Blythe Post Acute LLC, DAB CR5770 (2020)

DECISION

For over nine months, skilled nursing facility (SNF) Blythe Post Acute LLC (Petitioner or facility) failed to prevent or mitigate known fire hazards caused by its main electrical service panel.1   The safety hazards in the main electrical service panel placed all 40 facility residents, including 35 residents who were wheelchair bound and four residents who required staff assistance to ambulate, employees, and visitors, at risk for injury and death in the case of an electrical fire.  Because of the electrical fire hazard, the Centers for Medicare & Medicaid Services (CMS) found that Petitioner was not in substantial compliance with the Medicare requirement for SNFs at 42 C.F.R. § 483.25(d) (Tag F323) (accident prevention).  Further, CMS determined that Petitioner’s failure to remedy the electrical fire hazard immediately jeopardized the health and safety of its residents and imposed a $17,505 per-instance civil money penalty (CMP) on Petitioner for violating Medicare program participation requirements. 

Petitioner does not dispute that a professional electrical engineer (PE) identified the fire risk and communicated the risk to the facility’s owner and previous administrator in

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December 2016.  Rather, Petitioner asserts that it was diligently trying to remedy the situation and work with the PE to remediate the fire risk caused by the non-code compliant main electrical service panel.  However, there is no evidence that Petitioner put any safety measures in place until September 2017, more than nine months after the PE first identified the fire hazard.  From December 2016 to September 2017, the facility knew of the fire hazard but left residents vulnerable without any measures to prevent or mitigate the foreseeable risk of fire. 

In addition to this fire hazard, CMS also found that the water heater alarm, meant to inform staff when the hot water temperature exceeded 125 degrees, was not operating and that staff did not consistently or broadly test water temperature in the facility to ensure patient safety.  Petitioner simply disputed this by calling it a petty deficiency and indicating that staff did sufficient testing of the water temperature.  However, Petitioner did not otherwise dispute CMS’s findings. 

As I explain below, Petitioner’s serious, undisputed noncompliance placed 40 residents, facility staff, and visitors at risk for injury or death from an electrical fire hazard and potential scalding water.  Therefore, I conclude that CMS appropriately determined that Petitioner was not in substantial compliance with 42 C.F.R. § 483.25(d) and that a per-instance CMP of $17,505 was reasonable. 

I.  Legal Framework

The Medicare program “provides basic protection against the costs of . . . related post-hospital . . . care” for individuals over the age of 65 who are eligible for Social Security retirement benefits and for individuals under 65 who meet other criteria.  42 U.S.C. § 1395c.  Post-hospital care includes extended care services provided at an SNF. 42 U.S.C. §§ 1395f(a)(2)(B), 1395x(h)-(i).

For Medicare program purposes, an SNF is an institution that is primarily engaged in providing skilled nursing care and/or rehabilitation services for its residents, but is not primarily engaged in the care and treatment of mental diseases.  42 U.S.C. §§ 1395x(j), 1395i-3(a)(1).  Because an SNF is a “provider of services” in the Medicare program, each SNF that participates in the program must file a provider agreement with the Secretary of Health and Human Services (Secretary).  42 U.S.C. §§ 1395cc(a), 1395x(u).  Further, a participating SNF must meet a variety of ongoing requirements related to how it provides services, maintains the rights of its residents, and administers its facility.  42 U.S.C. § 1395i-3(a)(3), (b)-(d); 42 C.F.R. pt. 483, subpt. B.2

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When an SNF fails to meet a statutory or regulatory participation requirement, then the SNF has a “deficiency.”  42 C.F.R. § 488.301; see 42 U.S.C. § 1395i-3(h)(1).  “Noncompliance” means “any deficiency that causes a facility to not be in substantial compliance.”  42 C.F.R. § 488.301.  To maintain “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.

Broadly, noncompliance that subjects an SNF to enforcement remedies is divided into two levels.  One level is comprised of deficiencies that immediately jeopardize the health or safety of residents and the other level is composed of deficiencies 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.

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).  When the results of a survey show that an SNF is not in substantial compliance with program participation requirements, the Secretary may impose enforcement remedies on the SNF.  42 U.S.C. § 1395i-3(h)(2); 42 C.F.R. § 488.406.  When CMS selects an enforcement remedy to impose on an SNF, it determines the scope (i.e., the number of residents affected or potentially affected) and severity (i.e., the degree of harm or potential harm) for each deficiency.  See 42 C.F.R. § 488.404(a)-(b). 

One such enforcement remedy is a CMP.  42 U.S.C. § 1395i-3(h)(2)(B)(ii).  CMS may impose a per‑instance CMP for each instance of the SNF’s noncompliance or a per‑day CMP for the number of days an SNF is not in substantial compliance.  42 U.S.C. § 1395i‑3(h)(2)(A), (h)(2)(B)(ii)(I); 42 C.F.R. § 488.430(a).  For CMPs assessed on or after February 3, 2017, and for deficiencies that occurred after November 2, 2015, the CMP amounts may range as follows:  $2,097 to $20,965 for per-instance CMPs; $105 to $6,289 per day for less serious noncompliance; or $6,394 to $20,965 per day for more serious noncompliance that poses immediate jeopardy to the health and safety of residents.  45 C.F.R. § 102.3 (2017); 82 Fed. Reg. 9,174, 9,175, 9,182-83 (Feb. 3, 2017); see 42 C.F.R. § 488.438(a)(1) (providing original CMP amounts before statutory inflation adjustments). 

If CMS imposes a CMP based on a finding of substantial noncompliance, then the SNF may request a hearing before an administrative law judge (ALJ) to challenge CMS’s initial determination of noncompliance that led to the imposition of an enforcement remedy and/or the level of noncompliance (if a successful challenge to the level would affect the range of CMP amounts imposed on the SNF).  42 U.S.C. §§ 1320a-7a(c)(2), 1395i‑3(h)(2)(B)(ii); 42 C.F.R. §§ 488.330(e)(3)(ii), 488.408(g)(1), 488.434(a)(2)(viii),

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498.3(b)(13)-(14), (d)(10); see also 5 U.S.C. §§ 554, 556.  However, CMS’s choice of remedies is not reviewable.  42 C.F.R. §§ 488.438(e)(2); 488.408(g)(2); 498.3(b)(13).

If an SNF challenges the existence of a deficiency, CMS must make a prima facie case that the SNF failed to substantially comply with federal participation requirements and, if this occurs, the SNF must then 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).  If an SNF challenges CMS’s determination as to the level of noncompliance, CMS’s determination must be upheld unless it is clearly erroneous.  42 C.F.R. § 498.60(c)(2).

If an ALJ concludes that there was a basis for imposing a CMP on an SNF, then the SNF may dispute the amount of the CMP.  The ALJ’s review of the CMP amount is limited to considering the statutory and regulatory factors for setting a CMP amount.  42 C.F.R. § 488.438(e)(3); see 42 U.S.C. §§ 1320a-7a(d), 1395i-3(h)(2)(B)(ii)(I); 42 C.F.R. § 488.438(f).  The ALJ may not reduce a CMP to zero. 42 C.F.R. § 488.438(e)(1).

Either the SNF or CMS may request Departmental Appeals Board (DAB) review of an ALJ’s decision.  42 C.F.R. § 498.80.

II.  Background and Procedural History

Petitioner is an SNF that operates in Blythe, California.  On December 23, 2016, a PE analyzed the electrical conditions at Petitioner’s facility in preparation for installing a new generator and prepared a report of existing conditions (PE Report), which identified several electrical deficiencies in the facility’s main electrical service.  CMS Exhibit (Ex.) 3 at 1.  The PE report determined that the “existing conditions of the main electrical service is in non-code compliant conditions that could be the cause of an electrical fire if an overload or short circuit condition presents itself.”  CMS Ex. 3 at 4.

On September 14, 2017, a compliance officer with California’s Office of Statewide Health Planning and Development (OSHPD) lodged two complaints with the California Department of Public Health (state agency) regarding Petitioner’s electrical conditions, citing the PE Report.  CMS Exs. 4, 6.  In response to the complaints, surveyors from the state agency conducted a series of inspections of Petitioner’s facility from September 15, 2017 through October 26, 2017.  CMS Exs. 1, 4-6.  On September 20, 2017, the state agency surveyors verbally informed Petitioner that the situation involved immediate jeopardy level deficiencies.  CMS Ex. 1 at 3.  During the inspections of the identified electrical fire hazard, the OSHPD Fire Marshal also found that the annunciator, an alarm that advises staff when the domestic hot water (i.e., the hot water used by the residents) temperature exceeds 125 degrees Fahrenheit, was out of order.  CMS Ex. 1 at 2, 5-6.

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After determining that the facility’s electrical system had been corrected, on October 10, 2017, the state agency found that the immediate jeopardy situation was abated.  CMS Ex. 1 at 3; CMS Ex. 15 at 2.

Based on its survey, the state agency issued a Statement of Deficiencies (Form 2567).  The state agency found the following deficiencies:

• 42 C.F.R. § 483.25(d) (Tag F323) (quality of care:  accident prevention) at a scope and severity level of “L.”3
• 42 C.F.R. § 483.90(d)(2), (e) (Tag F456) (physical environment:  space and equipment) at a scope and severity level of “F.”

CMS Ex. 1. 

Due to the deficiencies, on November 3, 2017, the state agency issued an initial determination imposing a denial of payment for new admissions (DPNA), effective January 26, 2018, if Petitioner failed to achieve substantial compliance by that date.  CMS Ex. 15 at 1-3.  Further, the state agency recommended that CMS impose a CMP and terminate Petitioner’s Medicare provider agreement by April 26, 2018, if Petitioner failed to achieve substantial compliance by that date.  CMS Ex. 15 at 2-3.  In a December 12, 2017 letter, the state agency informed Petitioner that the first revisit conducted of the facility showed that Petitioner had returned to substantial compliance with participation requirements as of November 30, 2017.  CMS Ex. 16. 

On January 29, 2018, CMS issued an initial determination adopting the state agency survey findings and imposed a $17,505 per-instance CMP for the noncompliance

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identified under Tag F323 (42 C.F.R. § 483.25(d)).  CMS Ex. 17 at 1-2.  Because CMS determined Petitioner was in substantial compliance during a follow-up survey, CMS did not effectuate termination of Petitioner’s Medicare provider agreement or the DPNA.  CMS Ex. 17 at 1-2.4

Petitioner filed a timely request for hearing before an ALJ to dispute the January 29, 2018 initial determination, and the Civil Remedies Division (CRD) docketed the case under C-18-413.  Following receipt of Petitioner’s hearing request, the ALJ originally assigned to this case issued an Acknowledgment and Prehearing Order (APHO) that established a prehearing exchange schedule for the parties.  In that order, the ALJ directed the parties to file briefs, proposed exhibits, and written direct testimony for all witnesses they wanted to present in this case.

On April 20, 2018, CMS filed a Motion to Dismiss Petitioner Blythe Post Acute LLC’s Hearing Request, which was denied by the originally assigned ALJ.  On June 22, 2018, in compliance with the Prehearing Order, CMS filed a combined brief and motion for summary judgment (CMS Br.).  CMS also submitted 18 proposed exhibits (CMS Exs. 1-18), which included the written direct testimony of one witness (CMS Ex. 18).  Petitioner then timely filed a prehearing brief in opposition to the motion for summary judgment (P. Br.) and seven proposed exhibits (P. Exs. 19-25).5   Petitioner listed five witnesses on its list of proposed witnesses but only provided written direct testimony for two witnesses (P. Exs. 20, 25).  On November 20, 2018, CRD notified the parties that this case was transferred to me.  See 42 C.F.R. § 498.44(b).

III.  Evidentiary Rulings and Decision on the Record

Petitioner did not object to CMS’s proposed exhibits and CMS did not object to P. Exs. 22-24; therefore, I admit CMS Exs. 1-18 and P. Exs. 22-24 into the record. 

CMS objected to P. Ex. 19 as an out-of-date version of the scope and severity chart from 1999.  I sustain CMS’s objection because P. Ex. 19 does not represent the scope-and-

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severity grid in effect at the time of the initial determination.  CMS also objected to P. Ex. 21 as duplicative of CMS Ex. 3.  I sustain CMS’s objection because P. Ex. 21 is duplicative.  APHO ¶ 4; Civil Remedies Division Procedures (CRDP) § 14(a).

CMS objected to the witnesses for whom Petitioner did not submit written direct testimony.  I sustain CMS’s objections because Petitioner was required to submit the written direct testimony for all five proposed witnesses, but Petitioner only submitted written testimony for two witnesses.  See APHO ¶ 8; CRDP §§ 16(b), 19(b). 

CMS also objected to P. Exs. 20 and 25 because the witnesses’ written direct testimony was not properly signed under oath or penalty of perjury.  The statutory provision applicable to the hearing in this case provides that the Petitioner is entitled “to present witnesses.”  42 U.S.C. §§ 1320a-7a(c); 1395i-3(h)(2)(B)(ii)(I).  The regulation implementing that provision requires that “[w]itnesses at the hearing testify under oath or affirmation.”  42 C.F.R. § 498.62; see also 5 U.S.C. § 556(c)(1) (recognizing that regulations established to govern formal adjudications may provide the presiding official with the power to administer oaths and affirmations).  The CRDP recognizes that a presiding ALJ may direct the parties to submit written direct testimony for witnesses in lieu of obtaining direct testimony during an oral hearing.  However, the CRDP requires that “[a]ny written direct testimony must be in the form of a sworn affidavit or declaration under penalty of perjury.”  CRDP § 19(b); see also 28 U.S.C. § 1746.

The APHO required the parties to submit written direct testimony and specified that “[a] witness statement must be submitted in the form of an affidavit made under oath or as a written declaration that the witness signs under penalty of perjury for false testimony.”  APHO ¶ 8.  The written direct testimony Petitioner offers as P. Exs. 20 and 25 is not sworn, under affirmation, or signed under penalty of perjury.  Further, CMS objected to the unsigned written testimony on August 3, 2018.  However, in more than two years since that objection, Petitioner has not attempted to cure the defect in P. Exs. 20 and 25.  Therefore, I sustain CMS’s objections and exclude P. Exs. 20 and 25. 

Because there are no witnesses for the parties to cross-examine at a hearing, a decision on the written record is appropriate.  APHO ¶¶ 9, 10, 12; CRDP §§ 16(b), 19(b), (d). 

IV.  Issues

1) Whether Petitioner failed to substantially comply with the requirements of 42 C.F.R. § 483.25(d) (Tag F323, relating to accident prevention);

2) Whether the $17,505 per-instance CMP is appropriate based on the factors in 42 C.F.R. § 488.438(f).  42 C.F.R. § 488.438(e)(3); see 42 U.S.C. §§ 1320a-7a(d), 1395i-3(h)(2)(B)(ii)(I).

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V.  Findings of Fact

1. Petitioner is an SNF located in Blythe, California, and Petitioner participates in the Medicare program.  CMS Ex. 1 at 1; CMS Ex. 15 at 1.

2. The facility had 40 residents.  CMS Ex. 18 ¶ 14.  Of those 40 residents, 35 residents were wheelchair bound, four residents required staff assistance with mobility, and one resident ambulated independently.  CMS Ex. 1 at 2; CMS Ex. 4 at 2; CMS Ex. 6 at 2.

Main Electrical Service Panel

3. On December 23, 2016, PE Carlos J. Aldas assessed the conditions of Petitioner’s existing main electrical service in preparation for the installation of a new generator and drafted a PE Report.  CMS Ex. 3.  The PE Report discussed his observation of the “main disconnect Switch” and noted that all of the distribution circuit breakers had been removed.  CMS Ex. 3 at 1.  Mr. Aldas stated that this created an “unsafe condition because the power panels and feeders fed by this section were not protected.”  CMS Ex. 3 at 1.  Mr. Aldas further observed that there were more non-code compliant issues once the bottom of the main service switchboard was opened and described the situation as “non-code compliant installation.”  CMS Ex. 3 at 3.  Mr. Aldas concluded that the facility needed to resolve the circuit breaker issues before installing a generator.  CMS Ex. 3 at 4.  Mr. Aldas also concluded that the main electrical service was in “non-code compliant conditions that could be the cause of an electrical fire if an overload or short circuit condition presents itself.”  CMS Ex. 3 at 4.  Mr. Aldas stated that “OSHPD will not approve the generator installation once they notice these code violations.”  CMS Ex. 3 at 4.  The PE Report estimated the cost of replacing the main electrical service at $30,000 to $40,000.  CMS Ex. 3 at 4.  At the time of the report, the facility’s owner and previous administrator were aware of the PE Report.  Hearing Req. at 2.    

4. On February 17, 2017, Mr. Aldas submitted drawings to OSHPD for approval to build a new generator at the facility.  P. Ex. 22.  OSHPD provided comments to Mr. Aldas concerning his drawings on June 12, 2017.  P. Ex. 23.  On July 7, 2017, Mr. Aldas resubmitted the drawings to OSHPD for approval.  P. Ex. 22, Part 1.  OSHPD responded to Mr. Aldas’ July 7, 2017 submission on August 9, 2017, but apparently sent its response to an incorrect email address.  P. Ex. 24.  

5. On September 14, 2017, Michael Marrs, a compliance officer with OSHPD, lodged two complaints with the state agency concerning potential hazardous conditions with the facility’s main electrical service.  CMS Exs. 4, 6.  In his complaints, Mr. Marrs indicated that “there are feeder conductors without over

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current protection devices (circuit breakers) and may be subject to excessive overheating putting the building occupants at risk.”  CMS Ex. 4 at 1; CMS Ex. 6 at 1.  Mr. Marrs based these complaints on a review of the PE Report that apparently had been filed with OSHPD; however, he needed the survey agency to take action because OSHPD did not have enforcement authority.  CMS Ex. 18 ¶¶ 7-8.   

6. On September 15, 2017, in response to OSHPD’s complaints about the fire hazard, the state agency sent three Health Facilities Evaluator Nurse (HFEN) surveyors to inspect Petitioner’s facility.  CMS Ex. 13 at 15-16, 28-39; CMS Ex. 18 ¶ 9.  The surveyors reported that Petitioner’s staff were “greatly distressed” by the surveyors’ visit and were “upset that they were working in an unsafe and dangerous environment.”  CMS Ex. 18 ¶ 9.  The HFEN surveyors informed the Director of Nursing that the facility needed to implement a 24/7 fire watch and fax verification to the state agency daily.  CMS Ex. 13 at 15.

7. Following the state agency inspection on September 15, 2017, the facility initiated a 24/7 fire watch where a designated fire watch staff member would survey around the facility and each room of the facility every 30 minutes.  CMS Ex. 1 at 2; CMS Ex. 10 at 1; CMS Ex. 18 ¶ 9.  Each round included checking each room for the smell of smoke, each electrical outlet for signs of overheating (melted plugs, blackened areas around outlets, smell of smoke, visible smoke), all outdoor conduit pipes for visible blackened areas and smoke, the main facility breakers for a tripped breaker, signs of or visible smoke, and the generator for smoke or heat.  CMS Ex. 10 at 1.  The fire watch prescribed that rounds should be expected to take about 20-25 minutes.  CMS Ex. 10 at 1.  The facility also maintained a fire watch log, which it faxed, along with proof that a dedicated staff member performed the fire watch, to the state agency daily.  Beginning on September 29, 2017, rounds were performed every two hours instead of every 30 minutes.  CMS Ex. 10 at 118-226.

8. On September 16 and 17, 2017, Jill Bobbit, a state agency HFEN supervisor, visited the facility to inspect the facility and ensure the 24/7 fire watch rounds were being performed.  CMS Ex. 13 at 17-23; CMS Ex. 18 ¶ 10.  Ms. Bobbit spoke with Sandra Blessing, Administrator, who stated that she never received a report of an electrical problem and did not become aware of the PE Report until the state agency visit on September 15, 2017.  CMS Ex. 13 at 18. 

9. On September 19, 2017, Patricia Hardy, the state agency HFEN supervisor with the Life Safety Code Unit, made an unannounced visit to the facility to investigate the electrical fire hazard.  CMS Ex. 1 at 3-4; CMS Ex. 18 ¶ 11.  Ms. Hardy conducted an interview with an electrician that Petitioner had onsite.  CMS Ex. 1 at 3-4; CMS Ex. 18 ¶ 11.  The electrician stated that the building was safe from fire hazards, but the electrician would not certify that statement in writing.  CMS

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Ex. 1 at 4; CMS Ex. 4. at 2; CMS Ex. 6 at 2; CMS Ex. 18 ¶ 11.  The facility could not provide any documentation to substantiate that the facility was safe from fire hazards.  CMS Ex. 1 at 4; CMS Ex. 4 at 2; CMS Ex. 6 at 2.

10. On September 20, 2017, Jenny Piazza, RN, a state agency HFEN, visited the facility to further investigate the electrical fire hazard.  CMS Ex. 1 at 4; CMS Ex. 13 at 5-9; CMS Ex. 18 ¶ 12.  Ms. Piazza interviewed the Administrator and Kat Currier, Administrator in Training.  Both the Administrator and Administrator in Training stated that they had been unaware of the PE Report or the electrical fire hazard until the state agency’s first inspection on September 15, 2017.  The Administrator and Administrator in Training did not receive the PE Report until the state agency faxed the report to the facility on September 18, 2017.  CMS Ex. 1 at 4; CMS Ex. 13 at 6; CMS Ex. 18 ¶ 13. 

11. The state agency determined that an immediate jeopardy situation existed at the facility because “all 40 residents, in addition to staff and visitors, were at risk for serious injury or death by burning caused by an electrical fire if overheating occurred at the main electrical service panel.”  CMS Ex. 18 ¶ 14.  Ms. Piazza verbally notified the Administrator and Administrator in Training of the immediate jeopardy finding, with a scope and severity level of “L” on September 20, 2017, at 2:06 p.m.  CMS Ex. 1 at 3; CMS Ex. 13 at 8; CMS Ex. 18 ¶ 14.

12. On September 20, 2017, Petitioner presented the state agency with a plan of correction.  CMS Ex. 1 at 3.  In accordance with the plan of correction, Petitioner would continue the 24/7 fire watch until the identified electrical fire hazard was repaired.  CMS Ex. 1 at 2-3; CMS Ex. 18 ¶ 15.

13. On September 22, 2017, Mr. Marrs and Dean Martin, an OSHPD Fire Marshal, conducted a field visit to observe and review the electrical main service panel board for hazardous conditions.  The Construction Advisory Report made nine findings that addressed the main electrical service, temporary generator, and related equipment, including that “the section of this main service panel which normally contains over current protection devices has been removed,”  “main service panel board modification has likely voided its required NRTL [Nationally Recognized Testing Laboratories] listing,” and “sub panel feeder conductors are not provided with OCP [over current protection].”  The Construction Advisory Report noted numerous violations of the California Electrical Code (CEC).  Based on the findings, the OSHPD Construction Advisory Report recommended five areas “be observed, tested and/or corrected ASAP to help reduce potential fire hazard.”  CMS Ex. 7; see also CMS Ex. 1 at 5.   

14. In an email to OSHPD dated September 22, 2017, the Administrator requested an “emergency permit so that a fire hazard identified by our electrical engineer,

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Carlos Aldas, PE, could be eliminated as quickly as possible.”  CMS Ex. 12 at 2.  An OSHPD Regional Compliance Officer authorized Petitioner to proceed with emergency repairs, but stated that this did not waive the permit process and an application for plan review should be filed as soon as possible.  CMS Ex. 12 at 1.    

15. After reviewing the PE Report (CMS Ex. 3) and OSHPD Construction Advisory Report (CMS Ex. 7), Ms. Piazza found that the facility was not in substantial compliance with 42 C.F.R. § 483.25(d) (Tag F323).  CMS Ex. 18 ¶ 19.

16. On September 25, 2017, Mr. Aldas again submitted drawings to OSHPD for approval to build a new generator at the facility.  P. Ex. 22, Part 1. 

17. On October 10, 2017, Mr. Marrs performed an inspection and determined that the facility’s electrical system had been repaired to include overcurrent and undercurrent protection and that the repairs resolved the electrical fire hazard.  CMS Ex. 9.  Based on OSHPD’s assessment, the state agency determined the immediate jeopardy had been abated.  CMS Ex. 1 at 3; CMS Ex. 18 ¶ 20.

Hot Water Annunciator (Alarm)

18. On September 22, 2017, when Messrs. Marrs and Martin of OSHPD were at the facility, they “found that the annunciator, an alarm to warn the staff when hot water was over the high limit of 125 degrees Fahrenheit, was out of order.”  CMS Ex. 18 ¶ 16; see also CMS Ex. 4 at 2; CMS Ex. 6 at 2. 

19. OSHPD filed a complaint with the state agency because the facility had installed three water heaters without permits and the annunciator was not functioning.  On September 23, 2017, HFEN Henson investigated the matter at the facility and one of the staff knew of the defective annunciator, but stated that staff checked the hot water in every room in the facility and kept a log.  HFEN Henson found no recorded temperatures for September 14, 15, 17, and 22, 2017, and, in any event, only a limited number of rooms were sampled.  CMS Ex. 4 at 3; CMS Ex. 6 at 3; CMS Ex. 10 at 227; CMS Ex. 18 ¶ 17.  Based on the findings of the survey, HFEN Henson determined that the facility’s residents, staff, and visitors were at risk for burning by scalding hot water or steam.  CMS Ex. 18 ¶ 18.

Fire Safety

20. On September 22, 2017, Mr. Marrs issued a second Construction Advisory Report on the other conditions at the facility related to fire safety.  Mr. Marrs made the following findings, with citation to the California Building Code and California Code of Regulations:  (a) there were no smoke seals on the cross corridor doors to ensure a smoke barrier, stating that the “facility needs to rectify this issue”; (b) the

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facility’s “current configuration of supply air grilles (located in patient room ceiling system) and return air grilles (located in the corridor ceiling system) creates a non[-]code compliant situation in which the corridor is being used as part of the return of the air system”; (c) there were multiple corridor doors without self-closing devices; (d) the facility’s corridor laundry room door, which should minimally be “45-minute rated and limit the passage of smoke” has an air grille added to the door that resulted in “completely mitigat[ing] the door[’]s potential to limit the transfer of smoke and provide the code required fire rating”; and (e) “[s]torage rooms over 100 square feet in area require a minimum one-hour fire barrier with rated opening protection and combination fire/smoke dampers,” but the facility’s door to its main storage room appeared to be of hollow wood construction with an air grille.  CMS Ex. 8.  

21. Based on the September 22, 2017 Construction Advisory Report concerning fire safety issues, Mr. Marrs filed a complaint on October 5, 2017 with the state agency.  The state agency conducted a complaint survey on October 16 and 17, 2017, and confirmed Mr. Marrs’s findings.  The state agency permitted the facility to resolve the matters in the complaint through a plan of correction.  CMS Ex. 5. 

VI.  Conclusions of Law and Analysis

1. Petitioner was not in substantial compliance with 42 C.F.R. § 483.25(d) (Tag F323) because it failed to ensure that the facility was free from potential electrical fire hazards and scalding water.

Congress requires SNFs to “provide services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident, in accordance with a written plan of care.”  42 U.S.C. § 1395i-3(b)(2).  In furtherance of this mandate, the Secretary promulgated the general quality of care regulation at 42 C.F.R. § 483.25, which states that the SNF “must ensure that residents receive treatment and care in accordance with professional standards of practice,” based on a comprehensive resident assessment, a comprehensive care plan, and resident choice.  Subsection 483.25(d) imposes the following specific obligations on a facility related to accident hazards and accidents:6

The facility must ensure that ˗

(1) The resident environment remains as free of accident hazards as is possible; and

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(2) Each resident receives adequate supervision and assistance devices to prevent accidents.

In regard to § 483.25(d)(1), a facility must 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(d) “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 10 (2009), aff’d sub. nom. Fal‑Meridian, Inc. v. U.S. Dep’t of Health & Human Servs.,604 F.3d 445 (7th Cir. 2010).  Further, § 483.25(d)(2) requires that a facility take “all reasonable steps to ensure that a resident receives supervision and assistance devices that meet his or her assessed needs and mitigate foreseeable risks of harm from accidents.”  Briarwood Nursing Ctr., DAB No. 2115 at 11 (2007) (citing Woodstock Care Ctr. v. Thompson, 363 F.3d 583, 590 (6th Cir. 2003) (facility must take “all reasonable precautions against residents’ accidents”), aff’g Woodstock Care Ctr., DAB No. 1726 (2000)).  Facilities are given “the flexibility to choose the methods” they use to provide supervision or assistive devices to prevent accidents, so long as the chosen methods “constitute an ‘adequate’ level of supervision” for a particular resident’s needs.  Windsor Health Care Ctr.,DAB No. 1902 at 5 (2003), aff’d sub. nom. Windsor Health Ctr. v. Leavitt,127 F. App’x 843 (6th Cir. 2005).

Petitioner did not substantially comply with the requirement to keep the resident environment free from accident hazards.  Petitioner delayed taking any measures to address the known fire risk posed by the facility’s main electrical service, placing its residents, staff, and visitors at risk of injury or death from fire.  The record establishes that the non-code compliant conditions of the facility’s main electrical service panel posed an ongoing electrical fire hazard risk.  On December 23, 2016, Mr. Aldas, the PE that Petitioner’s owner had hired to analyze the conditions of the facility’s main electrical service, reported that the lack of overcurrent protection devices created an “unsafe condition because the power panels and feeders fed by this section were not protected.”  CMS Ex. 3 at 1.  Based on his analysis, Mr. Aldas concluded that the facility needed to resolve the circuit breaker issues and that the main electrical service was in “non-code compliant conditions that could be the cause of an electrical fire if an overload or short circuit condition presents itself.”  CMS Ex. 3 at 4.

The September 22, 2017 OSHPD Construction Advisory Report corroborated the findings in the PE Report, finding that the facility’s main electrical service violated numerous fire codes and posed a fire hazard.  The OSHPD Construction Advisory Report determined that “the section of this main service panel which normally contains over current protection devices has been removed” and concluded that the main service panel

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“be observed, tested and/or corrected ASAP to help reduce potential fire hazard.”  CMS Ex. 7. 

Despite Mr. Aldas’ warning about the risk of an electrical fire in December 2016, Petitioner did not take any immediate action to protect the facility’s residents, staff, and visitors from serious injury or death from fire.  Petitioner’s owner also failed to notify his staff, including the Administrator and Administrator in Training of the unsafe conditions and fire risk.  CMS Ex. 1 at 4; CMS Ex. 13 at 6, 18; CMS Ex. 18 ¶ 13.  It was only after state agency surveyors inspected the facility on September 15, 2017, in response to complaints from OSHPD, that the facility, at the direction of the surveyors, implemented a 24/7 fire watch.  CMS Ex. 13 at 15.  Further, Petitioner did not request an emergency permit from OSHPD to repair and replace the main electrical service until September 22, 2017, two days after the state agency notified the facility of the immediate jeopardy determination.  CMS Ex. 12 at 2.

Petitioner does not deny that the PE found the fire risk and communicated that to the facility owner and previous administrator in December 2016.  Petitioner instead asserts that its residents, employees, and visitors were never at risk for injury or death from fire because the “situation was stable,” the “electrical was functioning . . . [and] working properly,” and “there was never any interruption of services to the residents by this long standing issue.”  P. Br. at 6.  Petitioner further contends that “had there been great risk to the residents or an imminent problem the PE says he would have just fixed it and gotten ER approval but that this issue did not quality for this in his expertise.”  P. Br. at 6.   However, the evidence in the record does not support Petitioner’s arguments.  Both the PE Report and OSHPD Construction Advisory Report establish a fire hazard was posed by the non-code compliant main electrical service panel.  Moreover, on September 19, 2017, although the electrician on site at the facility stated that the building was safe from fire hazards, the electrician would not certify in writing that the building was safe from fire hazards.  CMS Ex. 1 at 4; CMS Ex. 18 ¶ 11.  The facility also did not provide any documentation to show that the facility was safe from fire hazards.  CMS Ex. 1 at 4. 

Petitioner further argues and submits evidence in support (P. Exs. 22-24) that it worked with Mr. Aldas to repair the main electrical service panel, but that the process took many months because of miscommunication between Mr. Aldas and OSHPD and delayed responses from OSHPD to Mr. Aldas.  P. Br. at 6-7.  However, the record shows that Mr. Aldas did not email OSHPD until February 17, 2017, almost two months after his analysis of the facility’s electrical service panel.  P. Ex. 22.  Further, Petitioner has not identified any reasonable measures it took to mitigate the risk of fire/accident to its 35 wheelchair-bound residents, its four residents who required assistance to ambulate, or its one resident who ambulated independently pending the OSHPD permit approval and repair.  Woodstock Care Ctr. v. Thompson, 363 F.3d 583, 590 (6th Cir. 2003) (the facility must take “all reasonable precautions against residents’ accidents.”).  In addition, had a

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fire started, the facility failed to meet all fire safety requirements that were meant to impede the spread of fire and smoke to allow evacuation of the facility.  CMS Exs. 5, 8. 

In regard to the question of Petitioner’s failure to have a functioning annunciator for its hot water at the facility, Petitioner argues that “[t]his deficiency appears to be rather petty.”  Petitioner asserts that “[a]t all time, there was a system in place to monitor the temperature of the water heater.  Additionally, the staff members always tested the warmth of coldness of the water prior to using the water onto [sic] residents at the facility.”  P. Br. at 8.

CMS presented a lengthier and more detailed argument on this issue, as follows: 

OSHPD and the Fire Marshall indicated that the annunciator for the water heater was out of order.  CMS Ex. 1 at 10-11; CMS Ex. 8.  The annunciator is an alarm system designed to notify occupants when temperatures exceed 125 degrees Fahrenheit, to protect against scalding burns by hot water or steam. CMS Ex. 1 at 11.  HFEN Patricia Henson interviewed two licensed nursing assistants and the environmental service aide (“EVA”), all of whom said they were unaware of the problem.  Id.; CMS Ex. 18 at 7-8, ¶ 17-18.

The EVA informed [the state agency] that the facility kept a water temperature log, where they checked the hot water every afternoon in some of the facility’s rooms.  Id. at 11-12. However, the log indicated that only a sampling of rooms were checked each day, and that the same rooms were sampled each time.  Id.; CMS Ex. 10 at 227 (showing that the only rooms monitored were Room #3, 4, 8, 12, 14, 18, staff restroom, shower room, dishwasher, kitchen hand sink, and clothes washer).  Further, the log indicated that on September 14, 15, 17, and 22, 2017, no temperatures had been recorded for any room.  Id.  When asked about these omissions, the EVA stated that she probably was too busy to check the temperature those days, therefore, did not do so.  Id.; CMS Ex. 18 at 7-8, ¶ 17-18.

The OSHPD guide also requires high temperature alarms set at 125 Fahrenheit, but Petitioner’s annunciator was out of order.  Id., See California Plumbing Code § 613.20133.

In Petitioner’s hearing request, the facility does not contest the fact that its annunciator alarm was broken.  See

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Petitioner’s Hearing Request.  Petitioner only argues that “there was a system in place to monitor the temperature of hot water.”  Id. at 3-4.  While this reference is vague as to what “system” Petitioner means, CMS presumes that Petitioner is referring to the temperature log system.  However, the temperature logs demonstrate that this system was not followed on four occasions in the month of September 2017, and the monitoring system always contained the same rooms. CMS Ex. 10 at 227.  Therefore the system was insufficient and inconsistent, and does not justify why the hot water annunciator was not maintained.

CMS Br. at 18-19.  CMS’s argument is consistent with the record in this case.   

A deficiency is severe enough to warrant a finding of substantial noncompliance “if it involves acts or omissions that, if repeated, have the potential to cause more than minimal harm to any of the SNF’s residents, even if surveyors did not observe or identify a particular resident who was actually threatened with harm during the survey.”  Liberty Commons Nursing & Rehab Ctr. – Johnston, DAB No. 2031 at 18-19 (2006), aff’d, Liberty Commons Nursing & Rehab Ctr. – Johnson v. Leavitt,241 F. App’x 76 (4th Cir. 2007).  CMS has met its burden of proving a prima facie case of substantial noncompliance with § 483.25(d), and Petitioner did not rebut that case with regard to the electrical fire hazard or the hot water hazard.  Therefore, I conclude that Petitioner was not in substantial compliance with 42 C.F.R. § 483.25(d).

2. CMS’s finding of immediate jeopardy is outside the scope of my review.

Petitioner argues that CMS has not provided evidentiary support to uphold its immediate jeopardy determination, thus CMS’s determination of immediate jeopardy is clearly erroneous.  P. Br. at 4.  A facility may only challenge CMS’s scope and severity findings (which include immediate jeopardy) 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), (d)(10); see also Cedar Lake Nursing Home, DAB No. 2344 at 9 (2010); Evergreen Commons, DAB No. 2175 (2008); Aase Haugen Homes, DAB No. 2013 at 17-19 (2006). 

In this case, I have no authority to review CMS’s immediate jeopardy determination.  CMS imposed a per-instance CMP of $17,505.  For a per-instance penalty, the regulations provide for only a single penalty range ($2,097 to $20,965), without regard to the level of noncompliance.  42 C.F.R. § 488.438(a)(2).  Thus, the finding of immediate jeopardy does not affect the range of the CMP.  See NMS Healthcare of Hagerstown, DAB No. 2603 at 6-7 (2014); see also Oaks of Mid City Nursing & Rehab. Ctr., DAB No. 2375 at 24 (2011).  Further, while CMS found the immediate jeopardy in regard to a

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deficiency of the quality of care regulation, the imposition of a CMP over $10,483 meant that withdrawal of approval of the nurse aid training program was required and the immediate jeopardy finding did not have an impact on that issue.  42 C.F.R. § 483.151(b)(2)(iv), (f)(1).  Because I conclude, as explained below, that $17,505 is an appropriate CMP in this case, the facility lost its approval for a nurse aide training program without regard to the immediate jeopardy finding.  42 U.S.C. § 1395i-3(f)(2)(B); 42 C.F.R. § 483.151(b)(2)(iv), (f)(1); see Sunshine Haven Lordsburg, DAB No. 2456 at 3 (2012), aff’d in part, Sunshine Haven Nursing Operations, LLC v. U.S. Dep’t of Health & Human Servs., 742 F.3d 1239 (10th Cir. 2014).  Therefore, I have no basis to review CMS’s finding of immediate jeopardy.

3. The per-instance CMP of $17,505 is an appropriate penalty amount, based on the factors in 42 C.F.R. § 488.438(f), for Petitioner’s substantial noncompliance with 42 C.F.R. § 483.25(d).

CMS imposed a single per‑instance CMP in the amount of $17,505 on Petitioner.  CMS Ex. 17 at 1-2.  When reviewing the CMP amount, I apply the factors listed in 42 C.F.R. § 488.438(f):  1) the facility’s history of noncompliance; 2) the facility’s financial condition; 3) the factors specified in 42 C.F.R. § 488.404; and 4) the facility’s degree of culpability, which includes neglect, indifference, or disregard for resident care, comfort, or safety.  See 42 U.S.C. §§ 1320a-7a(d)(2), 1395i-3(h)(2)(B)(ii)(I).  The absence of culpability is not a mitigating factor.  42 C.F.R. § 488.438(f).  The factors listed in 42 C.F.R. § 488.404 include:  1) the scope and severity of the deficiency; 2) the relationship of the deficiency to other deficiencies resulting in noncompliance; and 3) the facility’s prior history of noncompliance in general and specifically with reference to the cited deficiencies.  See 42 U.S.C. §§ 1320a-7a(d)(1), (3), 1395i-3(h)(2)(B)(ii)(I).

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 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 (2008).  However, 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).

Facility’s History of Non-Compliance:  Petitioner asserts that it does not have a history of noncompliance.  P. Br. at 9.  There is no evidence in the record of the facility’s previous deficiencies.  However, the absence of a history of noncompliance is not a mitigating factor.  Plum City Care Ctr., DAB No. 2272 at 19 (2009) (internal citations omitted).

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Financial Condition of the Facility:  Petitioner argues that it lacks sufficient assets to pay the CMP without having to go out of business and that it submitted evidence of financial hardship to CMS.  P. Br. at 9.  However, Petitioner did not submit its evidence in this proceeding, and there is no evidence in the record to support Petitioner’s claim of financial hardship.  Without evidence of financial hardship, this factor does not weigh in favor of reducing the amount of the CMP.

Scope and Severity of Deficiencies and Relationship Between Deficiencies:  Petitioner asserts the evidence demonstrates no actual harm and that its deficiency did not constitute a pattern of substantial non-compliance.  P. Br. at 9.  CMS argues that the deficiency is serious because all 40 of the facility’s residents could have suffered severe burning or death and the deficiency existed at the facility for over nine months.  CMS Br. at 24.

There was only one deficiency at issue in this case, at scope and severity level “L,” which means there was widespread immediate jeopardy to resident health and safety.  “Widespread” means “the problems causing the deficiency are pervasive (affect many locations) throughout the facility and/or represent a systemic failure that affected, or has the potential to affect, a large portion or all the residents or employees.”  State Operations Manual (SOM) ch. 7, § 7410.2.1.  A “pattern” is “when more than a very limited number of residents or employees are affected, and/or the situation has occurred in more than a limited number of locations but the locations are not dispersed throughout the facility.”  SOM ch. 7, § 7410.2.1.   

As discussed above, I cannot expressly review the scope and severity of the deficiency in this case, including CMS’s finding of immediate jeopardy.  However, I find that the deficiency was serious because the electrical fire hazard was widespread and constituted a pattern because, had a fire occurred, it could have endangered the entire facility and all residents and employees at the facility.  Further, the lack of a hot water annunciator also could have had a wide-spread negative effect on residents at the facility.

Culpability:  Petitioner argues that it worked hard to resolve the electrical service panel issue and relied on professionals to assist with the process.  P. Br. at 9.  CMS argues that Petitioner is highly culpable because its staff and administration failed to appreciate the risk of serious burns, smoke inhalation, or death posed by the facility’s electrical hazards for almost 10 months.  CMS Br. at 25.  I find that Petitioner is very culpable because it failed to take interim safety measures while it sought to obtain approval for repairs of its main electrical service panel.  Although Petitioner took some measures to repair the main electrical service panel in order to install a new generator, such as hiring the PE to make the necessary repair, there is no evidence that Petitioner pressed the PE to secure a permit quickly to effectuate repairs.  Further, as identified by OSHPD and state agency inspectors, the facility had multiple violations of the California Building Code with regard to fire safety matters.  Specifically, the facility’s structural ability to slow the progress of a fire or smoke was compromised.  CMS Exs. 4, 8.  It is not difficult to

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imagine the outcome had there been an electrical fire at the facility.  With no interim measures to watch for such a fire and a reduced ability to slow the spread of fire/smoke, many residents would likely have been injured before a full evacuation could have been effectuated.  See Cahokia Nursing & Rehab. Ctr., DAB CR5374 at 5-6 (2019) (describing the chaotic nature of a long-term care facility’s response to a fire when that facility failed to properly maintain its ability to slow the spread of a fire, resulting in 14 injured residents). 

CMP Amount:  As indicated by the review of factors above, a per-instance CMP in the amount of $17,505 is well supported.    

VII.  Conclusion

I uphold CMS’s initial determination that Petitioner was not in substantial compliance with 42 C.F.R. § 483.25(d) and that a $17,505 per-instance CMP was a reasonable penalty.

1. As the terms “main electrical service” and “main electrical service panel” are referred to interchangeably in the record, they are also used interchangeably in this decision.
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2. All citations to the Code of Federal Regulations are to the version in effect at the time of the survey unless otherwise indicated.
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3. Scope and severity levels are used by CMS and state survey agencies when selecting remedies.  The scope and severity level is designated by letters A through L, selected by CMS or the state agency from the scope and severity matrix published in the State Operations Manual, chap. 7, § 7400.5 (Sep. 10, 2010).  A scope and severity level of A, B, or C indicates a deficiency that presents no actual harm but has the potential for minimal harm, which is an insufficient basis for imposing an enforcement remedy.  Facilities with deficiencies of a level no greater than C remain in substantial compliance.  42 C.F.R. § 488.301.  A scope and severity level of D, E, or F indicates a deficiency that presents no actual harm, but has the potential for more than minimal harm that does not amount to immediate jeopardy.  A scope and severity level of G, H, or I indicates a deficiency that involves actual harm that does not amount to immediate jeopardy.  Scope and severity levels J, K, and L are deficiencies that constitute immediate jeopardy to resident health or safety.  The matrix, which is based on 42 C.F.R. § 488.408, specifies which remedies are required and optional at each level based upon the frequency of the deficiency.
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4. Although the Statement of Deficiencies indicated that Petitioner was not in substantial compliance with 42 C.F.R. § 483.90(d)(2), (e) (Tag F456) (space and equipment), CMS did not impose an enforcement remedy on Petitioner for that alleged noncompliance.  In its request for hearing, Petitioner requested ALJ review of both deficiencies and, in the prehearing exchanges, both parties briefed deficiencies for both 42 C.F.R. § 483.25(d) and 42 C.F.R. § 483.90(d)(2), (e).  As indicated in Part I of this decision, an SNF may only request an ALJ hearing to dispute deficiencies that resulted in the imposition of an enforcement remedy.  Therefore, this decision does not include a discussion of 42 C.F.R. § 483.90(d)(2), (e).
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5. Petitioner’s first marked exhibit is P. Ex. 19.
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6. In 2016, CMS revised the quality of care regulation at 42 C.F.R. § 483.25.  81 Fed. Reg. 68,688 (Oct. 4, 2016); 82 Fed. Reg. 32,256 (Jul. 13, 2017) (technical corrections).  The accident prevention regulation at § 483.25(d) was formerly found at § 483.25(h).
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