Decision No. CR656 Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |
Hearthside Care Center, |
DATE: Mar 24, 2000 |
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Health Care Financing Administration | Docket No.C-99-566 |
DECISION | |
The Health Care Financing Administration (HCFA) moved for
summary disposition against Petitioner, Coos Bay Rehabilitation, Inc., d/b/a
Hearthside Care Center. Petitioner opposed the motion. I find that HCFA
has established a prima facie case to support the imposition against Petitioner
of a civil money penalty of $200 per day for each day of the period which
begins on November 12, 1998 and which ends on February 1, 1999. Petitioner
has not adduced facts which rebut HCFA's prima facie case. Therefore, I
sustain the civil money penalties imposed against Petitioner by HCFA. The
total amount of the civil money penalties that I sustain is $16,000. Background Petitioner is a long-term care facility that is located in Coos Bay, Oregon.
Petitioner participates in the Medicare program. This case arises from
HCFA's determination to impose civil money penalties against Petitioner
because Petitioner was not in substantial compliance with federal participation
requirements during the November 12, 1998 through February 1, 1999 period. HCFA filed five proposed exhibits (HCFA Ex. 1 - HCFA Ex. 5) in support of its motion for summary disposition. Petitioner filed one exhibit (P. Ex. 1) in opposition to the motion. Subsequently, Petitioner submitted an additional document which contains financial information about Petitioner. Petitioner did not identify this additional document as an exhibit. I am identifying it as P. Ex. 2. Petitioner has not opposed the admission into evidence of HCFA's proposed exhibits. HCFA has not opposed the admission into evidence of Petitioner's proposed exhibits. I hereby admit into evidence HCFA Ex. 1 - HCFA Ex. 5 and P. Ex. 1 - P. Ex. 2.
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FINDINGS OF FACT AND CONCLUSIONS OF LAW | |
Issue The only issue in this case is whether the amount of the civil money
penalties that HCFA imposed against Petitioner - $200 per day for each
day of the period which begins November 12, 1998 and which ends on February
1, 1999 for a total of $16,000 - is reasonable. HCFA based its determination to impose civil money penalties against
Petitioner on the results of compliance surveys that were performed on
November 12, 1998 and January 21, 1999. HCFA Ex. 1; HCFA Ex. 2. At both
of these surveys Petitioner was found not to be complying substantially
with federal participation requirements. Ids. Petitioner does not
dispute the findings of deficiencies. Nor does Petitioner deny that it
was not complying substantially with participation requirements between
November 12, 1998 and February 1, 1999. Petitioner contends only that
the amount of the civil money penalties imposed against it is unreasonable.
Petitioner asserts that it should be liable only for civil money penalties
which do not total more than $4,000. Findings of fact and conclusions of law I make findings of fact and conclusions of law (Findings) to support
my decision in this case. I set forth each Finding below as a separately
numbered heading. I discuss each Finding in detail. 1. A basis exists to impose a civil money
penalty against HCFA is authorized to impose a civil money penalty against a long-term
care facility for each day that the facility is not complying substantially
with federal participation requirements. Social Security Act (Act), sections
1819(h)(2)(B)(ii); 42 C.F.R. � 488.430(a). A failure to comply substantially
with participation requirements occurs where a facility is found to be
deficient in complying with any of those requirements to the extent that
there exists a potential for more than minimal harm to the facility's
residents. 42 C.F.R. � 488.301. There is no dispute that Petitioner failed to comply substantially with
participation requirements. The surveyors who conducted the November 12,
1998 and January 21, 1999 surveys of Petitioner found at each survey that
Petitioner was not complying substantially. HCFA Ex.1; HCFA Ex. 2. Petitioner
has not challenged these findings of noncompliance. Nor is there any dispute
as to the duration of Petitioner's noncompliance. Therefore, HCFA is authorized
to impose civil money penalties against Petitioner for each day of the
November 12, 1998 - February 1, 1999 period. 2. HCFA established a prima facie case for
imposition HCFA may impose a civil money penalty which ranges from $50 to $3,000
for each day that a facility is not complying substantially with participation
requirements in the event that the noncompliance poses a potential for
more than minimal harm to facility residents but does not constitute immediate
jeopardy to the health and safety of facility residents. 42 C.F.R. � 488.438(a)(ii);
see 42 C.F.R. � 488.301. The $200 per day civil money penalty that
HCFA determined to impose against Petitioner falls within the range of
penalties that is reserved for deficiencies that are substantial but which
do not constitute immediate jeopardy. The penalties that HCFA determined to impose against Petitioner are based
on deficiencies that fall within the range of deficiencies that allow
for a $50 - $3,000 per day civil money penalty. These penalties are at
the lower end of the $50 - $3,000 per day range, indicating that HCFA
determined that the deficiencies that Petitioner manifested - while substantial
- were relatively modest in nature. However, Petitioner argues that these
relatively low level civil money penalties are nonetheless unreasonable
given the character of its deficiencies. The regulations which govern the imposition of civil money penalties
describe those factors which HCFA may consider in determining the amount
of any civil money penalties that it determines to impose. 42 C.F.R. ��
488.404; 488.438(f). These factors include the seriousness of deficiencies;
their relationship to each other; the facility's past compliance history;
the facility's financial condition; and, the facility's culpability. Ids.
The evidence offered by HCFA establishes a prima facie case that the
civil money penalties it determined to impose against Petitioner are reasonable.
First, the evidence shows that the deficiencies were sufficiently serious
so as to justify the imposition of more than minimal civil money penalties.
Petitioner manifested a substantial number of deficiencies. And, some
of these deficiencies caused actual harm to residents of Petitioner. The undisputed findings that the surveyors made at the November 12, 1998
survey of Petitioner established that Petitioner manifested eight substantial
deficiencies. These deficiencies are identified at Tags 246, 309, 312,
314, 318, 324, 353, and 444 of the report of the November 12, 1998 survey.
HCFA Ex. 1. Some of these deficiencies are relatively severe. For example,
under Tag 246, the surveyors found that, in the cases of five residents,
Petitioner was not providing reasonable accomodations of the residents'
needs. The residents' needs for prompt assistance were not being met by
Petitioner. Nor was Petitioner assuring that these residents' physical
environment and activities were adequate. In the case of one of these
residents, Resident 3, Petitioner was found to have caused harm to the
resident by failing to respond adequately to the resident's needs for
assistance. HCFA Ex. 1 at 1 - 3. Petitioner has not challenged these findings.
Second, HCFA established that Petitioner has a history of noncompliance
with participation requirements. HCFA Ex. 3. Petitioner had been found
to be deficient prior to the November 12, 1998 survey at surveys that
were conducted of Petitioner on November 6, 1997, May 14, 1998. Id.
Moreover, some of the deficiencies that the surveyors identified at previous
surveys recurred in subsequent surveys of Petitioner. For example, Petitioner's
failure to provide care of an adequate quality was cited at Tag 314 of
the report of the November 6, 1997, May 14, 1998, November 12, 1998, and
January 21, 1999 surveys. Id.; HCFA Ex. 1; HCFA Ex. 2. Finally, HCFA made a prima facie showing that Petitioner's ability to
provide care to its residents would not be jeopardized by requiring it
to pay the civil money penalties that HCFA imposed against Petitioner.
Petitioner provided HCFA with only limited data concerning its financial
status. HCFA Ex. 4. However, the information that Petitioner provided
does not suggest that Petitioner would be unable to pay the civil money
penalties that HCFA imposed against it. Id. 3. Petitioner did not rebut the prima facie case that HCFA
established. Petitioner asserts that the deficiencies established by HCFA merit, at
most, the imposition of civil money penalties against Petitioner totaling
$4,000. That sum equates to a $50 per day civil money penalty against
Petitioner, which would be the minimum civil money penalty that HCFA might
impose for failure to comply substantially with participation requirements.
Petitioner argues that the deficiencies that it manifested qualified
for "category 1" remedies that did not merit the imposition of civil money
penalties. In effect, this argument is that the scope and severity of
Petitioner's deficiencies is so modest as to not justify imposition of
civil money penalties against Petitioner. A category 1 remedy is a remedy that HCFA may impose for deficiencies
that: (1) are isolated deficiencies that constitute no actual harm to
residents and which have a potential for causing more than minimal harm
to residents but which are not so severe as to constitute immediate jeopardy
to residents; or (2) comprise a pattern of deficiencies that cause no
actual harm to residents and which have a potential for causing more than
minimal harm to residents but which are not so severe as to constitute
immediate jeopardy to residents. 42 C.F.R. � 488.408(c). Category 1 remedies
do not include the remedy of a civil money penalty. HCFA acknowledges that the deficiencies that were identified at the January
21, 1999 survey of Petitioner were of a scope and severity that would
normally merit the imposition of a category 1 remedy or remedies against
Petitioner. However, as HCFA notes, the deficiencies that were identified
at the November 12, 1998 survey justified a higher category of remedy
than category 1, inasmuch as there were findings of actual harm to residents
made at that survey. HCFA Ex. 1. Petitioner has not disputed the findings
of actual harm that were made at the November 12, 1998 survey of Petitioner.
Consequently, even if Petitioner's argument that no civil money penalties
could be imposed for deficiencies that justified category 1 remedies had
merit, that argument could only apply to penalties that HCFA imposed after
January 21, 1999. Moreover, the regulations which govern the imposition of civil money
penalties expressly permit HCFA to impose a civil money penalty or penalties
where deficiencies are substantial but where they normally would justify
the imposition only of a category 1 remedy or remedies. 42 C.F.R. � 488.408(d)(3).
HCFA has the discretion to impose a civil money penalty or penalties in
the case where normally it might not do so. HCFA may impose a civil money
penalty or penalties in any instance where a facility is found
not to be complying substantially with participation requirements. What
HCFA plainly opted to do in this case is to impose civil money penalties
against Petitioner after January 21, 1999 in light of Petitioner's continuing
noncompliance with participation requirements after that date. That is
a remedy that HCFA plainly is authorized to impose. Petitioner argues also that its financial condition justifies a reduction
of the civil money penalties that HCFA determined to impose against it.
Petitioner asserts that the financial information that HCFA relied on
relates not to Petitioner but to another entity, Hearthside Skilled Nursing
Facility, LLC. See P. Ex. 1. According to Petitioner, it leases
the real and personal property of the nursing care facility in question
from Hearthside Skilled Nursing Facility, LLC. Petitioner characterizes
Hearthside Skilled Nursing Facility, LLC, as an "unrelated third party
entity." Petitioner asserts that the financial information that HCFA relied
on pertains to Hearthside Nursing Facility, LLC, and not to Petitioner.
According to Petitioner, Petitioner's balance sheet shows a "continual
loss of revenue" and represents a more accurate statement of Petitioner's
financial condition from which to make a determination as to whether the
civil money penalties imposed by HCFA are reasonable. Petitioner has also submitted a document which it characterizes to be
a "true and accurate Profit and Loss Summary for Petitioner for the eleven
months ending November 30, 1999, and a true and accurate balance sheet
for the same date." P. Ex. 2 at 1. Evidently, Petitioner contends that
the financial information that is contained in P. Ex. 2 demonstrates that
Petitioner is unable to pay civil money penalties which total $16,000
in this case. I am assuming, for purposes of this decision, that the financial information
that is contained in P. Ex. 2 is true. I conclude nonetheless that Petitioner
has not shown that it is unable to pay the civil money penalties that
HCFA determined to impose and which I sustain. Petitioner has not satisfied me that its financial condition is so precarious that it will not be able to pay the civil money penalties that I am sustaining here and continue to provide care consistent with federal participation requirements. See 42 C.F.R. � 488.438(f)(2).
Indeed, Petitioner has not even alleged explicitly that its financial
condition will prevent it from paying the penalties. The financial data which Petitioner submitted purports to show that Petitioner
sustained a net loss of more than $45,000 during the fiscal year running
through November, 1999. P. Ex. 2 at 2. But, the fact that Petitioner may
have lost money during any period of time does not demonstrate that Petitioner's
ability to continue to provide care will be jeopardized by requiring it
to pay the civil money penalties that are at issue here. Moreover, in
spite of its losses, Petitioner continues to possess substantial current
assets, totalling more than $250,000. Id. at 3. Petitioner's total
assets continue to exceed its current liabilities. Id. at 4 - 5.
And, Petitioner's purported losses did not preclude its owners from drawing
over $176,000 from Petitioner during the period ending November 30, 1999.
Id. at 5. 4. Civil money penalties of $200 per day
for the period which begins HCFA established a prima facie case to support the imposition of civil money penalties against Petitioner of $200 per day for each day of the November 12, 1998 - February 1, 1999 period. Petitioner has offered neither evidence nor persuasive argument to rebut this prima facie case. Consequently, I find the civil money penalties to be reasonable.
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JUDGE | |
Steven T. Kessel
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