I do not have the authority to overturn.

Petitioner argues next that it should not be subject to penalties for deficiencies that occurred as early as October 2018.  Petitioner’s pre-hearing brief at 6.  It asserts that it acquired the facility from its previous owner and that its application for change of ownership was approved on January 10, 2019.  Petitioner contends that it should not be accountable for noncompliance that occurred during the previous owner’s management of the facility.

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I disagree.  Petitioner opted to continue operating its facility under the previous owner’s Medicare participation agreement.  That was a business decision that Petitioner obviously believed worked to its pecuniary advantage.  In making that decision, Petitioner not only assumed the assets of the previous owner but the liabilities as well.  See 59 Fed. Reg. 56,116, 56,174 (Nov. 10, 1994) (“A facility is purchased ‘as is.’  The new owner acquires the compliance history, good or bad, as well as the assets.”).  Those liabilities included the assumption of responsibility for remedies imposed against the facility to address noncompliance that occurred during the previous owner’s management.

The civil money penalties that CMS determined to impose have a remedial purpose.  They are intended to provide redress for a failure by a facility or its staff to comply with Medicare participation requirements.  Those failures aren’t erased when new management opts to continue operating a facility under its existing Medicare provider agreement.  The noncompliance in this case was ongoing.  Therefore, imposing penalties that address the duration of noncompliance – without regard to an intervening management change – makes perfect sense.

Indeed, noncompliance by Petitioner’s staff that had an onset prior to the January 2019 change in management continued to occur after new management had assumed control of the facility.  The staff’s failure to treat appropriately residents’ pain issues first shows up in the failure to secure Percocet for Resident #1 in October 2018.  That deficient conduct continued into February 2019 with the staff’s failure to consult with Resident #6’s treating physician concerning the interruption of the supply of Fentanyl for that resident.

Finally, Petitioner asserts that its financial condition is “tenuous” and that it should therefore not be required to pay civil money penalties that total more than $70,000.  Petitioner’s pre-hearing brief at 7-8.  In support of this assertion, Petitioner contends that it must spend about $250,000 to comply with a Florida state regulatory mandate that it provide an alternative power source to protect its residents against the consequences of a power outage.  Petitioner argues also that it was not profitable during part of 2019 due to its new management having made substantial investments in improving its facility.

Petitioner’s assertions – assuming them to be correct – do not establish grounds for me to reduce the civil money penalty amount that CMS determined to impose.  Petitioner has not proven that it is unable to pay the total penalty amount.  It has not proven that it is consistently losing money.  See P. Ex. 1 at 2.  The fact that it lost money at the inception of its management’s acquisition of the facility does not predict its future performance.  Furthermore, that Petitioner might be required to make a substantial investment to enable its facility to withstand a possible power outage shows only a one-time cost and does not address its overall financial security. 

The evidence that Petitioner offered to support its contention that it lacks the wherewithal to pay the penalty amount includes a profit and loss statement covering the period from

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January 2019 through July 2019.  P. Ex. 1 at 2.  I find this document to be unpersuasive, because Petitioner does not represent that it is “the product of audits conducted by certified public accountants, or by otherwise qualified auditors, pursuant to generally accepted accounting principles.”  Littlefield Hospitality., DAB No. 2756 at 11 (2016).  In any event, even accepting the statement at face value, it does not establish Petitioner’s inability to pay.

Furthermore, Petitioner has not even argued that payment of the civil money penalty would adversely affect the quality of care that it gives to its residents.  In the final analysis, that is what matters.  Littlefield Hospitality, DAB No. 2756 at 8.  I find no basis to reduce the penalty amount absent proof that paying the penalty would adversely affect the quality of residents’ care.